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Report of the Panel

CASES CITED IN THIS REPORT

Short TitleFull Case Title and Citation
Argentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of Goods, WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted 26 January 2015
Argentina – Import Measures Panel Reports, Argentina – Measures Affecting the Importation of Goods, WT/DS438/R and Add.1 / WT/DS444/R and Add.1 / WT/DS445/R and Add.1, adopted 26 January 2015, as modified (WT/DS438/R) and upheld (WT/DS444/R / WT/DS445/R) by Appellate Body Reports WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R
Argentina – Textiles and Apparel Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22 April 1998, DSR 1998:III, p. 1003
Australia – Apples Panel Report, Australia – Measures Affecting the Importation of Apples from New Zealand, WT/DS367/R, adopted 17 December 2010, as modified by Appellate Body Report WT/DS367/AB/R, DSR 2010:VI, p. 2371
Canada – Continued Suspension Panel Report, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS321/R and Add.1 to Add.7, adopted 14 November 2008, as modified by Appellate Body Report WT/DS321/AB/R, DSR 2008:XV, p. 5757
China – Autos (US) Panel Report, China – Anti-Dumping and Countervailing Dutieson Certain Automobiles from the United States, WT/DS440/R and Add.1, adopted 18 June 2014
China – Broiler Products Panel Report, China - Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States, WT/DS427/R and Add.1, adopted 25 September 2013
China – GOES Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R, adopted 16 November 2012, DSR 2012:XII, p. 6251
China – Rare Earths Panel Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/R and Add.1 / WT/DS432/R and Add.1 / WT/DS433/R and Add.1, adopted 29 August 2014, upheld by Appellate Body Reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R
Dominican Republic – Import and Sale of Cigarettes Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p. 7425
EC – Bananas III (Mexico) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Mexico, WT/DS27/R/MEX, adopted 25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, p. 803
EC – Bed Linen Appellate Body Report, European Communities – Anti‑Dumping Duties on Imports of Cotton‑Type Bed Linen from India, WT/DS141/AB/R, adopted 12 March 2001, DSR 2001:V, p. 2049
EC – Export Subsidies on Sugar (Brazil) Panel Report, European Communities – Export Subsidies on Sugar, Complaint by Brazil, WT/DS266/R, adopted 19 May 2005, as modified by Appellate Body Report WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, DSR 2005:XIV, p. 6793
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135
EC – Hormones (Canada) Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), Complaint by Canada, WT/DS48/R/CAN, adopted 13 February 1998, as modified by Appellate Body Report WT/DS26/AB/R, WT/DS48/AB/R, DSR 1998:II, p. 235
EC – Hormones (US) Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), Complaint by the United States, WT/DS26/R/USA, adopted 13 February 1998, as modified by Appellate Body Report WT/DS26/AB/R, WT/DS48/AB/R, DSR 1998:III, p. 699
EC – Salmon (Norway) Panel Report, European Communities – Anti‑Dumping Measure on Farmed Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1, DSR 2008:I, p. 3
EC – Seal Products Panel Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/R and Add.1 / WT/DS401/R and Add.1, adopted 18 June 2014, as modified by Appellate Body Reports WT/DS400/AB/R / WT/DS401/AB/R
EC – Tariff Preferences Panel Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004, as modified by Appellate Body Report WT/DS246/AB/R, DSR 2004:III, p. 1009
EC and certain member States – Large Civil Aircraft Panel Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685
EC and certain member States – Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
European Communities – Selected Customs Matters Panel Report, European Communities – Selected Customs Matters, WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body Report WT/DS315/AB/R, DSR 2006:IX, p. 3915
Mexico – Olive Oil Panel Report, Mexico – Definitive Countervailing Measures on Olive Oil from the European Communities, WT/DS341/R, adopted 21 October 2008, DSR 2008:IX, p. 3179
Peru – Agricultural Products Panel Report, Peru – Additional Duty on Imports of Certain Agricultural Products, WT/DS457/R and Add.1, adopted 31 July 2015, as modified by Appellate Body Report WT/DS457/AB/R
Philippines – Distilled Spirits Panel Reports, Philippines – Taxes on Distilled Spirits, WT/DS396/R / WT/DS403/R, adopted 20 January 2012, as modified by Appellate Body Reports WT/DS396/AB/R / WT/DS403/AB/R, DSR 2012:VIII, p. 4271
Turkey – Rice Panel Report, Turkey – Measures Affecting the Importation of Rice, WT/DS334/R, adopted 22 October 2007, DSR 2007:VI, p. 2151
US – 1916 Act (EC) Appellate Body Report, United States – Anti‑Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, p. 4793
US – Anti-dumping and Countervailing Duties (China) Panel Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/R, adopted 25 March 2011, as modified by Appellate Body Report WT/DS379/AB/R, DSR 2011:VI, p. 3143
US – Anti-dumping and Countervailing Duties (China) Appellate Body Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011, DSR 2011:V, p. 2869
US – Anti-dumping Methodologies (China)United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China,WT/ DS471, panel composed on 28 August 2014
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain Corrosion‑Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
US – Carbon Steel (India) Panel Report, United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/R and Add.1, adopted 19 December 2014, as modified by Appellate Body Report WT/DS436/AB/R
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted 19 December 2014
US – Continued Suspension Panel Report, United States – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS320/R and Add.1 to Add.7, adopted 14 November 2008, as modified by Appellate Body Report WT/DS320/AB/R, DSR 2008:XI, p. 3891
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R, DSR 2012:VI, p. 2745
US – Countervailing Duty Investigation on DRAMS Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Countervailing Measures (China) Panel Report, United States – Countervailing Duty Measures on Certain Products from China, WT/DS437/R and Add.1, adopted 16 January 2015, as modified by Appellate Body Report WT/DS437/AB/R
US – Countervailing Measures on Certain EC Products Panel Report, United States – Countervailing Measures Concerning Certain Products from the European Communities, WT/DS212/R, adopted 8 January 2003, as modified by Appellate Body Report WT/DS212/AB/R, DSR 2003:I, p. 73
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, DSR 2003:I, p. 5
US – Gambling Panel Report, United States – Measures Affecting the Cross‑Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797
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 16 May 2001, DSR 2001:IX, p. 4051
US – Large Civil Aircraft (2nd complaint) Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012, DSR 2012:I, p. 7
US – Lead and Bismuth II Appellate Body Report, United States – Imposition of Countervailing Duties on Certain Hot‑Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, p. 2595
US – Shrimp (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS404/R, adopted 2 September 2011, DSR 2011:X, p. 5301
US – Shrimp and Sawblades Panel Report, United States – Anti-Dumping Measures on Certain Shrimp and Diamond Sawblades from China, WT/DS422/R and Add.1, adopted 23 July 2012, DSR 2012:XIII, p. 7109
US – Shrimp II (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS429/R and Add.1, adopted 22 April 2015, upheld by Appellate Body Report WT/DS429/AB/R
US – Shrimp II (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS429/R and Add.1, adopted 22 April 2015, upheld by Appellate Body Report WT/DS429/AB/R
US – Softwood Lumber IV Panel Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada – Recourse by Canada to Article 21.5 [of the DSU], WT/DS257/RW, adopted 20 December 2005, upheld by Appellate Body Report WT/DS257/AB/RW, DSR 2005:XXIII, p. 11401
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada – Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted 20 December 2005, DSR 2005:XXIII, p. 11357
US – Softwood Lumber V Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, p. 1875
US – Softwood Lumber V (Article 21.5 – Canada) Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, p. 1875
US – Softwood Lumber VI (Article 21.5 – Canada), Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p. 4865
US – Stainless Steel (Mexico) Panel Report, United States – Final Anti‑Dumping Measures on Stainless Steel from Mexico, WT/DS344/R, adopted 20 May 2008, as modified by Appellate Body Report WT/DS344/AB/R, DSR 2008:II, p. 599
US – Stainless Steel (Mexico) Appellate Body Report, United States – Final Anti‑Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008, DSR 2008:II, p. 513
US – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted 5 October 2011, DSR 2011:IX, p. 4811
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, Add.1 to Add.3 and Corr.1, adopted 21 March 2005, as modified by Appellate Body Report WT/DS267/AB/R, DSR 2005:II, p. 299
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted 9 May 2006, and Corr.1, DSR 2006:II, p. 417
US – Zeroing (EC) Panel Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/R, adopted 9 May 2006, as modified by Appellate Body Report WT/DS294/AB/R, DSR 2006:II, p. 521
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p. 3
US – Zeroing (Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/R, adopted 23 January 2007, as modified by Appellate Body Report WT/DS322/AB/R, DSR 2007:I, p. 97
US – Zeroing (Japan) (Article 21.5 – Japan) Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441

ABBREVIATIONS

AbbreviationDescription
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
BCI Business Confidential Information
BCI Procedures Additional working procedures of the Panel concerning Business Confidential Information
CONNUM Control number
DPM Differential Pricing Methodology
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
ERDF European Regional Development Fund
GATT 1994 General Agreement on Tariffs and Trade 1994
LRWs/Washers Large Residential Washers
Marrakesh Agreement Marrakesh Agreement Establishing the World Trade Organization
OECD Organization for Economic Cooperation and Development
R&D Research and Development
RSTA Restriction of Special Taxation Act
SCM Agreement Agreement on Subsidies and Countervailing Measures
T-T Transaction-to-Transaction Comparison Methodology
USDOC United States Department of Commerce
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679
W-T Weighted Average-to-Transaction Comparison Methodology
WTO World Trade Organization
W-W Weighted Average-to-Weighted Average Methodology

1 INTRODUCTION

1.1 COMPLAINT BY KOREA

1.1.
On 29 August 2013, Korea requested consultations with the United States pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade (GATT 1994), Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti‑Dumping Agreement), and Article 30 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) with regard to the anti-dumping and countervailing measures applied by the United States on Large Residential Washers (LRWs) from the Republic of Korea.1
1.2.
Consultations were held on 3 October 2013, but failed to resolve the dispute. On 5 December 2013, Korea requested the establishment of a panel.2

1.2 PANEL ESTABLISHMENT AND COMPOSITION

1.3.
At its meeting on 22 January 2014, the Dispute Settlement Body (DSB) established a panel pursuant to the request of Korea in document WT/DS464/4, in accordance with Article 6 of the DSU.3
1.4.
The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by Korea in document WT/DS464/4 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.4

1.5.
On 10 June 2014, Korea requested the Director-General to determine the composition of the Panel, pursuant to Article 8.7 of the DSU. This paragraph provides:

If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.

1.6.
On 20 June 2014, the Director-General accordingly composed the Panel as follows:

Chairperson: Ms Claudia Orozco

Members: Mr Mazhar Bangash

Mr Hanspeter Tschaeni

1.7.
Brazil, Canada, China, the European Union, India, Japan, Norway, Saudi Arabia, Thailand, Turkey and Viet Nam reserved their rights to participate in the Panel proceedings as third parties.

1.3 PANEL PROCEEDINGS

1.3.1 General

1.8.
After consultations with the parties, the Panel adopted its Working Procedures5 and timetable on 3 September 2014. The Panel revised its Working Procedures on 8 October 2014 and the timetable on 12 December 2014.
1.9.
The Panel held a first substantive meeting with the parties on 10 and 11 March 2015. A session with the third parties took place on 11 March 2015. The Panel held a second substantive meeting with the parties on 20 and 21 May 2015. On 3 July 2015, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 14 October 2015. The Panel issued its Final Report to the parties on 13 November 2015.

1.3.2 Working Procedures on BCI

1.10.
After consultations with the parties, the Panel adopted, on 3 September 2014, additional procedures for the protection of Business Confidential Information (BCI).6

1.3.3 China's request for enhanced third party rights

1.11.
By letter dated 25 June 2014, China indicated that it is a party to a parallel panel proceeding7, and requested enhanced third party rights to: (a) receive all submissions of the parties at the time they are submitted to the Panel; (b) have access to any other information submitted to the Panel; (c) be present during the entirety of all meetings of the parties; (d) ask questions of the parties at meetings; and (e) make a short statement at all meetings of the parties. China repeated its request by letter dated 26 November 2014 to the Panel.
1.12.
On 12 December 2014, the Panel rejected China's request for enhanced third party rights in the following terms:

Article 10.2 of the DSU provides that Members may participate in panel proceedings as third parties if they have a "substantial" interest in the matter before the panel. It is well established that panels may grant a third party enhanced rights, provided that such third party's interest in the proceeding extends beyond the "substantial" interest referred to in Article 10.2 of the DSU.

The Panel observes that previous panels have granted enhanced third party rights on the basis of, inter alia, the significant economic effect of the measures at issue on certain third parties8, the importance of trade in the product at issue to certain third parties9, the significant trade policy impact that the outcome of the case could have on third parties maintaining measures similar to the measures at issue10, at least one of the parties agreeing that enhanced third party rights should be granted11, claims that the measures at issue derived from an international treaty to which certain third parties were parties12, third parties having previously been granted enhanced rights in related panel proceedings13, and certain practical considerations arising from a third party's involvement as a party in a parallel panel proceeding.14

China asserts that its interest in DS464 extends beyond being merely "substantial" because the DS464 and 471 proceedings are "parallel", or "significantly overlapped".15 China also asserts that it has an "especially significant interest" in the United States Department of Commerce's (USDOC) use of the methodology at issue in the DS464 proceeding. China contends that it will be "disadvantaged", compared to the United States, in developing arguments in the DS471 proceeding if it cannot "properly appreciate the manner in which issues develop"16 during the DS464 proceeding.

In citing World Trade Organization (WTO) case law where enhanced third party rights have been granted in the context of parallel proceedings, China refers to the two EC – Hormones cases.17 These two cases were separate proceedings brought by Canada and the United States against the same European measure. Both cases were factually intense, were heard by the same panelists, and involved the use of the same scientific experts. Enhanced third party rights were granted in these parallel proceedings for "practical" reasons18, to avoid undue duplication. Similar practical considerations do not arise in the present case, particularly since the panelists in DS464 are different from the panelists in DS471.

Regarding China's assertion that there is "significant overlap" between the issues that are likely to arise in DS464 and 471, the Panel notes that similarity of the legal issues between cases has not been a criterion to grant enhanced third party rights to a third party in one case that is also the complainant in another case. Moreover, the Panel notes that China did not request, pursuant to Article 9.3 of the DSU, that the same panelists should serve on both the DS464 and DS471 cases.19 This would have ensured a harmonized timetable between the cases.

Regarding China's alleged "especially significant interest" in the USDOC's use of the methodology under review by the DS 464 Panel, China refers to the USDOC's use of this methodology in anti-dumping proceedings involving imports from China. China asserts that the USDOC's use of this methodology therefore has a "significant economic impact" on China. The Panel notes that the alleged economic impact of the USDOC's use of the relevant methodology against Chinese imports is what has caused China to bring its own proceeding against this methodology. China will have every right to pursue its own claims – and thereby protect its economic interest – in the DS471 proceeding. Since China is able to defend its interests by bringing its own case, there is no need for China to be granted enhanced third party rights to protect those interests in DS464.

In referring to its "especially significant interest", China seeks to rely on the grant of enhanced third party rights in EC – Bananas III and EC – Tariff Preferences.20 Those disputes involved situations in which third parties were the beneficiaries of the EC programs that were being challenged. The third parties in those cases therefore had highly significant economic interests in the panel proceedings that could not be addressed by them bringing separate cases. This is in marked contrast to the circumstances surrounding China's request, given China's ability to defend its own economic interests by bringing its own case against the United States.

China further suggests that it will be "disadvantaged", compared to the United States, in developing arguments in the DS471 proceeding if it cannot "properly appreciate the manner in which issues develop"21 during the DS464 proceeding. This argument is not persuasive, since China's claims in DS471 will be assessed on their merits by panelists who have not participated in the DS464 proceeding. Those panelists will determine for themselves (through questions, and their conduct of the hearings, for example) how the issues in DS471 should be developed. The manner in which issues develop in DS464 is therefore of little consequence.22 Furthermore, as a regular third party in DS464, China has already received the United States' first written submission in DS464, and therefore has an insight into the nature of the defence being raised by the United States.

Finally, the Panel observes that both parties have expressed their opposition to China's request for enhanced third party rights. The United States has expressed this opposition in two written communications. Korea expressed its opposition orally at the Panel's organizational meeting. China has not provided any reason for us to grant enhanced third party rights over the objections of both parties to the dispute.

1.3.4 The European Union's request concerning the Panel's Working Procedures and the BCI Procedures

1.13.
In its third party submission dated 8 December 2014, the European Union requested the Panel to amend certain aspects of its Working Procedures, and raised a number of reservations regarding the Additional working procedures of the Panel concerning business confidential information (BCI Procedures).23
1.14.
By communication dated 13 February 2015, the Panel rejected the European Union's requests in the following terms:

1.1 The European Union asks the Panel to amend its Working Procedures, in order to allow third parties to receive all communications submitted by the parties, be present throughout the hearings and respond to questions addressed to the parties or other third parties. The European Union also raises a number of reservations regarding the BCI Procedures adopted by the Panel.

1 The Panel's Working Procedures

1.1 Introduction

1.2 The European Union submits that the Working Procedures adopted by the Panel modify Appendix 3 of the DSU in a manner that risks to diminish the rights of third parties. The European Union requests modifications of the Working Procedures to preserve the rights of third parties as envisaged by the DSU.

1.3 The European Union submits24 that the Working Procedures set forth in Appendix 3 of the DSU contemplate two distinguishable stages in a panel proceeding. The European Union states that the first stage involves the parties setting out their case in chief, including a full presentation of claims, facts, evidence and appropriate argument. The second stage involves rebuttals, and the refinement of argument and questions for soliciting explanations. The European Union contends that paragraph 6 of Appendix 3 grants third parties a right to be fully implicated in the first stage and that DSU Articles 10.1 and 10.2 require that third parties have a full view of the cases presented by the parties before presenting their written submissions and exercising their right to be heard. The European Union asserts that paragraph 8 of the Panel's Working Procedures modifies the Appendix 3 Working Procedures "by admitting factual assertions and evidence (and associated argument) filed after the first hearing, notably in rebuttals or responses to questions".25 According to the European Union, this modification "permits to some extent the shifting of fact, evidence and associated argument from the first stage to the second stage", thereby "diminish[ing]"26 the rights of third parties.

1.4 The European Union requests three changes to the Panel's Working Procedures, so as to "fully preserve"27 the rights of third parties. First, the European Union requests that third parties receive all submissions by the parties to the Panel, including first submissions, rebuttals, ruling requests and responses thereto, responses to questions and comments thereon and oral statements. Second, the European Union requests that third parties should be present during the entirety of the first and second substantive meetings. Third, the European Union requests that third parties have an opportunity to respond to questions from the Panel to the parties and other third parties. The European Union supports its requests by referring to prior WTO cases "in which appropriate steps"28 have been taken in relation to third party rights.

1.5 Consistent with Article 12.1 of the DSU, the Panel consulted with the parties regarding the European Union's request. The parties provided written comments regarding this matter on 30 January 2015. Both parties asked the Panel to reject the European Union's request.

1.2 The nature of the European Union's request

1.6 We note that the European Union refers to WTO cases in which "appropriate steps" have been taken to protect third party rights. These are actually cases in which panels granted enhanced third party rights once satisfied that the interest of a third party extended beyond the "substantial" interest envisaged by Article 10.2 of the DSU. However, the European Union does not argue that its interest in the present proceeding extends beyond the "substantial" interest referred to in Article 10.2 of the DSU. Rather, the European Union argues that paragraph 8 of the Working Procedures risks to diminish the rights of third parties, and justifies the rights requested as necessary to preserve the rights of third parties as envisioned by the DSU.

1.3 The rights of third parties

1.7 Before addressing the argument by the European Union, we recall the rights of third parties established in the DSU and Appendix 3. Article 10 establishes a general obligation to fully take into account the interests of the parties to a dispute and those of other Members under a covered agreement. The specific rights of third parties are developed in paragraphs 2 and 3 of Article 10 and paragraph 6 of Appendix 3. Article 10.2 requires a panel to provide an opportunity for third parties to make submissions and present their views to the panel. In turn, the right to present views to the panel is developed in paragraph 6 of Appendix 3 which indicates that third parties shall be invited to a special session of the first substantive meeting of the panel with the parties. Article 10.3 of the DSU mandates that third parties receive the submissions of the parties to the first meeting of the panel.

1.8 These rights are included and developed in paragraphs 15, 16, 17, 18, 20, 21 and 25 (d) of the Panel's Working Procedures. In particular, parties are required to serve on all third parties their written submissions in advance of the first meeting with the Panel; third parties are invited to present written submissions prior to the first substantive meeting of the Panel; and third parties are invited to present their views orally to the panel during a session of the first substantive meeting of the Panel with the parties.

1.4 The Panel's Working Procedures reflect standard panel practice

1.9 Before considering the European Union's arguments in detail, we note that there is nothing novel about the text of paragraph 8 of the Working Procedures. It is a standard provision of panels' Working Procedures. All Working Procedures publicly available29 have an identical or virtually identical provision, except in one case.30 We note that in all these cases, the European Union was either a party or a third party in the dispute. We also note that there is no record in any of these panel Reports of any concern being expressed by the European Union regarding the timeframe for the submission of factual evidence or the rights of third parties.

1.10 The language of paragraph 8 is included in panel Working Procedures in order to regulate the submission of factual evidence. Such discipline is necessary because, as explained below, there is no deadline for the submission of factual evidence provided for in the Working Procedures set forth in Appendix 3 of the DSU.

1.5 Alleged diminishment of third party rights

1.11 With regard to the European Union's assertion that paragraph 8 of the Panel's Working Procedures diminishes the rights of third parties, we recall that the first and second sentences of paragraph 8 provide:

Each party shall submit all factual evidence to the Panel no later than during the first substantive meeting, except with respect to evidence necessary for purposes of rebuttal and answers to questions or comments on answers provided by the other party. Exceptions to this procedure shall be granted upon a showing of good cause.

1.12 The European Union's concern arises in respect of the limited exception provided for in paragraph 8 of the Panel's Working Procedures, because it "admit[s] factual assertions and evidence (and associated argument) filed after the first hearing". The European Union considers that all factual evidence and associated argument should be set out in the first stage of the panel process. The European Union considers that third parties are "fully implicated"31 in this first stage.

1.13 We note that the distinction between the first and second stages of the panel process was drawn by the Appellate Body in Argentina – Textiles. We consider it appropriate to be guided by the findings of the Appellate Body in that case. The Appellate Body was reviewing a decision by the panel to admit certain evidence presented by the United States, the complainant, after the deadline for rebuttal submissions. The panel had granted Argentina, the respondent, two weeks to comment on that evidence. The Appellate Body upheld the panel's decision. In doing so, the Appellate Body observed that:

Under the Working Procedures in Appendix 3, the complaining party should set out its case in chief, including a full presentation of the facts on the basis of submission of supporting evidence, during the first stage. The second stage is generally designed to permit "rebuttals" by each party of the arguments and evidence submitted by the other parties.32

1.14 With respect to the admissibility of factual evidence presented by the United States, the Appellate Body observed that "[t]he Working Procedures in Appendix 3 … do not establish precise deadlines for the presentation of evidence by a party to the dispute."33 The Appellate Body emphasised that the Working Procedures set forth in Appendix 3 "do not constrain panels with hard and fast rules on deadlines for submitting evidence."34 We agree. Since there are no rules in the Appendix 3 Working Procedures governing the submission of evidence, there is no basis for the European Union to suggest that the third party rights provided for in that Appendix are somehow tied to, or dependent on, any requirement that factual evidence should be provided by the parties in the first stage of the panel proceeding. Accordingly, there is no basis for the European Union to allege that paragraph 8 of the Panel's Working Procedures somehow "diminishes" the rights of third parties provided for in Appendix 3 of the DSU by allowing – in exceptional circumstances only – the submission of factual evidence by the parties after the first substantive meeting.

1.15 Furthermore, with respect to the European Union's concern that paragraph 8 of the Panel's Working Procedures allows "associated argument" to be submitted in the second stage of the Panel proceeding, we note that the Appellate Body in Argentina – Textiles stated that the panel might have considered granting Argentina more than two weeks "to respond to the additional evidence"35 presented by the United States. Thus, the Appellate Body accepted that the United States could provide factual evidence after the first stage of the panel proceeding, and noted that Argentina should be afforded sufficient time to prepare comments and/or arguments in respect of that evidence. This due process requirement, which dictates that one party should always be entitled to adduce arguments in respect of factual evidence presented by the other party, no matter at what stage of the panel proceeding it is presented, is established in the last sentence of paragraph 8 of the Panel's Working Procedures.

1.16 In addition, we are not persuaded by the European Union's argument that third parties have a right to be "fully implicated" in the first stage of the panel process. We agree with the Appellate Body's statement in Argentina – Textiles that the first stage of the panel process includes the panel's first substantive meeting with the parties.36 Paragraph 6 of Appendix 3 of the DSU establishes that third parties only attend a separate third party session of the Panel's first meeting with the parties. Third parties are not present when the complainant presents its case to the Panel (pursuant to Paragraph 5 of the Appendix 3 Working Procedures). It is entirely possible that the parties may present new factual evidence to the Panel at this juncture. For example, the complainant may present new factual evidence to the Panel in response to an argument made in the respondent's first written submission. Contrary to the view expressed by the European Union, the Appendix 3 Working Procedures do not provide for third parties to be "fully implicated" in this exchange.

1.6 Conclusion

For the above reasons, we reject the European Union's allegation that the Panel's Working Procedures risk to "diminish" the rights of third parties. Accordingly, we reject the European Union's request to modify our Working Procedures to provide for fuller third party participation in these panel proceedings.

2 The Panel's BCI Procedures

2.1 Introduction

2.1 The European Union expresses a number of "reservations"37 regarding the BCI Procedures adopted by the Panel. First, the European Union considers that a Member's right to submit BCI to the Panel should not be conditioned on the provision of an authorising letter from the entity that submitted that information to the investigating authority in the underlying investigation. Second, the European Union considers that a Member may not be required to follow the designation for confidential information used in the underlying investigation. Third, the European Union considers that the designation of information as BCI in panel proceedings is ultimately a matter for the Panel, and may not be absolutely delegated to the investigating authority or any interested party. Accordingly, the European Union considers that the BCI Procedures should contain a challenge clause by which the designation proposed by the party providing the relevant information may be challenged by the other party and third parties.

2.2 Consistent with Article 12.1 of the DSU, the Panel consulted with the parties regarding the issues raised by the European Union. The parties provided written comments regarding this matter on 30 January 2015. Neither party shared the reservations expressed by the European Union.

2.2 Absence of any third party interest, or support from the parties

2.3 The European Union has not argued that the Panel's BCI Procedures have any specific implications for the rights and interests of third parties. Nor has the European Union identified any respect in which the Panel's BCI Procedures have impacted on its participation in the present proceeding.

2.4 Furthermore, in accordance with Article 12.1 of the DSU, the Panel's BCI Procedures were adopted in consultation with the parties. Neither party expressed any concern with the proposed BCI Procedures during those consultations. In the absence of any support from the parties for the reservations expressed by the European Union, we see no basis on which we should amend the BCI Procedures at this juncture.

2.3 Conclusion

2.5 For the above reasons, we do not consider that there is any need for us to modify our BCI Procedures in light of the "reservations" raised by the European Union.

2 FACTUAL ASPECTS

2.2.
Korea's claims under the Anti-Dumping Agreement concern certain aspects of the USDOC's approach to the comparison methodology provided for in the second sentence of Article 2.4.2 of the Anti-Dumping Agreement (weighted average to individual export transactions – W-T comparison methodology). Korea challenges certain aspects of the methodologies used by the USDOC to determine whether the conditions for the application of the W-T comparison methodology are met. Specifically, Korea challenges (i) the methodology used to apply the second sentence of Article 2.4.2 in the Washers anti-dumping investigation (the Nails II methodology); (ii) the methodology that replaced the Nails II methodology (the Differential Pricing Methodology or the DPM) "as such"; (iii) the DPM "as applied" in the first administrative review of the Washers anti-dumping order; and (iv) the ongoing and future application of the DPM in the context of the USDOC's Washers anti-dumping proceeding. Korea also challenges the USDOC's use of zeroing in the context of the W-T comparison methodology. Specifically, Korea challenges (i) "as such" the rule or norm pursuant to which the USDOC engages in zeroing; and (ii) zeroing "as applied" in the Washers anti-dumping investigation.
2.3.
Korea's claims under the SCM Agreement concern the USDOC's determinations that two tax credit subsidy programmes are specific. Korea also raises claims under the SCM Agreement and the GATT 1994 challenging the manner in which the USDOC calculated the amount of subsidy conferred on Samsung under those programmes.

2.1 THE MEASURES AT ISSUE

3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

3.1.
With respect to the anti-dumping measures, Korea requests that the Panel finds that38:

a. The USDOC's use of "zeroing" under the W-T comparison methodology in anti-dumping investigations, administrative reviews and other segments of anti-dumping proceedings involving the second sentence of Article 2.4.2 is inconsistent, "as such", with the Anti-Dumping Agreement and the GATT 1994 in the following respects:

i. The use of zeroing invariably results in the USDOC disregarding or artificially setting to zero the results of W-T comparisons when aggregating those results for the purposes of calculating the margin of dumping for the product as a whole and for each individual exporter or foreign producer. For this reason, it is "as such" inconsistent with the second sentence of Article 2.4.2 of the Anti-Dumping Agreement, and as a consequence, also "as such" inconsistent with Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT;

ii. The use of the zeroing methodology invariably results in the results of intermediate W-T comparisons being disregarded or artificially set to zero, thus increasing the resulting margins of dumping and making an affirmative dumping determination more likely. For this reason, the use of zeroing is "as such" inconsistent with Article 2.4 of the Anti-Dumping Agreement; and

iii. The USDOC systematically levies anti-dumping duties in excess of the margin of dumping properly established under Article 2 of the Anti-Dumping Agreement. For this reason, the use of zeroing in administrative reviews is "as such" inconsistent with Article 9.3 of the Anti-Dumping Agreement, and Article VI:2 of the GATT 1994.

b. The USDOC's use of "zeroing" in the original Washers determination and in subsequent connected stages of Washers is inconsistent with the following provisions of the Anti-Dumping Agreement and the GATT 1994:

i. Article 2.4 and Article 2.4.2 of the Anti-Dumping Agreement, which require that investigating authorities fully take into account the results of intermediate W-T comparisons when calculating the margin of dumping for the product under consideration and for each investigated exporter or foreign producer;

ii. Article 2.1 of the Anti-Dumping Agreementand Article VI:1 of the GATT 1994, which require that investigating authorities determine the dumping margin for the product as a whole; and

iii. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994, which require that investigating authorities levy anti-dumping duties not in excess of the margin of dumping properly established under Article 2 of the Anti-Dumping Agreement.

c. The USDOC's methodologies for invoking the second sentence of Article 2.4.2 of the Anti-Dumping Agreement are inconsistent with the obligations set forth in that provision "as applied" in the Washers anti-dumpinginvestigation, as ongoing conduct in subsequent connected stages of the Washers proceedings, and "as such" in respect of the DPM, in the following respects:

i. Both under the methodology used in the Washers anti-dumping investigation and the DPM that has replaced it, the USDOC applies fixed numerical criteria to determine whether there is a "pattern of export prices which differ significantly" among customers, regions or time periods, and categorically rejects the relevance to its inquiry of the commercial context in which the alleged pattern of significant pricing differences arise;

ii. Both under the methodology used in the Washers anti-dumping investigation and the DPM that has replaced it, the USDOC provides no explanation as to why the price differences it found cannot be taken into account appropriately by resort to either the average-to-average or transaction-to-transaction methodology; and

iii. Both under the methodology used in the Washers anti-dumping investigation and the DPM that has replaced it, the USDOC applies the exception provided for in the second sentence of Article 2.4.2 to transactions that even the USDOC agrees do not meet its own criteria for determining "targeted dumping" or "differential pricing" rather than limiting the exception to those transactions that are found to be targeted or differentially priced.

d. The USDOC's DPM is also inconsistent "as such" with the obligations in Article 2.4.2, because the USDOC does not effectively identify or analyse a "pattern" of prices charged by the exporter to any purchaser, or in any region or time period, as required by both the second sentence of Article 2.4.2 and the U.S. statute. Rather, the USDOC simply compares each individual price separately with the exporter's other U.S. prices.

e. Furthermore, the USDOC's use of "systemic disregarding" in the calculation of the dumping margin in the DPM is inconsistent with the Anti-Dumping Agreement and the GATT 1994.

f. The United States' measures discussed above are also inconsistent with Article 1 of the Anti-Dumping Agreement.

3.2.
With respect to the countervailing measures, Korea requests that the Panel finds that the USDOC acted inconsistently with certain of the United States' obligations under the GATT 1994 and the SCM Agreement in the countervailing duty proceeding entitled LRWs from the Republic of Korea, including:

With Respect to RSTA Article 10(1)(3)

a. Article 1.2 and Article 2.1(c) of the SCM Agreementbecause:

i. the USDOC erred when it determined that the respondent Samsung received a de facto specific subsidy under Article 10(1)(3) of Korea's RSTA, which automatically provided tax credits to all Korean corporate taxpayers that made certain specified types of investments;

ii. the USDOC incorrectly determined that Samsung received a disproportionately large amount of the tax credits available under Article 10(1)(3) of RSTA; and

iii. the USDOC failed to take into account the extent of diversification of economic activities within Korea, as well as the length of time during which Article 10(1)(3) of RSTA had been in effect before determining that Samsung had received a disproportionately large amount of the tax credits provided under the Article.

b. Article VI:3 of the GATT 1994 because the USDOC imposed countervailing duties on Samsung attributable to tax credits that it received for investments it made under Article 10(1)(3) of RSTA pertaining to products other than the products subject to investigation, i.e. products other than LRW.

c. Article 1.1 and Article 14 of the SCM Agreementbecause:

i. the USDOC erroneously overstated the amount of the financial contribution that the Government of Korea provided and the resulting benefit that it conferred on Samsung when it failed to recognize that the tax credits provided under Article 10(1)(3) of RSTA benefitted products that Samsung manufactured in locations outside Korea; and

ii. the USDOC did not provide a reasoned and adequate explanation of why it failed to take into account in its benefit calculation the fact that the investments that generated the tax credits provided under Article 10(1)(3) of RSTA benefitted products that Samsung manufactured in locations outside Korea.

d. Article 19.4 of the SCM Agreementbecause the USDOC levied countervailing duties on imported products in excess of the amount of the subsidy found to exist, calculated in terms of subsidization per unit of the subsidized and exported product.

With Respect to RSTA Article 26

e. Article 1.2 and Article 2.2 of the SCM Agreementbecause the USDOC erroneously found that Article 26 of RSTA provided a specific subsidy because it was limited to certain enterprises located within a designated geographical region notwithstanding that the tax credits under Article 26 were generally available throughout Korea.

f. Article VI:3 of the GATT 1994 because the USDOC imposed countervailing duties on Samsung attributable to tax credits that it received for investments it made under Article 26 of RSTA pertaining to products other than the products subject to investigation, i.e. products other than LRW.

g. Article 19.4 of the SCM Agreementbecause, inter alia, the USDOC levied countervailing duties on imported product in excess of the amount of the subsidy found to exist, calculated in terms of subsidization per unit of the subsidized and exported product.

h. The United States' measures discussed above are also inconsistent with Article 10 and Article 32.1 of the SCM Agreement.

3.3.
The United States requests that the Panel reject all of Korea's claims in this dispute in their entirety.

4 ARGUMENTS OF THE PARTIES

4.1.
The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 19 of the Working Procedures adopted by the Panel (see Annexes B and C).

5 ARGUMENTS OF THE THIRD PARTIES

5.1.
The arguments of Brazil, Canada, China, the European Union, Japan, Norway, Thailand, Turkey, and Viet Nam are reflected in their executive summaries, provided in accordance with paragraph 20 of the Working Procedures adopted by the Panel (see Annex D). India and Saudi Arabia did not submit written or oral arguments to the Panel.

6 INTERIM REVIEW

6.1.
On 14 October 2015, the Panel submitted its Interim Report to the parties. On 28 October 2015, Korea and the United States each submitted written requests for the review of precise aspects of the Interim Report. On 4 November 2015, both parties submitted comments on each other's requests for review. Neither party requested an interim review meeting.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the Panel's response to the parties' requests made at the interim review stage. The Panel modified aspects of its Report in the light of the parties' comments where it considered it appropriate, as explained below. Due to changes as a result of our review, certain numbering of the paragraphs and footnotes in the Final Report has changed from the Interim Report. The text below refers to the numbers in the Interim Report, with the numbers in the Final Report in parentheses for ease of reference.
6.3.
In addition to the modifications specified below, the Panel also corrected a number of typographical and other non-substantive errors throughout the Report, including those identified by the parties. The Panel is grateful for the assistance of the parties in this regard.

6.1 ANTI-DUMPING CLAIMS

6.1.1 Korea's requests for review of precise aspects of the Interim Report

6.1.1.1 Paragraph 7.9 and Paragraph [7.188]39 (paragraphs 7.9 and 7.188 of the Final Report)

6.4.
Korea requests the Panel to change the reference to "anti-dumping investigation" in these paragraphs to "anti-dumping proceeding", so as to avoid any confusion about the applicability of Article 2.4.2 to both original investigations and administrative reviews in this dispute.
6.5.
The United States does not object to this request.
6.6.
We have decided to make certain editorial changes to paragraphs 7.9 and 7,188 of the Interim Report to avoid possibly prejudging whether or not the second sentence of Article 2.4.2 would apply to administrative reviews.

6.1.1.2 Paragraph 7.11 (paragraph 7.11 of the Final Report)

6.7.
Korea requests the Panel to add a footnote to identify the evidentiary basis for its factual statement that the USDOC applied the W-T comparison methodology to all export transactions.
6.8.
The United States does not support this request. The United States argues that the proposed footnote does not contain any reference to the record evidence. Moreover, the United States disagrees with Korea that the United States "concedes" that the USDOC applied the W‑T comparison methodology to all export transactions.
6.9.
We consider it appropriate to include the evidentiary basis for this factual statement. However, we agree with the United States that the footnote proposed by Korea does not identify evidence to support the fact that the USDOC applied the W-T comparison methodology to all export transactions. Accordingly, we refer in a footnote to the Issues and Decision Memorandum in the Washers anti-dumping investigation (Exhibit KOR-18, pp33-34.) instead.

6.1.1.3 Paragraph 7.12 (paragraph 7.12 of the Final Report)

6.10.
Korea requests the Panel to supplement its summary of Korea's arguments on the term "such differences".
6.11.
The United States does not support this request. The United States points out that Korea has not proposed a revision to the paragraph. Moreover, according to the United States, the argument Korea seeks to add is presented in Korea's second written submission and not one of Korea's main arguments.
6.12.
We have decided to accommodate Korea's request, despite Korea's failure to propose specific text. Furthermore, we do not agree with the United States that arguments presented in the second written submission may not form part of a party's main arguments.

6.1.1.4 Paragraph 7.33 (paragraph 7.33 of the Final Report)

6.13.
Korea requests the Panel to clarify in this paragraph that Korea does not argue that an investigating authority must consider the intent of the exporter under the pattern clause.
6.14.
The United States does not object to this request. However, to the extent that the Panel agrees to Korea's request, the United States requests the Panel to modify paragraph 7.37 to clarify that the United States' argument was not limited only to the intent of the exporter. According to the United States, it argued, more broadly, that an investigating authority need not consider the reasons why export prices differ significantly among different purchasers, regions, or time periods.
6.15.
We have decided to accommodate Korea's request. Concerning the counter-request of the United States to modify paragraph 7.37 of the Interim Report, we note that the current text is essentially a verbatim reproduction of the United States' argument to the Panel. Accordingly, there is no reason to make the modification proposed by the United States.

6.1.1.5 Paragraph 7.71 (paragraph 7.71 of the Final Report)

6.16.
Korea requests the Panel to include discussion of the context of the term "appropriately" under the explanation clause before turning to the object and purpose of the second sentence of Article 2.4.2, in order to reinforce the Panel's interpretation of the explanation clause.
6.17.
The United States does not support Korea's request. The United States notes first that Korea has failed to propose a revision. In addition, the United States does not agree that Korea's proposed addition of further contextual discussion would enhance the clarity of the paragraph or the Panel's interpretation generally. The United States argues that paragraphs 140‑148 of Korea's second written submission do not explain how the terms "explanation" and "cannot" could or should inform, as context, the interpretation of the term "appropriately".
6.18.
We have decided not to accommodate Korea's request. In the absence of a proposed revision from Korea, it is not clear to us how Korea's proposed additional discussion of the context of the term "appropriately" would enhance the clarity of our interpretation of that term.

6.1.1.6 Paragraph 7.76 and footnote 130 (paragraph 7.76 and footnote 134 of the Final Report)

6.19.
Korea requests the Panel to modify a footnote to supplement the factual support for the fact that the USDOC did not consider the alternative explanations provided by the interested parties in the Washers anti-dumping investigation.
6.20.
The United States does not support Korea's request, because the proposed footnote, which relates to the USDOC's application of the pattern clause, is not relevant to the discussion of the explanation clause in this paragraph and footnote.
6.21.
We have decided not to accommodate Korea's request. As the United States correctly observes, the specific passage from the Washers I&D Memorandum which Korea refers to in its request concerns the USDOC's refusal to consider the reasons for the price differences in the context of its application of the pattern clause. It does not concern the USDOC's application of the explanation clause.

6.1.1.7 Paragraph 7.99 (paragraph 7.99 of the Final Report)

6.22.
Korea requests the Panel to add a footnote to identify the USDOC documents referred to by the Panel.
6.23.
The United States does not object to this request. However, the United States notes that the parenthetical descriptions proposed by Korea do not appear to be neutral.
6.24.
We have decided to accommodate Korea's request, taking into account the United States' concern over the neutrality of the description used.

6.1.1.8 Paragraph 7.100 (paragraph 7.100 of the Final Report)

6.25.
Korea requests the Panel to correct a factual inaccuracy with regard to the Xanthan Gum document discussed in this paragraph and in footnote 190.
6.26.
The United States makes a similar request.
6.27.
We have corrected the inaccuracy identified by the parties.

6.1.1.9 Paragraph 7.102 (paragraph 7.102 of the Final Report)

6.28.
Korea requests the Panel to insert a footnote to clarify the relationship between Exhibits KOR-33 and KOR-67.
6.29.
The United States makes no comment on this request.
6.30.
We have inserted the footnote as requested by Korea.

6.1.1.10 Paragraph 7.106 (paragraph 7.106 of the Final Report)

6.31.
Korea requests the Panel to address the distinction between changes that can be made to the DPM in theory and changes that have been made in fact.
6.32.
The United States does not support Korea's request. The United States argues that the points raised by Korea have been addressed by the Panel at, inter alia, paragraphs 7,111-7.112 and 7,115 of the Interim Report, and that it would not improve the Report to repeat those discussions at this paragraph.
6.33.
We have decided not to accommodate Korea's request. The points raised by Korea are already addressed by the Panel at, inter alia, paragraphs 7,111-7.112 and 7,115 of the Interim Report.

6.1.1.11 Paragraph 7.111 (paragraph 7.111 of the Final Report)

6.34.
Korea requests the Panel to expand the discussion on the evidentiary issues concerning the DPM.
6.35.
The United States does not support Korea's request, because Korea's proposed addition is already addressed in paragraphs 7,115 and 7,106 of the Interim Report.
6.36.
We have decided not to accommodate this request. As Korea itself acknowledges in its request, the matter raised by Korea is already addressed by the Panel later on in paragraph 7,115 of the Interim Report.

6.1.1.12 Paragraph 7.112 (paragraph 7.112 of the Final Report)

6.37.
Korea suggests that the Panel appears to be addressing Exhibit USA-21 in this paragraph. On this basis, Korea requests the Panel to state clearly that the Panel's discussion in this paragraph relates to the points made by the United States in Exhibit USA-21.
6.38.
The United States does not support Korea's request, because the United States submitted Exhibit USA-21 to support a different proposition from the Panel's discussion at this paragraph.
6.39.
We have decided not to accommodate Korea's request. In paragraph 7,112 of the Interim Report, we addressed the issue of whether the DPM is of general and prospective application. On the contrary, Exhibit USA-21 relates to the United States' argument that the DPM cannot be found to be inconsistent with Article 2.4.2 "as such" because it does not result in the application of the W-T comparison methodology in all cases. We addressed the latter argument of the United States at paragraphs 7,145 and 7,146 of the Interim Report.

6.1.1.13 Paragraph 7.113 (paragraph 7.113 of the Final Report)

6.40.
Korea requests the Panel to add a cross-reference to the point made at paragraph 7,105 of the Interim Report that the actual SAS code in four proceedings over two years is identical. Korea argues that this fact also supports the general and prospective application of the DPM.
6.41.
The United States does not support Korea's request. The United States argues that adding the cross-reference would not improve the clarity given that the first sentence of paragraph 7,113 of the Interim Report already refers to the Naschak affidavit and describes Korea's reliance on it.
6.42.
We have decided not to accommodate Korea's request, because the first sentence of paragraph 7,113 already refers to the conclusion of the Naschak affidavit on the consistent application of the DPM as enshrined in the SAS code without any material changes.

6.1.1.14 Paragraphs 7.118 and 7.119 (paragraphs 7.118 and 7.119 of the Final Report)

6.43.
Korea requests the Panel to clarify the evidentiary basis for its factual statements about the DPM.
6.44.
The United States does not support Korea's request, because paragraph 7,118 of the Interim Report does not appear to contain any factual statements or factual findings made by the Panel.
6.45.
We do not consider it necessary to make the changes requested by Korea. As Korea itself recognises, the evidentiary basis of our factual statements is discussed in detail in Section 7.4.1 of the Interim Report where we addressed the issue of whether the DPM can be challenged "as such".

6.1.1.15 Paragraph 7.138 and footnotes 256 and 257 (paragraph 7.138 and footnotes 268 and 269 of the Final Report)

6.46.
Korea requests the Panel to include in these footnotes additional citations of various evidence supporting the factual statements of the Panel concerning the DPM.
6.47.
The United States does not object to Korea's request. However, the United States notes that Korea's description of paragraphs 63-69 of the United States' second written submission is incorrect.
6.48.
The evidentiary basis of our factual statements is already discussed in detail in Section 7.4.1 of the Interim Report where we addressed the issue of whether the DPM can be challenged "as such". Nevertheless, in the absence of any opposition from the United States, we have decided to accommodate Korea's request, with the exception of the reference to paragraphs 63-69 of the United States' second written submission.

6.1.1.16 Paragraph 7.149 (paragraph 7.149 of the Final Report)

6.49.
Korea requests the Panel to add a citation for the factual statement that the DPM sets to zero any negative comparisons results from the W-W comparison. In addition, Korea requests the Panel to modify the fourth sentence of this paragraph to more accurately reflect Korea's arguments.
6.50.
The United States does not support Korea's request, because this paragraph does not appear to set forth factual statements or factual findings made by the Panel.
6.51.
This paragraph concerns the summary of Korea's arguments on "systemic disregarding"40. Although this paragraph does not set forth our factual finding, we have decided to accommodate Korea's request in order to complete the evidentiary record.

6.1.1.17 Paragraphs 7.171, 7.193 and 7.209 (paragraphs 7.171, 7.193 and 7.209 of the Final Report)

6.52.
Concerning paragraph 7,171 of the Interim Report, Korea requests the Panel to make certain factual findings concerning the USDOC's application of the second sentence of Article 2.4.2 in the first administrative review of the Washers anti-dumping order. In particular, Korea requests the Panel to confirm that the DPM as applied in the first administrative review of the Washers anti‑dumping order is the same DPM with the same features as described by the Panel.
6.53.
Concerning paragraphs 7,193 and 7,209 of the Interim Report, Korea requests the Panel to make certain factual findings to confirm that the USDOC's application of zeroing in the context of the W‑T comparison methodology in the first administrative review of the Washers anti-dumping order is the same as the Panel has found more generally.
6.54.
The United States does not support Korea's requests. The United States argues that the Panel's decision not to review Korea's "as applied" claims concerning the first administrative review of the Washers anti-dumping order is sound. Moreover, since the Panel has determined that it is not necessary for it to address the procedural issue whether the first administrative review of the Washers anti-dumping order is within its term of reference, the United States argues that the Panel should not make the factual findings concerning claims or measures that have not been determined to be within its terms of reference. In addition, concerning Korea's proposed modification related to Exhibit KOR-141, the United States argues that since the Panel has determined it not necessary to make a ruling concerning the admissibility of Exhibit KOR-141, it would not be appropriate for the Panel to make factual findings on the basis of Exhibit KOR-141.
6.55.
We have decided not to accommodate Korea's requests. There is no basis for us to make factual findings in respect of claims for which we have exercised judicial economy.

6.1.2 United States' requests for review of precise aspects of the Interim Report

6.1.2.1 Paragraphs 1.11 and 1.14 (paragraphs 1.11 and 1.14 of the Final Report)

6.56.
The United States requests the Panel to modify these paragraphs in order to place greater weight on (i) the importance of the views of the parties to the dispute; (ii) the greater obligations that would be imposed on the parties than those set out in the DSU; and (iii) derogation from certain rights of the parties under the DSU, when considering third parties' requests for additional procedural rights. The United States argues that the fact that both Korea and the United States agreed that additional third party rights should not be granted provides sufficient basis to decline the request.
6.57.
Korea makes no comment on this request.
6.58.
We have decided not to accommodate the United States' request. We do not agree with the United States that the parties' objections necessarily provide sufficient basis for the Panel to reject requests for additional third party rights.

6.1.2.2 Paragraph 2.2 (paragraph 2.2 of the Final Report)

6.59.
The United States requests the Panel to specify each proceeding by indicating its type, e.g. anti-dumping investigation or countervailing investigation.
6.60.
Korea makes no comment on this request.
6.61.
We have decided to accommodate this request of the United States by making the necessary changes to this paragraph and paragraphs 7.29, 7.30, 7.44, 7.65, 7.70, 7.74 and 7,173 of the Interim Report.

6.1.2.3 Paragraph 2.4 (paragraph 2.4 of the Final Report)

6.62.
The United States requests the Panel to qualify the measures that Korea has challenged in this paragraph with the wording "alleged measures", because the United States disputed that the DPM is a measure challengeable "as such".
6.63.
Korea makes no comment on this request.
6.64.
We have decided to accommodate the United States' request.

6.1.2.4 Paragraph 7.10, footnote 48 (paragraph 7.10, footnote 54 of the Final Report)

6.65.
The United States requests the Panel to make certain changes to the Panel's description of the operation of the NailsII methodology in footnote 48 to ensure the accuracy of the Report. In particular, the United States requests the Panel to use the term "standard deviation test" instead of "pattern test" to describe the first step of the NailsII methodology. Moreover, the United States requests the Panel to also clarify that the NailsII methodology only looks at export sales for which there is an allegation of targeted dumping and that the "gap test" only looks at export prices that pass the "standard deviation test".
6.66.
Korea makes no comment on this request.
6.67.
We note that in describing the first stage of the NailsII methodology, Korea has used the term "pattern test" in its written submissions.41 On the contrary, the United States has referred the first stage of the NailsII methodology as the "standard deviation test" in its written submissions, its responses to the Panel's questions and the Washers Final AD I&D Memo (Exhibit KOR-18). In the absence of any comments from Korea, we have decided to accommodate the request of the United States in this respect. For the same reason, we have also changed the reference to "pattern test" under paragraph 7.18 of the Interim Report to "standard deviation test". We have also accommodated the United States' request to clarify other aspects of the description of the NailsII methodology.

6.1.2.5 Paragraph 7.14 (paragraph 7.14 of the Final Report)

6.68.
The United States requests the Panel to modify the first sentence of this paragraph to accurately reflect the United States' arguments as set out in paragraphs 149 and 150 of its first written submission. The United States contends that it does not argue that the term "pattern of export prices" would necessarily include all export prices in all situations. The United States points out that in the context of the application of the NailsII methodology in the Washers anti-dumping investigation, all of the export prices examined constituted the "pattern". In certain situations where the DPM is applied, the pattern identified by the USDOC did not include all export prices.
6.69.
Korea makes no comment on this request.
6.70.
We have decided to partially accommodate the United States' request. As the heading of this section of the Interim Report indicates (i.e. "Claims concerning the USDOC's application of the W-T comparison methodology in the Washers investigation"), the Panel's summary of the United States' arguments and its analysis in this paragraph are precisely made in the context of the USDOC's application of the NailsII methodology in the Washers anti-dumping investigation, and do not concern the DPM. Therefore, it would be inaccurate to delete the reference to "all of the export prices examined" completely, as the United States requested. We have modified the first sentence of this paragraph in the following manner:

The United States asserts that even if the W-T comparison methodology were only allowed to be applied to pattern transactions, the relevant "pattern of export prices" necessarily includes all export prices, including both lower and higher export prices that "differ significantly" from each other. The United States contends that an export price cannot "differ significantly" on its own. The United States asserts that because "difference" is a comparative or relative concept, for something to be different, it must differ from something else. The United States therefore contends that lower export prices, which likely do not differ significantly from one another, cannot form a "pattern of export prices which differ significantly" without reference within that pattern to the higher export prices from which they differ significantly. The United States argues that, in the Washers anti-dumping investigation, because the pattern identified by the USDOC comprised of all of the exporter's US sales, the USDOC's application of the W-T comparison methodology to all export sales is not at odds with the Appellate Body's statement in US – Zeroing (Japan) that an investigating authority may limit the application of the W-T comparison methodology to the prices of export transactions falling within the relevant pattern.

6.1.2.6 Paragraph 7.28 (paragraph 7.28 of the Final Report)

6.71.
For the same reasons given with respect to paragraph 7.14 above, the United States requests the Panel to modify its summary of the United States arguments in this paragraph.
6.72.
Korea makes no comment on this request.
6.73.
We have decided to accommodate this request of the United States.

6.1.2.7 Paragraph 7.32 (paragraph 7.32 of the Final Report)

6.74.
The United States requests the Panel to change the word "exception" to "exceptional comparison methodology" in this paragraph to enhance clarity.
6.75.
Korea makes no comment on this request.
6.76.
We have decided to accommodate this request of the United States.

6.1.2.8 Paragraph 7.70 (paragraph 7.70 of the Final Report)

6.77.
The United States requests the Panel to add the word "meaningfully" before the word "lower" in its summary of the USDOC's application of the explanation clause in the Washers anti‑dumping investigation. The United States argues that the absence of the word "meaningfully" could be construed as suggesting that the USDOC was looking for any difference whereas the USDOC looked for a "meaningful" difference in the margins of dumping in the Washers anti‑dumping investigation.
6.78.
Korea disagrees with the request of the United States. Korea's first concern is that the USDOC used inconsistent terminology in the Washers anti-dumping investigation: "material difference" in the preliminary determination and "meaningful difference" in the final determination. Korea's second concern is that the USDOC does not explain what "meaningful" difference means. For this reason, Korea considers it more appropriate not to add the word "meaningful".
6.79.
We have decided to accommodate the request of the United States, by adding the wording "'materially' or 'meaningfully'" before the word "lower" in this paragraph. We have also addressed Korea's concerns above by adding a footnote to the effect that in its preliminary and final determinations of the Washers anti-dumping investigation, the USDOC did not define or explain the meaning of the terms "material" or "meaningful".

6.1.2.9 Paragraph 7.76 (paragraph 7.76 of the Final Report)

6.80.
The United States requests the Panel to insert a footnote to indicate the quoted statement from the United States' response to the Panel's question. The United States also requests the Panel to modify the quoted statement and the third sentence of this paragraph to more accurately reflect its arguments.
6.81.
Korea makes no comment on these requests.
6.82.
We have decided to accommodate the request of the United States concerning the quoted statement. Concerning the third sentence of this paragraph, we have decided to accommodate the United States' request, albeit not in the exact manner as suggested by the United States.

6.1.2.10 Paragraph 7.100 and footnote 190 (paragraph 7.100, footnote 195 of the Final Report)

6.83.
Similar to Korea's request concerning this paragraph, the United States requests the Panel to make certain modification to enhance accuracy.
6.84.
Korea makes no comment on this request.
6.85.
We have decided to accommodate the United States' request.

6.1.2.11 Paragraph 7.101 (paragraph 7.101 of the Final Report)

6.86.
The United States requests the Panel to modify this paragraph to accurately describe the DPM.
6.87.
Korea makes no comment on this request.
6.88.
We have decided not to accommodate the United States' request. This paragraph accurately reflects the USDOC's description of the DPM in the Post-Preliminary Analysis Memorandum in Xanthan Gum. The elements which the United States requests to add to this paragraph are not present in the USDOC's description of the DPM in the text quoted in paragraph 7,100 of the Interim Report.

6.1.2.12 Paragraph 7.130 (paragraph 7.130 of the Final Report)

6.89.
The United States requests the Panel to modify the last sentence of this paragraph to enhance clarity.
6.90.
Korea makes no comment on this request.
6.91.
We have decided to accommodate the United States' request.

6.1.2.13 Paragraph 7.148 et seq. (paragraph 7.148 et seq. of the Final Report)

6.92.
The United States notes that Korea used the term "systemic disregarding" rather than "systematic disregarding" in its submissions. Moreover, the United States requests the Panel to replace the term "systematic disregarding" used by the Panel in this paragraph and elsewhere in the Interim Report (except where reference is made to specific arguments made by Korea or third parties) with a more neutral term for describing the USDOC's approach of not providing any offsets when combining the results of mixed W-W and W-T comparison methodologies. The United States also disagrees that the USDOC's approach when combining the comparison results from mixed comparison methodologies can fairly be characterised as "disregarding".
6.93.
Korea disagrees with the suggested change by the United States. Korea contends that the Panel has consistently referred to "systematic disregarding" with quotation marks to indicate that this term is a shorthand reference adopted by Korea. Moreover, Korea argues that this phrase is not unbalanced. Rather, the phrase is descriptive in that the negative results of certain comparisons are in fact being "disregarded" and replaced with something else. Korea further argues that the term "disregarding" and the phrase "systematically disregarding" have been used repeatedly by the Appellate Body in describing the USDOC refusal to consider negative comparison results in determining dumping margins.42
6.94.
We have decided not to accommodate the United States' request to replace "systemic disregarding" with a more neutral term. First, it would not be unbalanced for us to use this term. We note that in addition to referring to this term with quotation marks, we have also qualified the term with the wording "so-called" to indicate that this term is used only as a shorthand reference. Moreover, in the absence of a proposed more neutral term from the United States, it is not inappropriate for us to use the term "systemic disregarding" as a shorthand reference. However, we have decided to accommodate the United States request to use the term "systemic disregarding" rather than "systematic disregarding".

6.1.2.14 Paragraph 7.150 (paragraph 7.150 of the Final Report)

6.95.
The United States requests the Panel to modify the wording of the first sentence of this paragraph to enhance clarity.
6.96.
Korea makes no comment on this request.
6.97.
We have decided to accommodate the United States' request.

6.1.2.15 Paragraph 7.178 and footnote 311 (paragraph 7.178 and footnote 319 of the Final Report)

6.98.
The United States requests the Panel to modify the second sentence of this paragraph to accurately reflect its argument, and to supplement the summary of the United States' arguments related to Korea's zeroing claims.
6.99.
Korea makes no comment on these requests.
6.100.
We have decided to accommodate the United States' requests.

6.1.2.16 Paragraph 7.196 (paragraph 7.196 of the Final Report)

6.101.
The United States requests the Panel to modify the wording in the first sentence of this paragraph to enhance accuracy. According to the United States, the use of zeroing does not artificially reduce intermediate W-T comparison results to zero, but in fact raises or changes negative margins to zero. The United States therefore requests the Panel to replace the word "reduced" with "raised" or "changed".
6.102.
Korea makes no comment on this request.
6.103.
While this paragraph reflects accurately Korea's arguments regarding zeroing in the context of the W-T comparison methodology43, the United States is correct to state that the use of zeroing does not reduce to zero any negative results. We have therefore decided to accommodate the United States' request by replacing the phrase "reduced to zero" to "set to zero" in this paragraph and paragraph 3.1 of the Interim Report.

6.2 SUBSIDIES CLAIMS

6.2.1 Korea's requests for review of precise aspects of the Interim Report

6.2.1.1 General comment

6.104.
Korea asks the Panel to replace the phrase "disproportionate amounts" with the phrase "disproportionately large amounts", to accurately reflect the text of Article 2.1(c).
6.105.
The United States does not object to Korea's request.
6.106.
We have decided to accommodate the change requested by Korea.

6.2.1.2 Paragraph 7.213 (paragraph 7.213 of the Final Report)

6.107.
Korea asks the Panel to replace the phrase "without reference to" in the last sentence with the phrase "without including".
6.108.
The United States does not object to Korea's request.
6.109.
We have decided to accommodate the change requested by Korea.

6.2.1.3 Paragraphs 7.217, 7.244 (footnote 401), and 7.249 (footnote 410) (paragraphs 7.217, 7.245 (footnote 415), 7.250 (footnote 424) of the Final Report)

6.110.
Korea asks the Panel to amend, clarify or expand its description of Korea's arguments.
6.111.
The United States does not object to Korea's request in respect of para. 7,217 of the interim Report. Regarding footnote 401, the United States asserts that the material referred to by Korea is irrelevant to the specific point made by the Panel in that footnote. The United States contends that if the Panel nonetheless wishes to include this material at the end of footnote 401, then the Panel should also include a summary of the U.S. position on the relevant issues.
6.112.
Regarding footnote 410, the United States suggests that, if the Panel decides to include the material requested by Korea, the insertion should occur after the first sentence of this footnote, as a summary of Korea's position. The United States believes that placing this material after the final sentence, which contains the Panel's evaluation, could give rise to confusion.
6.113.
We agree in principle to the changes requested by Korea. With respect to footnote 401, though, we have decided that the additional arguments cited by Korea should be included at the end of paragraph 7,219 of the Interim Report, which describes Korea's main argument against the remand determination. As noted above, the additional arguments alluded to by Korea do not pertain to the matter addressed in footnote 401. We have also decided to include the U.S. arguments concerning this matter, as requested by the United States.
6.114.
Regarding footnote 410, we have decided to accommodate the United States' suggestion to include Korea's text after the first sentence of the footnote.

6.2.1.4 Paragraph 7.[254], footnote 42044 (paragraph 7.255 of the Final Report)

6.115.
Korea asks the Panel to clarify that the United States merely alleged that the USDOC took the two mandatory factors into account.
6.116.
The United States denies that the mandatory factors were only allegedly taken into account. The United States contends that it has identified language in the USDOC redetermination confirming that they were taken into account.
6.117.
In order to avoid any confusion, we have decided to delete footnote 420 of the Interim Report.

6.2.1.5 Paragraph 7.256 (paragraph 7.257 of the Final Report)

6.118.
Korea asks the Panel to include specific arguments made by Korea in this paragraph.
6.119.
The United States asserts that paragraph 7,256 does not purport to summarize in total Korea's arguments concerning the USDOC's regional specificity findings, but rather provides a road map to the Panel's subsequent analysis, with each sentence ("first," "second", "third," and "fourth") relating to the corresponding section of analysis that follows. The United States asserts that the Panel already provides a summary of Korea's various arguments within each of the relevant sections. The United States also contends that Korea's request for the inclusion of two additional paragraphs immediately after paragraph 7,256 is similarly unwarranted. The United States suggests that the arguments identified by Korea are in any event sufficiently summarized and addressed at section 7.6.3.2 of the interim report.
6.120.
Paragraph 7,256 of the Interim Report merely introduces the claims brought by Korea. It is not intended to describe arguments made by Korea in support of those claims. Korea's main arguments are described in subsequent paragraphs of the Report. For this reason, we have decided not to include any additional arguments in this paragraph.

6.2.1.6 Paragraph 7.260 (paragraph 7.261 of the Final Report)

6.121.
Korea asks the Panel to delete the second sentence of paragraph 7,260, on the ground that it "may not take into account the full breadth of Korea's arguments regarding Article 2.1(b)".
6.122.
The United States asserts that Korea has failed to provide a basis for deleting the second sentence of this paragraph. The United States contends that Korea fails to explain how the second sentence is inaccurate. According to the United States, Korea does not – and cannot – point to any submission in which it provides the discussion or support that the Panel found to be lacking.
6.123.
The second sentence of this paragraph states that "Korea does not discuss the relationship between Articles 2.1(b) and 2.2, [or] support its assertion with any analysis of the text of these provisions". At interim review, Korea has not identified any specific arguments pertaining to the relationship between Articles 2.1(b) and 2.2, nor identified any analysis of the text of those provisions. In these circumstances, we have decided not to delete the second sentence of this paragraph.

6.2.1.7 Paragraph 7.261 (paragraph 7.262 of the Final Report)

6.124.
Korea suggests that the third sentence of this paragraph does not accurately reflect its arguments, and therefore requests the deletion thereof.
6.125.
The United States does not object to Korea's request.
6.126.
Since the precise textual formulation of the third sentence does not feature in any of Korea's submissions to the Panel, we have decided to accommodate Korea's request.

6.2.1.8 Paragraph 7.262 (paragraph 7.263 of the Final Report)

6.127.
Korea proposes a number of changes to the Panel's description of its arguments in paragraph 7,262.
6.128.
The United States does not support Korea's request to delete and reformulate the third, fourth, and fifth sentences of this paragraph. The United States asserts that Korea fails to explain how these sentences are deficient. According to the United States, the sentences accurately reflect Korea's position at paragraphs 346-356 of its second written submission. The United States does not object to other changes proposed by Korea.
6.129.
We have decided to accommodate the request by Korea. The amendments proposed by Korea all reflect arguments made in Korea's submissions to the Panel. Although the current summary of those arguments is not inaccurate, we see no reason not to use a formulation that more closely mirrors the actual arguments made by Korea in its submissions.

6.2.1.9 Paragraph 7.265 (paragraph 7.266 of the Final Report)

6.130.
Korea proposes a number of changes to the manner in which the Panel presents Korea's claim in this paragraph. Korea proposes to amend the second sentence, and replace the penultimate and final sentences with a new sentence. Korea also proposes to change the text of footnote 431, by replacing the second sentence with a statement that the United States' interpretation of "enterprise" in this case is not consistent with its practice in free trade agreements.
6.131.
The United States contends that Korea fails to explain why the second sentence of this paragraph – which Korea seeks to delete and replace – is inaccurate. In that sentence, the Panel observes that "Korea interprets 'enterprises' as companies or businesses having legal personality." According to the United States, this accurately reflects Korea's statement at paragraph 356 of its second written submission. The United States also opposes the replacement of the penultimate and final sentences of paragraph 7,265. According to the United States, these sentences accurately reflect statements in Korea's submissions. The United States also denies that Korea's requested change would provide a more comprehensive summary of its arguments, as it seeks to replace two sentences with one.
6.132.
The United States does not support Korea's request to delete and replace the second sentence of this footnote. According to the United States, the second sentence accurately reflects Korea's argument at paragraph 34 of its response to Panel question No. 5.10. The United States suggests that the language that Korea now seeks to introduce would obscure the meaning of the first sentence, as it would leave unexplained the alleged significance that Korea seeks to draw from definitions contained in U.S. free trade agreements (i.e., that they allegedly do not expressly refer to an entity's facilities).
6.133.
We have decided not to make the change proposed by Korea in respect of the second sentence. This sentence reflects the arguments made by Korea at paragraph 356 of its second written submission: "The term 'enterprises' within the meaning of Article 2.2 should be interpreted to mean that the recipient of the subsidy must be a company with legal personality." We have the same view in respect of the penultimate sentence, which reflects an argument made by Korea at paragraph 329 of its first written submission: "RSTA Article 26 tax credits are limited, not to 'certain enterprises located within a designated geographical region', but rather, are limited to certain uses – namely, to investments made outside the overcrowding control region of the Seoul Metropolitan Area."
6.134.
Regarding the final sentence, the text simply reflects the Panel's understanding of Korea's position. RSTA Article 26 is entitled Tax Deduction for Facilities Investment. Since the heading of that provision refers to "Facilities", it is reasonable to understand Korea to argue that RSTA Article 26 concerns the location of facilities, rather than the location of enterprises.
6.135.
Regarding footnote 431, we do not consider it appropriate to include the qualification of the United States' argument proposed by Korea. Since we have decided not to evaluate Korea's claim by reference to the practice of the United States in respect of its free trade agreements, there is no basis for us to state whether the interpretation proposed by the United States is or is not consistent with that practice. Nor is there any basis to delete the second sentence, which is based on Korea's assertion at paragraph 34 of its response to Panel question No. 5.10 that "interpreting the term 'enterprise' to refer to facilities is not even consistent with the consistent practice of the United States".

6.2.1.10 Paragraph 7.269, footnote 435 (paragraph 7.270, footnote 453 of the Final Report)

6.136.
Korea asks the Panel to amend its description of Korea's handling of a question from the Panel, by replacing the second sentence of footnote 435 with two additional sentences, and deleting the last sentence.
6.137.
The United States contends that the second sentence of footnote 435 accurately reflects the fact that Korea's responses did not address the temporal issue that the Panel raised in question No. 5.10 – i.e., whether the Article 2.2 specificity analysis hinges on whether an enterprise receives the subsidy before or after acquiring new facilities. The United States asserts that likewise, in its comments on the U.S. response to Panel question 5.10, Korea reiterated its assertion that the term "enterprise" does not encompass "facilities," but failed to address the various arguments outlined by the United States with respect to this temporal issue. The United States proposes alternative text to be used in the event that the Panel chooses to amend footnote 435.
6.138.
We consider that the second sentence of footnote 435 is an accurate reflection of Korea's reply to Panel question No. 5.10. In its reply, Korea did not address the temporal issue raised by the Panel. Korea instead repeated its view that "facilities" should be distinguished from "enterprises". We have clarified the second sentence by replacing the word "matter" with the phrase "temporal issue". Regarding the last sentence of footnote 435, we have decided to replace it with two sentences that more clearly explain Korea's reaction to Panel question No. 5.10, and its comments on the United States' reply to that question.

6.2.1.11 Paragraphs 7.274 and 7.283 (paragraphs 7.275 and 7.284 of the Final Report)

6.139.
Korea asks the Panel to include additional elements in its description of Korea's arguments.
6.140.
The United States does not object to Korea's request.
6.141.
We have decided to accommodate Korea's request.

6.2.1.12 Paragraph 7.291 (paragraph 7.292 of the Final Report)

6.142.
Korea asks the Panel to amend its description of Korea's arguments by deleting the first and third sentences.
6.143.
The United States does not support Korea's request to delete the first and third sentences of this paragraph. The United States contends that, when read in context with the surrounding sentences in that paragraph, the first and third sentences accurately reflect Korea's arguments. Nonetheless, if the Panel wishes to amend this paragraph in response to Korea's request, the United States proposes alternative language.
6.144.
We agree with Korea that the original formulation of this paragraph may risk misrepresenting Korea's arguments. Rather than deleting entire sentences, though, we consider it more appropriate to amend the text in the manner proposed by the United States. This approach preserves the description of the main elements of Korea's position.

6.2.1.13 Paragraphs 7.301 and 7.302 (paragraphs 7.302 and 7.303 of the Final Report)

6.145.
Korea asks the Panel to amend its description of Korea's arguments, and include the argument that the R&D tax credits were enacted to provide an incentive to undertake R&D activities.
6.146.
The United States does not support Korea's request to modify these paragraphs. As an initial matter, the United States contends that it is inadequate, in light of Article 15.2 of the DSU, for Korea to simply propose that the Panel make an unspecified "addition" to "reflect" Korea's arguments. The United States also disagrees that these paragraphs warrant revision. The United States observes that Korea does not dispute that the existing text is an accurate rendering of its position. Regarding the additional "incentive" argument referred to by Korea, the United States contends that this argument appears to relate to an issue that is already addressed at paragraph 7,303 of the Interim Report.
6.147.
Korea does not specify which additional "incentive" argument it would have the Panel include in these paragraphs. To the extent Korea is referring to the argument made in its reply to Panel question No. 5.2, this argument is already reflected at paragraph 7,303 of the Interim Report. There is therefore no need to include that argument in paragraphs 7,301 and 7,302. If Korea is referring to some other argument, its failure to specify that argument precludes any meaningful intervention by the Panel at this stage.

6.2.2 United States' requests for review of precise aspects of the Interim Report

6.2.2.1 Paragraphs 7.224, 7.277, 7.293, 7.296, 7.311, 7.312, and 7.313 (paragraphs 7.224, 7.278, 7.294, 7.297, 7.312, 7.313, and 7.314 of the Final Report)

6.148.
The United States asks the Panel to supplement its description of the United States' arguments.
6.149.
Korea does not object to the United States' request.
6.150.
We have decided to accommodate the United States' request.

6.2.2.2 Paragraph 7.269 (paragraph 7.270 of the Final Report)

6.151.
The United States asks the Panel to include a reference for the definitions of the verb "locate".
6.152.
Korea does not object to the United States' request.
6.153.
We have decided to accommodate the United States' request.

7 FINDINGS

7.1 INTRODUCTION

7.1.
Korea has advanced three sets of claims concerning the anti-dumping measures at issue in this case. First, Korea challenges the use of zeroing (i) when applying the W-T comparison methodology "as such", (ii) in the Washers anti-dumping investigation, and (iii) in "subsequent connected stages" of the Washers proceeding. Second, Korea challenges certain aspects of the methodology used by USDOC in the Washers anti-dumping investigation (i.e. the Nails II methodology) to determine whether the W-T comparison methodology under the second sentence of Article 2.4.2 should be applied. Third, Korea pursues claims concerning certain aspects of the Differential Pricing Methodology, which replaced Nails II methodology as the USDOC's methodology for determining application of the W-T comparison methodology under the second sentence of Article 2.4.2. Some of the factual and legal arguments of the parties regarding these various claims are interlinked or overlapped. To ensure that all of Korea's claims are addressed in respect of the relevant measures, we proceed as follows. In Section 7.2, we review the general principles governing treaty interpretation, the standard of review and the burden of proof. In Section 7.3, we address Korea's claims concerning the application of the W-T comparison methodology in the Washers anti-dumping investigation, excluding Korea's claims regarding the use of zeroing. In Section 7.4, we turn to Korea's claims concerning the DPM. In Section 7.5, we address Korea's "as such" and "as applied" claims concerning the use of zeroing in the context of the W-T comparison methodology. These claims have been brought under a number of provisions of the Anti-Dumping Agreement and GATT 1994. Once we have resolved all issues concerning the relevant anti‑dumping measures, we address Korea's claims concerning the countervailing measures in Section 7.6.

7.2 GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION, THE STANDARD OF REVIEW, AND BURDEN OF PROOF

7.2.1 Treaty interpretation

7.2.
Article 3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly requires panels to interpret that Agreement's provisions in accordance with the customary rules of interpretation of public international law.45 It is generally accepted that the principles codified in Articles 31 and 32 of the Vienna Convention on the Law of Treaties are such customary rules.

7.2.2 Standard of review

7.3.
Article 11 of the DSU provides, in relevant part, that:

[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.

7.4.
In addition, Article 17.6 of the Anti-Dumping Agreement sets forth the special standard of review applicable to disputes under the Anti-Dumping Agreement:

(i) in its assessment of the facts of the matter, the panel shall determine whether the authorities' establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the evaluation shall not be overturned;

(ii) the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

Thus, Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement together establish the standard of review we will apply with respect to both the factual and the legal aspects of the present dispute.

7.5.
The Appellate Body has explained that where a panel is reviewing an investigating authority's determination, the "objective assessment" standard in Article 11 of the DSU requires a panel to review whether the authorities have provided a reasoned and adequate explanation as to (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings support the overall determination.46 In the context of Article 17.6(i) of the Anti‑Dumping Agreement, the Appellate Body has clarified that a panel should not conduct a de novo review of the evidence, nor substitute its judgment for that of the investigating authority. A panel must limit its examination to the evidence that was before the investigating authority during the course of the investigation and must take into account all such evidence submitted by the parties to the dispute.47 At the same time, a panel must not simply defer to the conclusions of the investigating authority; a panel's examination of those conclusions must be "in-depth" and "critical and searching".48
7.6.
The Appellate Body has clarified a panel's standard of review of the facts pursuant to the above provisions in the following terms:

It is well established that a panel must neither conduct a de novo review nor simply defer to the conclusions of the national authority. A panel's examination of those conclusions must be critical and searching, and be based on the information contained in the record and the explanations given by the authority in its published report. A panel must examine whether, in the light of the evidence on the record, the conclusions reached by the investigating authority are reasoned and adequate. What is 'adequate' will inevitably depend on the facts and circumstances of the case and the particular claims made, but several general lines of inquiry are likely to be relevant. The panel's scrutiny should test whether the reasoning of the authority is coherent and internally consistent. The panel must undertake an in-depth examination of whether the explanations given disclose how the investigating authority treated the facts and evidence in the record and whether there was positive evidence before it to support the inferences made and conclusions reached by it. The panel must examine whether the explanations provided demonstrate that the investigating authority took proper account of the complexities of the data before it, and that it explained why it rejected or discounted alternative explanations and interpretations of the record evidence. A panel must be open to the possibility that the explanations given by the authority are not reasoned or adequate in the light of other plausible alternative explanations, and must take care not to assume itself the role of initial trier of facts, nor to be passive by 'simply accept[ing] the conclusions of the competent authorities.'49 (footnote omitted)

7.2.3 Burden of proof

7.7.
The general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.50 Therefore, as the complaining party in this proceeding, Korea bears the burden of demonstrating that certain aspects of the measures at issue are inconsistent with the Anti-Dumping Agreement, the SCM Agreement and the GATT 1994. The Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima facie case, namely a case which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party.51 Finally, it is generally for each party asserting a fact to provide proof thereof.52

7.3 CLAIMS CONCERNING THE USDOC'S APPLICATION OF THE W-T COMPARISON METHODOLOGY IN THE WASHERS ANTI-DUMPING INVESTIGATION

7.3.1 Introduction

7.8.
Article 2.4.2 of the Anti-Dumping Agreement provides:

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 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 authorities 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 average‑to‑weighted average or transaction‑to‑transaction comparison.

7.9.
Article 2.4.2 comprises the comparison methodologies applicable to establish margins of dumping in the investigation phase. The first sentence provides for two comparison methodologies that should "normally" be used to establish margins of dumping. The second sentence provides for a third comparison methodology for establishing the margins of dumping, to be used in exceptional cases only.53 The second sentence of Article 2.4.2 is divided into three parts. The first part, which we refer to as the "methodology clause", explains that an investigating authority is allowed to use an asymmetrical comparison methodology involving the comparison of a weighted average normal value with "prices of individual export transactions". The second and third parts provide that certain conditions must be met before such asymmetrical comparison may be undertaken. The second part, which we refer to as the "pattern clause", requires the existence of a "pattern of export prices which differ significantly among different purchasers, regions or time periods". The third part, which we refer to as the "explanation clause", requires the investigating authority to explain why "such differences" cannot be taken into account appropriately by the use of a weighted average-to-weighted average (W-W) or transaction-to-transaction (T-T) comparison methodology
7.10.
Korea has advanced claims under each of the three parts of the second sentence concerning the USDOC's application of the NailsII methodology54 in the Washers anti-dumping investigation. We begin with Korea's claims concerning the methodology clause. Thereafter, we address Korea's claims concerning the pattern and explanation clauses

7.3.2 Claim regarding the methodology clause

7.11.
This claim concerns the scope of application of the W-T comparison methodology. In the Washers anti-dumping investigation, the USDOC applied the W-T comparison methodology to all export transactions, including export transactions falling outside of the relevant patterns.55 Korea claims that the USDOC acted inconsistently with the second sentence of Article 2.4.2 because, according to Korea, the W-T comparison methodology may only be applied to transactions falling within the relevant patterns.

7.3.2.1 Main arguments of the parties

7.12.
Korea submits56 that the structure and text of Article 2.4.2 confirm that the W-T comparison methodology may only be applied to those transactions determined to have met the criteria for invocation of that methodology ("pattern transactions"), and not to export transactions falling outside of the relevant pattern ("non-pattern transactions"). In terms of structure, Korea observes that the exceptional W-T comparison methodology "may" be used in certain limited circumstances, whereas a strong preference is expressed for the mandatory application of the W-W or T-T comparison methodologies outside of those circumstances. Korea concludes from this that the W-T comparison methodology should only be applied to those transactions that have justified its use. Regarding text, Korea observes that the Appellate Body in US – Zeroing (Japan) understood the phrase "individual export transactions" to refer to the transactions that "fall within the relevant pricing pattern". Korea notes that the Appellate Body also stated that "this universe of export transactions would necessarily be more limited than the universe of export transactions to which the symmetrical comparison methodologies in the first sentence of Article 2.4.2 would apply." Korea suggests that this interpretation is reinforced by the requirement in the second sentence of Article 2.4.2 to explain why the relevant price differences, pertaining only to the narrower universe of targeted dumping transactions, cannot be taken into account appropriately by using either the W-W or T-T comparison methodology. Korea notes that in the Washers anti-dumping investigation the USDOC indicated that the identified pattern "is defined by all of the respondent's U.S. sales". Korea understands the USDOC to suggest that the broad application of the W-T comparison methodology is predicated on its view that the term "pattern" refers to all export sales. Korea contends that this is not a plausible interpretation, since the relevant "pattern" refers only to those export transactions whose prices differ significantly among different purchasers, regions or time periods.
7.13.
The United States disagrees57 with Korea's argument that it follows from the structure of the second sentence of Article 2.4.2 that the scope of application of the W-T comparison methodology should be limited to those transactions that have justified its use. The United States contends that, when the conditions for the use of the exceptional comparison methodology are met, nothing in the second sentence of Article 2.4.2 suggests that the use of the alternative methodology is further constrained. The United States acknowledges that in US – Zeroing (Japan) the Appellate Body read the phrase "individual export transactions" as referring to the transactions that fall within the relevant pricing pattern.58 The United States notes, though, that the Appellate Body went on to suggest that "in order to unmask targeted dumping, an investigating authority may limit the application of the [average-to-transaction] comparison methodology to the prices of export transactions falling within the relevant pattern."59 Noting the Appellate Body's use of the word "may", the United States asserts that the Appellate Body did not definitively declare in US – Zeroing (Japan) that the W-T comparison methodology must only be applied to pattern transactions.
7.14.
The United States asserts that even if the W-T comparison methodology were only allowed to be applied to pattern transactions, the relevant "pattern of export prices" necessarily includes both lower and higher export prices that "differ significantly" from each other. The United States contends that an export price cannot "differ significantly" on its own. The United States asserts that because "difference" is a comparative or relative concept, for something to be different, it must differ from something else. The United States therefore contends that lower export prices, which likely do not differ significantly from one another, cannot form a "pattern of export prices which differ significantly" without reference within that pattern to the higher export prices from which they differ significantly. The United States argues that, in the Washers anti-dumping investigation, because the pattern identified by the USDOC comprised of all of the exporter's US sales, the USDOC's application of the W-T comparison methodology to all export sales is not at odds with the Appellate Body's statement in US – Zeroing (Japan) that an investigating authority may limit the application of the W-T comparison methodology to the prices of export transactions falling within the relevant pattern.
7.15.
The United States submits that Korea's proposed interpretation of Article 2.4.2 is at odds with the Appellate Body's recognition that the alternative methodology provides Members a means to "unmask targeted dumping".60 The United States asserts that "targeted dumping" – which is evidenced by lower-priced sales that "differ significantly" from higher-priced sales – is "unmasked" by also applying the W-T comparison methodology to the higher-priced sales.

7.3.2.2 Main arguments of third parties61

7.16.
Brazil contends62 that there seems to be considerable uncertainties as to how the W-T comparison methodology should operate in practice. According to Brazil, an interpretation of the second sentence of Article 2.4.2 that would limit the application of the W-T comparison methodology to the transactions that fall within the pattern63 raises several doubts relative to the practical operation of such understanding.
7.17.
China contends64 that Article 2.4.2 of the Anti-Dumping Agreement is concerned with the establishment of margins of dumping, and that the provision is explicit in stating that such margins are "normally" to be determined on the basis of one or the two symmetrical comparison methodologies. China asserts that the permission to use the alternative W-T comparison methodology is exceptional65, applying only where a relevant price pattern cannot be taken into account appropriately through a symmetrical comparison methodology. According to China, this means that the allowance to use the W-T comparison methodology applies only on a limited basis: although an authority must consider the entire universe of sales in order to identify a relevant pricing pattern within that universe, the alternative methodology may be applied only to those sales that comprise the relevant pricing pattern. For export sales that are not part of the relevant pricing pattern, Article 2.4.2, second sentence, does not permit departure from the rule, stated in the first sentence, that mandates use of a symmetrical comparison methodology.
7.18.
The European Union disagrees66 with Korea's argument that the final sentence of Article 2.4.2 requires that the existence and amount of targeted dumping, if any, must be calculated only on the basis of the export transactions falling within the pricing pattern. The European Union asserts that this would not comport with the basic objective of the targeted dumping provision, which is to permit an investigating authority to unmask targeted dumping by purchaser, region or time period that would otherwise be concealed. It is not clear to the European Union how this can be achieved if the sole option open to an investigating authority would be to make a calculation only on the basis of the transactions that have passed the standard deviation and gap tests.
7.19.
Japan contends67 that the plain meaning of the second sentence of Article 2.4.2 suggests that the W-T comparison methodology is limited to the "pattern" of export prices which differ significantly among different purchasers, regions, or time periods. According to Japan, the provision does not indicate that the W-T comparison methodology should extend to all sales transactions once a pattern is found. Japan also contends that the context of the sentence implies that "individual sales transactions" to be used for comparison are precisely those that fall into the "pattern" discerned by the authorities, and the purpose of the provision to unmask targeted dumping similarly speaks for such understanding. Japan asserts that its interpretation finds strong support in the holding of the Appellate Body in US – Zeroing (Japan) that the phrase "individual export transactions" in the second sentence refers to the transactions that fall "within the relevant pricing pattern", and that "an investigating authority may limit the application of the W-T comparison methodology to the prices of export transactions falling within the relevant pattern".68 Japan contends that its interpretation is also supported by the context of the first and second sentences of Article 2.4.2. Japan observes that the first sentence provides that the existence of margins of dumping shall "normally" be established through W-W or T-T comparisons. According to Japan, this makes the W-T comparison methodology an exception, which an investigating authority "may" use in its discretion if it finds a "pattern" and provides an explanation. Japan submits that it follows from the nature of the second sentence of Article 2.4.2 as an exception that the W‑T comparison methodology has to be applied in an appropriately limited manner – i.e. to an identified "pattern" – and not to all transactions, which would make the exception the rule as it would allow proceeding in the same manner as for W-W or T-T comparisons.
7.20.
Viet Nam agrees69 with Korea that, assuming the W-T comparison methodology can be used, it can only be applied to the transactions found to "differ significantly", that is, within the pattern. Viet Nam contends that the two "normal[]" methodologies should be applied to transactions outside the pattern.

7.3.2.3 Evaluation by the Panel

7.21.
Korea's scope claim raises the issue of whether the W-T comparison methodology may be applied to all export transactions, or only to transactions that constitute the relevant pattern (pattern transactions). Korea's claim requires us to determine whether the "prices of individual export transactions" used in the W-T comparison provided for in the first part of the second sentence are the same transactions as those comprising the "pattern of export prices which differ significantly among different purchasers, regions or time periods" referred to in the second part of that sentence. Our interpretive analysis suggests that they are.
7.25.
Further support can be found in the statement of the Appellate Body in US – Zeroing (Japan) that:

[t]he emphasis in the second sentence of Article 2.4.2 is on a "pattern", namely a "pattern of export prices which differs significantly among different purchasers, regions or time periods". The prices of transactions that fall within this pattern must be found to differ significantly from other export prices. We therefore read the phrase "individual export transactions" in that sentence as referring to the transactions that fall within the relevant pricing pattern. This universe of export transactions would necessarily be more limited than the universe of export transactions to which the symmetrical comparison methodologies in the first sentence of Article 2.4.2 would apply.70

7.26.
Our reading of the text of the second sentence of Article 2.4.2 is also supported by its object and purpose. There is broad agreement that the object and purpose of the second sentence of Article 2.4.2 is to enable investigating authorities to "unmask" so-called "targeted dumping". This view has been expressed by the parties71, all but one of the third parties72 and, as we explain below, the Appellate Body. This understanding of the object and purpose of the second sentence is also confirmed73 by negotiating history, which shows that "the issue at stake [when negotiating the second sentence of Article 2.4.2] was masked, selective dumping".74
7.27.
The Appellate Body stated in the abovementioned US – Zeroing (Japan) case that the second sentence of Article 2.4.2 provides an asymmetrical comparison methodology to address a "pattern of 'targeted' dumping".75 The Appellate Body then referred to the notion of "unmasking" such "targeted dumping". In particular, the Appellate Body stated that "[i]n order to unmask targeted dumping, an investigating authority may limit the application of the W-T comparison methodology to the prices of export transactions falling within the relevant pattern."76 The last statement by the Appellate Body could be read in two ways.77 First – and this is the reading proposed by the United States – the Appellate Body could be stating that an authority is allowed to ("may") limit the scope of application of the W-T comparison methodology to pattern transactions, but it is not required to do so (and may therefore apply the W-T comparison methodology to all export transactions). Second, the Appellate Body could be understood to suggest that, given that the object and purpose of the second sentence is to unmask "targeted dumping", the authority is able to ("may") restrict the application of the W-T comparison methodology to pattern transactions only, since it is those pattern transactions that are indicative of targeted dumping. We favour the second reading, because the first reading would be at odds with the Appellate Body's statement in the preceding sentence (set forth in the extract above) that the universe of transactions subject to the W-T comparison methodology would "necessarily" be more limited than the universe of transactions to which the symmetrical comparison methodologies in the first sentence of Article 2.4.2 would apply. The term "necessarily" excludes the possibility that the W-T comparison methodology might in certain circumstances also apply to non-pattern transactions. This reading is supported by the exceptional nature of the W-T comparison methodology.
7.28.
We note the United States' argument that a "pattern" necessarily includes lower export prices that differ from higher export prices, and thus all export transactions may be included in the relevant pattern. However, as we explain below78, a "pattern" is "[a] regular and intelligible form or sequence discernible in certain actions or situations". We also explain that, in the context of the second sentence, the relevant form or sequence is determined by reference to purchasers, regions or time periods. If particular prices are observed to differ by purchaser, region or time period, those prices may be treated as a regular and intelligible form or sequence relating to that purchaser, region or time period. The price differences are "regular" and "intelligible" because they pertain only to a particular purchaser, region or time period.79 Once those prices are identified, they constitute the relevant "pattern". Although those prices are identified by reference to other prices pertaining to other purchasers, regions or time periods, those other prices are not part of the relevant "pattern" (just as a floral pattern on a garment is concerned with the flowers printed against a backdrop, rather than the backdrop itself).80

7.3.3 Claim regarding the pattern clause

7.30.
This claim concerns the USDOC's application of the pattern clause, i.e. the requirement to establish the existence of a "pattern of export prices which differ significantly among different purchasers, regions or time periods". Korea challenges the manner in which the USDOC determined the existence of a "pattern of export prices which differ significantly" among purchasers, regions or time periods in the Washers anti-dumping investigation. Korea contends that the USDOC applied purely quantitative criteria in determining the existence of "patterns of export prices which differ significantly", without any qualitative assessment of the reasons for the relevant price differences. Korea asserts that an investigating authority must qualitatively assess why prices differ, and whether such differences reflect what can reasonably be inferred as targeting conduct.

7.3.3.1 Main arguments of the parties

7.31.
Korea submits81 that the ordinary meaning of the terms "pattern" and "significantly" precludes resort to purely quantitative criteria when determining whether there is a pattern of export prices that differ significantly. Korea asserts that each of these terms carries qualitative connotations (that were ignored by the USDOC's purely quantitative tests), such that the second sentence requires an examination of "why", not just "how big".
7.32.
Korea asserts that the word "pattern" means that there must be some intelligible and predictable repetition or form that can be discerned, qualitatively, from the sample of prices at issue. Korea contends that the qualitative connotation of the word "pattern" does not allow for random variation, but rather requires a particular design or purpose, namely targeting conduct. Korea submits that, to be "intelligible" or to "serve to govern the execution of something"82, the pattern must be meaningful to the purpose of what is being undertaken – namely determining whether use of the exceptional comparison methodology set forth in the second sentence of Article 2.4.2 is justified.
7.33.
Korea contends that this understanding is reinforced by the requirement in Article 2.4.2 that the prices differ "significantly". According to Korea, this term conveys both quantitative and qualitative aspects. Korea contends that the qualitative meaning of "significant" means that the relevant price differences must have meaning or purpose, rather than reflecting random price variation or normal commercial factors. Korea contends that the price differences must be more than merely "large" in order to justify the application of the second sentence of Article 2.4.2. According to Korea, an authority cannot find differences to be "significant" based solely on quantitative criteria with no consideration at all of the qualitative factual context – the reasons why prices might be differing.83 Korea asserts that a qualitative assessment of the relevant price differences is necessary in order to avoid finding that price differences constitute targeted dumping, even though they are caused entirely by exogenous factors or normal commercial conditions.
7.34.
The United States disagrees84 with Korea's argument that the words "pattern" and "significantly" require an investigating authority to examine, qualitatively, the design, meaning, or purpose underlying the significant differences in export prices. The United States notes that the parties agree that a "pattern" is "[a] regular and intelligible form or sequence discernible in certain actions or situations". The United States agrees with Korea's contention that a "pattern" cannot simply be the result of random price variation. However, the United States rejects Korea's argument that there must be some predictable repetition or form that can be discerned. The United States notes that an anti‑dumping investigation is concerned exclusively with sales during the period of investigation, which necessarily is in the past. According to the United States, nothing in the "pattern clause" or anywhere else in Article 2.4.2 of the Anti‑Dumping Agreement relates to predicting future sales.
7.35.
Regarding the term "significantly", the United States agrees with Korea's contention that the Appellate Body has suggested that the term "significant" can have both quantitative and qualitative dimensions. The United States does not agree, though, that the price differences that trigger the application of the W-T comparison methodology must be something other than merely "large" quantitative differences. The United States suggests that Korea's understanding would read the quantitative dimension out of the term "significantly". The United States asserts that this would be inconsistent with the ordinary meaning of the term "significantly" in its context, and also with the Appellate Body's guidance in US – Large Civil Aircraft (2nd Complaint).
7.36.
In the context of the requirement to identify "a pattern of export prices which differ significantly", the United States asserts that a qualitative analysis would be employed to assess how the export prices differ from each other, in the sense of whether that difference qualitatively is notable or important, and thus is "significant". The United States contends that under Korea's notion of a qualitative analysis, the investigating authority would rather ask why the export prices are different. The United States suggests that Korea's references to commercial reasons, market explanations, or other exogenous factors all go to why differences may exist between export prices. The United States suggests that these issues would not provide information about how the export prices are different, and whether the observed differences are "significant".
7.37.
The United States also contends that Korea's argument concerning the need to demonstrate that dumping is targeted confuses the "pattern of export prices which differ significantly", which is described in the text of the "pattern clause" in the second sentence of Article 2.4.2, with the intention of an exporter to "target" its dumping and "mask" that dumping. The United States asserts that the drafting of the "pattern clause" is passive and not active, such that the investigating authority is charged with finding whether a pattern of export prices exists, not with finding that an exporter has intentionally patterned its export prices to target and mask dumping.

7.3.3.2 Main arguments of third parties85

7.38.
Canada submits86 that the ordinary meaning of the word pattern implies a qualitative element.
7.39.
China shares Korea's concern87 that the USDOC appears to have failed to consider relevant qualitative explanations for price variations. China asserts that the use of the W-T comparison methodology is conditioned on identification of a "pattern" of "prices which differ significantly". The mere existence of time-based, or similar, price variations cannot in itself be revealing of "significant" differences. For China, the fact that "significance" has meaning in both quantitative and qualitative terms is a strong indicator that an investigating authority must consider both such dimensions whenever it seeks to determine the existence of a "pattern of export prices which differ significantly". China disagrees with the United States as they have asserted that it is sufficient to explore either dimension by showing either that price differences are "numerically large" or, alternatively, that even numerically small differences remain "important" in the context of a particular market.
7.40.
The European Union argues88 that the terms "pattern" and "significantly" can be understood quantitatively. The European Union agrees with the United States' understanding of the more limited sense in which that term might be understood qualitatively. The European Union asserts that in a normal anti-dumping calculation, that does not involve any determination of targeted dumping, an investigating authority is not required to assess the reason for which dumping is occurring. Rather, the determination of the existence and amount of dumping is based on an objective assessment of the data. The European Union understands that the situation should be no different under the second sentence of Article 2.4.2 of the Anti-Dumping Agreement.
7.41.
Japan argues89 that the question of how significant a difference of export prices is, or in other words what the standard of being "large" is, cannot be answered unless one places relevant numerical variations in an appropriate context and assesses their meaning.
7.42.
Turkey does not support the interpretation that a "pattern of significant difference" should be necessarily an outcome of a specific intent. Turkey does not agree that usual commercial practices are perfectly plausible if the differing export prices display a pattern in line with the expected results of these practices. Turkey argues that neither the text of Article 2.4.2 nor WTO jurisprudence makes it possible to conclude that the "usual commercial" practices are defences to permit the act of targeted dumping.90
7.43.
Viet Nam agrees with Korea91 that the United States' methodology inappropriately creates the possibility that random, relatively minor and commercially entirely commonplace price fluctuations will be characterized as a "pattern" of prices that "differ significantly". Beyond all technicalities of the second sentence of Article 2.4.2, it cannot be that the Anti-Dumping Agreement entitles WTO Members to burden exporters with higher anti-dumping duties simply because they follow standard business practices.

7.3.3.3 Evaluation by the Panel

7.44.
Korea submits that in the Washers anti-dumpinginvestigationthe USDOC acted inconsistently with the pattern clause because it found a "pattern of export prices which differ significantly" among purchasers, regions or time periods based "solely on quantitative criteria with no consideration at all of the qualitative factual context – the reasons why prices might be differing".92 According to Korea, the second sentence "requires an examination of 'why', not just 'how big'".93
7.45.
Korea's claim is based on its interpretation of the terms "pattern" and "significant". The parties agree that a "pattern" is "[a] regular and intelligible form or sequence discernible in certain actions or situations".94 We accept that this definition accords with the ordinary meaning of the term "pattern" as used in the second sentence of Article 2.4.2. The parties also agree that random price variation does not constitute a "pattern".95 Again, we agree.
7.46.
The parties disagree on whether a "pattern" of price differences may be discerned without exploring the reasons for those price differences. We note that the text of Article 2.4.2 contains no requirement to consider such reasons. Further, the fact that prices differ in a regular and intelligible form may be discerned through a simple examination of the relevant numerical price values. In the context of the second sentence, the relevant form or sequence is determined by reference to purchasers, regions or time periods. If particular prices are observed to differ in respect of a particular purchaser, region or time period, those prices may be treated as a regular and intelligible form or sequence relating to that purchaser, region or time period. The price differences are "regular" and "intelligible" because they pertain only to that particular purchaser, region or time period. This is consistent with Korea's argument that, in order to be "intelligible", the relevant price differences "must have some relationship to each other so that this form can be discerned".96 The relationship results from the fact that the price differences pertain to a given purchaser, region or time period.
7.47.
Korea argues that "to be 'intelligible' or to 'serve to govern the execution of something', the pattern must be meaningful to the purpose of what is being undertaken"97, i.e. "targeting conduct".98 We disagree. First, a form or sequence of price differences may be "intelligible" in the context of the second sentence if there is regularity to that form or sequence that may be detected in respect of a particular purchaser, region or time period. Although the term "intelligible" excludes random price variation, it does not require consideration of the purpose of the price variations. A regular series of price variation relating to a particular purchaser, region or time period may be detected on the basis of an objective assessment of the data, even if one does not know the reason for, or purpose behind, such variation.
7.49.
In certain factual circumstances, the size or scale of a price difference may need to be assessed in light of the prevailing factual circumstances. Thus, a relatively minor numerical difference between two large prices may not be "significant", whereas the same numerical difference between two much smaller prices may well be "significant". In addition, a small price difference in a price-competitive market may be "significant". However, this aspect of significance pertains to how the relevant prices differ, not why they differ. We find support for this approach in the report of the panel in US – Upland Cotton, concerning the meaning of the phrase "significant price suppression" in Article 6.3(c) of the SCM Agreement. That panel found that:

[I]t is the degree of price suppression or depression itself that must be "significant" (i.e. important, notable or consequential) under Article 6.3(c) of the SCM Agreement. In determining whether the price suppression is "significant", it may be relevant to look at the degree of the price suppression or depression in the context of the prices that have been affected – that is, at the degree of significance of suppression or depression.

Such significance may be manifest in a number of ways. The "significance" of any degree of price suppression may vary from case to case, depending upon the factual circumstances, and may not solely depend upon a given level of numeric significance. Other considerations, including the nature of the "same market" and the product under consideration may also enter into such an assessment, as appropriate in a given case.

We cannot believe that what may be significant in a market for upland cotton would necessarily also be applicable or relevant to a market for a very different product. We consider that, for a basic and widely traded commodity, such as upland cotton, a relatively small decrease or suppression of prices could be significant because, for example, profit margins may ordinarily be narrow, product homogeneity means that sales are price sensitive or because of the sheer size of the market in terms of the amount of revenue involved in large volumes traded on the markets experiencing the price suppression.106 (emphasis added; footnotes omitted)

7.50.
We agree with the US – Upland Cotton panel that certain factual circumstances regarding the product and/or market may be relevant to the assessment of whether a difference is "significant". We also note that the US – UplandCotton panel did not refer to the underlying reasons for price suppression or depression as being relevant to the potential significance of the degree of price suppression or depression.

7.3.4 Claims regarding the explanation clause

7.53.
The third part of the second sentence of Article 2.4.2 requires an authority to provide an explanation "as to why [the pattern of significant price] differences cannot be taken into account appropriately by the use of a [W-W] or [T-T] comparison". Korea claims that the USDOC failed to comply with this explanation clause in the Washers anti-dumping investigation.

7.3.4.1 Explanation provided by the USDOC in the Washers anti-dumping investigation

7.3.4.2 Main arguments of the parties

7.57.
Korea submits110 that the term "appropriate(ly)" under the explanation clause requires a qualitative assessment of the objective circumstances of a particular industry. Korea suggests that the W-W or T-T comparison methodologies can appropriately take account of price differences in certain circumstances, particularly when those differences are commercially reasonable.111 Korea asserts that the authority must explain, with reference to the existence of the pattern and the significance of the price differences within that pattern, why the W-W or T-T comparison methodologies cannot take appropriate account of those price differences. Korea contends that the explanation clause excludes the application of the W-T comparison methodology if there is any way in which the W-W or T-T comparison methodologies can produce a dumping margin calculation in which the pattern of significantly differing prices can be taken into account appropriately.
7.58.
Korea submits that the USDOC failed to "make clear" and "give details" of the reason or purpose of the failure or impossibility to take into account appropriately the relevant pattern using either the W-W or T-T comparison methodology. Korea asserts that the USDOC merely observed that there was a "material difference" between the margins of dumping calculated using the W-W comparison methodology without zeroing and W-T comparison methodology with zeroing, and then concluded that the use of the W-W comparison methodology was not appropriate. Korea contends that the existence of a "material difference" merely relates to inherent aspects of the W-W comparison methodology that cannot provide the explanation required by the second sentence of Article 2.4.2. Otherwise, according to Korea, the use of the W-T comparison methodology would have been automatically authorized as soon as a pattern of significantly different prices was found, without any obligation to explain. Korea further asserts that the USDOC's reasoning does not amount to the explanation required by Article 2.4.2, but is rather a measure of the impact of zeroing on the calculation of dumping margins. Korea suggests that if the USDOC's approach would be accepted, it would render the explanation clause inutile, because the use of zeroing will virtually always produce higher margins. Korea also submits that there is no explanation by the USDOC as to why the T-T comparison methodology cannot take into account appropriately the pattern of significantly differing prices.
7.59.
According to the United States112, the "explanation clause" requires a reasoned and adequate statement by the investigating authority that makes clear or intelligible or gives details of the reason that it is not possible in the dumping calculation or computation to deal or reckon with export prices which differ significantly in a manner that is proper, fitting, or suitable using one of the normal comparison methodologies set forth in the first sentence of Article 2.4.2. The United States suggests that a relatively brief and not particularly detailed explanation may suffice when, for example, it is readily apparent from a comparison of the results of the application of one of the normal comparison methodologies and the results of the application of the alternative comparison methodology that using one of the normal comparison methodologies would lead to the "masking" of dumping to a material or meaningful degree. The United States asserts that the difference between applying the W-W and W-T comparison methodologies was meaningful in the Washers anti-dumping investigation in the sense that it was relatively large and, in the case of Samsung, the difference resulted in a change from a determination of no dumping to an affirmative determination of dumping.
7.60.
The United States disagrees with Korea's argument that the explanation should include some qualitative assessment of the reasons for the relevant price differences. The United States does not consider that the explanation need have any connection to the issues of "pattern" and "significance". The United States does not consider that the term "appropriately" introduces any such qualitative assessment into the pattern clause.113 The United States also rejects Korea's argument that because it is in the very nature of the W-W comparison methodology that, through the use of averaging, it will "conceal" the differences between individual prices, it logically follows that this inherent aspect of the W-W comparison methodology itself cannot provide the required "explanation" as to why that methodology cannot take into account the pattern of lower priced sales found to exist. The United States recalls that the Appellate Body has stated that the second sentence of Article 2.4.2 allows the use of the W-T comparison methodology to "unmask targeted dumping".114 The United States asserts that it is therefore logical for an investigating authority, in providing the requisite explanation, to examine the extent to which dumping would be masked by one of the normal comparison methodologies.115 The United States contends that while it is inherent in the W-W comparison methodology that differences between individual prices may be concealed, it will not necessarily always be the case that "targeted dumping" will be "masked" by this "very nature" of that comparison methodology such that the W-W comparison methodology cannot account for such differences appropriately. The United States suggests, for example, that differing export prices may all be above normal value, so that both the W-W and W-T comparison methodologies would lead to a finding of no dumping. Alternatively, the United States suggests that it may be the case that all of the export prices are below normal value, and thus no "masking" of dumping is occurring, and the weighted average dumping margin calculated under both the W‑W and W-T comparison methodologies would be the same. The United States suggests that, apart from these two cases, it may also be the case that the amount of "masking" or the amount of dumping found is relatively small. The United States contends that when there is a pattern of export prices that differ significantly, and the export prices that are lower are below normal value while the export prices that are higher are above normal value, the "inherent aspect of the [average-to-average] comparison methodology itself" does indeed "provide the required 'explanation' as to why that methodology cannot take into account the pattern of lower priced sales found to exist".116 The United States submits that it is unclear what, other than this "inherent aspect" of the W-W comparison methodology, would provide the requisite explanation.
7.61.
The United States does not disagree with Korea's assertion that the comparison undertaken by the USDOC is a measure of the impact of zeroing on the calculation of the dumping margins under those two methodologies, when applied to all of an exporter's sales, not merely to those found to constitute a pattern of significantly difference prices. The United States submits that this is an acknowledgement by Korea that the results of the comparisons would be mathematically equivalent without zeroing under the W-T comparison methodology.
7.62.
The United States disagrees with Korea's argument that the USDOC should also have explained why the T-T comparison methodology could not "take into account appropriately the pattern of significantly different prices". The United States refers to the Appellate Body's statement in US – Softwood Lumber V (Article 21.5 - Canada) that the W-W and T-T comparison methodologies "fulfil the same function", and are "equivalent in the sense that Article 2.4.2 does not establish a hierarchy between the two".117 The United States also refers to the Appellate Body's statement in that case that it would be illogical if these two comparison methodologies were to yield "results that are systematically different". The United States contends that, logically, if the W-W and T-T comparison methodologies yield systematically similar results, then there would be no purpose in requiring an investigating authority to explain why a pattern of export prices that differ significantly cannot be taken into account appropriately by the T-T comparison methodology, when the investigating authority already has explained why the pattern of export prices that differ significantly cannot be taken into account appropriately by the W-W comparison methodology. The United States also observes the Appellate Body's statement that "[a]n investigating authority may choose between the two [comparison methodologies in the first sentence of Article 2.4.2] depending on which is most suitable for the particular investigation."118 The United States asserts that a T-T comparison methodology may be particularly unsuitable, and could be quite burdensome, when there are a large number of sales transactions in both the home market and the export market. The United States asserts that nothing in the first sentence of Article 2.4.2 requires an investigating authority to apply both comparison methodologies in the course of a single anti‑dumping investigation. The United States contends that the initial choice between the W-W and T-T comparison methodologies is reflected in the use of the word "or" in the explanation clause.

7.3.4.3 Main arguments of third parties119

7.63.
Brazil argues120 that if the investigating authority proceeds to use the W-T comparison methodology, there must be other reasons to have recourse to this method beyond purely mathematical differences in the amount of dumping, which are the consequence of the intrinsic characteristics and of the operation of each of the methods. Brazil understands that investigating authorities have an obligation to give details on why the regular tools already afforded to them by the Anti-Dumping Agreement were not sufficient to enable the use of one of the symmetrical methods.
7.64.
Canada asserts121 that the United States does not explain its recourse to the W-T comparison methodology. Canada contends that instead it compares the dumping margins that would be obtained by using the W-W comparison methodology to those that would be obtained by using the W-T comparison methodology. This "meaningful difference test" only demonstrates that using the two methodologies yields a different result, not that the difference in export prices cannot be taken into account by one of the symmetrical methodologies.
7.65.
In China's view122, the requirement of an explanation under Article 2.4.2 is a crucial discipline upon use of the exceptional W-T comparison methodology. China submits that the explanation must have genuine explanatory value, making it clear "why" relevant "differences cannot be taken into account appropriately" using a symmetrical comparison methodology.123 China notes that the explanation provided by the USDOC in the Washers anti-dumping investigation was incomplete: it centres on the idea that averaging somehow "conceals" targeted dumping, providing no analysis as to why the averaging of prices has this effect. Rather, USDOC's reference to averaging resurrects the US assertion – repeatedly rejected in WTO zeroing cases – that dumping may be understood as a transaction-specific concept, meaning that average values including all transactions are to be avoided in favour of "denying offsets"(zeroing) where specific export transaction prices exceed normal value. China also believes that the USDOC has failed to address the T-T comparison methodology. China asserts that under Article 2.4.2, an investigating authority must provide an explanation "as to why [the relevant] differences cannot be taken into account appropriately by use of a weighted average-to-weighted average or transaction-to-transaction comparison". The use of the disjunctive "or" in this phrase signals that both methodologies must be considered and rejected, because if one of these methodologies can "take into account appropriately" the relevant pricing pattern, then the conditions for use of the exceptional W-T comparison methodology are not met. This is confirmed by the fact that the symmetrical methodologies "shall normally" be used. In China's view, there are cases in which the T-T comparison methodology could appropriately take into account a relevant pricing pattern. For instance, in a case involving allegations of significant differences in pricing among time periods, the T-T comparison methodology may appropriately take those differences into account because it is the methodology that gives most particular effect to the requirement under Article 2.4 that comparisons of export price and normal value are "made at as nearly as possible the same time". In this way, the T-T comparison methodology may have utility in dealing with seasonal price variations in a manner that ensures a "fair comparison".
7.66.
The European Union refers124 to the examples set by Korea to illustrate why the use of the W-T comparison methodology would be inappropriate to conclude that they do not explain nor demonstrate their argument. Insofar as Korea is arguing that the explanation must extend to the reasons it refers to in its submission, the European Union agrees with the United States that the Panel should reject that claim. Specifically, with respect to Korea's first example of seasonal prices, Korea does not explain or demonstrate that the patterns of export prices found to exist in the measure at issue are the result of seasonal pricing. Nor does Korea explain and demonstrate that they are the result of discounting during key holiday seasons (Korea's second example). With respect to Korea's third example (quantities), the European Union observes that this is one of the differences that Article 2.4 expressly requires must be given due allowance, and yet Korea does not appear to be developing any claim or argument with respect to that specific obligation. Finally, with respect to Korea's fourth example, the European Union notes that Korea does not explain or demonstrate that the patterns of export prices found to exist in the measure at issue are the result of changes in costs of production. However, the European Union agrees with Korea that the explanations in the measure at issue make no reference to the possible use of the T-T comparison methodology. The European Union submits that the consistency of the measure at issue with the final sentence of Article 2.4.2 of the Anti-Dumping Agreement should be assessed in that light.
7.67.
Japan agrees with Korea125 that the meaning of "explanation" and "why" in the second sentence of Article 2.4.2 must be interpreted to mean that an investigating authority must provide clear and detailed reasons for or the purpose of the inability or impossibility to take into account appropriately a pattern of significantly different export prices by the use of a W-W or T-T comparison. Japan asserts that the United States' argument renders the "explanation" requirement of the second sentence of Article 2.4.2 practically ineffective as it is obvious that the calculation results of the W-T comparison methodology and of the W-W comparison methodology will differ if one allows zeroing for the former and prohibits it for the latter. Japan considers that the "explanation" is also insufficient for the purposes of the second sentence of Article 2.4.2 of the Anti-Dumping Agreement as it merely rests on a difference in dumping margins achieved by the W-W or W-T comparison methodologies, without making clear or giving details of the reasons or purposes of the inability or impossibility to take into account appropriately a pattern of significantly different export prices among the three types of category, i.e. purchasers, regions or time periods, by the use of the W-W comparison methodology. Japan considers that the USDOC's mechanical methodology for finding a "pattern" does not allow any assessment whether the export prices within the "pattern" deviate from the normal pricing behaviour. Japan sees no inherent "appropriate" reason to distinguish an exporter's pricing with respect to a certain limited universe of the market of the importing country that is a mere reaction to the market situation of the importing country from its pricing with respect to the rest of the same market, which is also a mere reaction to the market situation. In such a scenario, variations seen in export prices do not pertain to exporters' behaviour to mask dumping, and therefore, Japan sees no reason why such price differences could not be taken into account appropriately by W-W or T-T comparisons.
7.68.
Turkey understands126 that the explanation of why normal methodologies cannot be used should be in such a context that it should not deprive the interested parties from using their right of presenting evidence they consider relevant in respect of the question. Thus, Turkey asserts that the base of the test controlling the adequacy of the explanation should be Article 6.1 of the Anti‑Dumping Agreement.
7.69.
Viet Nam argues127 that the United States' practice reduces to an empty formality the requirement to provide an "explanation" as to why the two "normally" applicable methodologies cannot be used. Viet Nam supports its argument with three reasons: first, the United States fails to provide any explanation with respect to the T-T comparison methodology. Second, the explanation that the W-W comparison methodology "conceals" certain price differences is, as Korea argues, merely a description of what any averaging process entails by its very essence. Finally, saying that the W-T comparison methodology with zeroing yields a higher margin than the W-W comparison methodology without zeroing is not an explanation why price differences "cannot be taken into account appropriately" by the W-W comparison methodology. When zeroing is applied the margins of dumping will always be higher than if zeroing is not applied because of the absence of any offset for the margin by which export prices exceed normal value. Recourse to the third methodology cannot be driven, or justified, by the fact that the application of zeroing will always result in the highest possible dumping margin. Viet Nam concludes that nothing in Article 2.4.2 supports such an interpretation.

7.3.4.4 Evaluation by the Panel

7.70.
The explanation clause in the second sentence of Article 2.4.2 requires an explanation as to why the significant price differences cannot be taken into account appropriately by the use of the W-W or T-T comparison methodologies. We must consider whether the USDOC complied with that requirement when it determined in the Washers anti-dumping investigation that the relevant export price differences could not be taken into account "appropriately" by the W-W comparison methodology because (a) the averaging in that methodology conceals price differences and (b) the margin of dumping calculated using that methodology was "'materially' or 'meaningfully'"128 lower than the margin calculated using the W-T comparison methodology. We must also consider whether the USDOC was required to provide an explanation in respect of both the W-W and the T‑T comparison methodologies, or whether it was sufficient to provide an explanation only in respect of the W-W comparison methodology.

7.3.4.4.1 The assessment of appropriateness

7.71.
Although the second sentence of Article 2.4.2 provides that the W-T comparison methodology can only be applied when the authority explains that the W-W or T-T comparison methodologies cannot take "appropriate" account of the relevant price differences, the text of the second sentence does not provide any guidance for determining "appropriateness" in this context. In considering the ordinary meaning of the term "appropriately", we observe that both parties129 rely on the statement by the Appellate Body in US Anti-Dumping and Countervailing Duties (China) that:

[R]elevant dictionary definitions of the term "appropriate" include "proper", "fitting" and "specially suitable (for, to)". These definitions suggest that what is "appropriate" is not an autonomous or absolute standard, but rather something that must be assessed by reference or in relation to something else. They suggest some core norm — "proper", "fitting", "suitable" — and at the same time adaptation to particular circumstances.130 (footnote omitted)

We shall be guided by the Appellate Body's understanding of the ordinary meaning of the term "appropriate" in evaluating Korea's claim. We note in particular that the term "appropriately" should not be understood to suggest any autonomous or absolute standard, but rather suggests that the potential application of the W-W or T-T comparison methodology should be assessed by reference or in relation to something else, with proper consideration of attendant factual circumstances.

7.72.
The second sentence of Article 2.4.2 does not explicitly identify any reference point for assessing appropriateness. It is therefore reasonable to refer to the object and purpose of the second sentence in this context. As explained elsewhere in this Report131, the object and purpose of the second sentence concerns the unmasking of targeted dumping.132 We have also observed, with reference to the findings of the Appellate Body in US – Zeroing (Japan), that the existence of a pattern of export prices which differ significantly among different purchasers, regions or time periods is indicative of targeted dumping.133 Since the use of either the W-W or T-T comparison methodology may result in that targeted dumping being hidden134, it is appropriate for an authority to use the W-T comparison methodology in order to avoid it being hidden. However, this does not mean that the W-T comparison methodology may be applied simply because of the existence of a pattern of export prices which differ significantly among different purchasers, regions or time periods. If this were the case, there would have been no need to include the explanation clause in the second sentence of Article 2.4.2.
7.74.
The USDOC referred to the averaging effect of the W-W comparison methodology as a reason why use of that methodology was not appropriate in the Washers anti-dumping investigation. We disagree, for it is in the very nature of the W-W comparison methodology that, through the use of averaging, it will "conceal" the differences between individual export prices. Notwithstanding this inherent aspect of the W-W comparison methodology, and notwithstanding the prevalence of export price differentials, the first sentence provides that the W-W comparison methodology shall normally be used. Accordingly, we do not consider that the masking effect inherent in the W-W comparison methodology itself provides an "explanation" as to why that methodology cannot take into account the relevant pattern of price differences.
7.75.
The United States asserts that the USDOC properly took into account the particular factual circumstances of the Washers anti-dumping investigation when it compared the margin of dumping calculated using the W-W comparison methodology with the margin of dumping calculated using the W-T comparison methodology. The United States asserts that this revealed the amount of dumping that would be masked by use of a normal comparison methodology, consistent with the object and purpose of the second sentence.137 We disagree that an authority is entitled to only consider such difference in margin, since the use of the second sentence may result in a higher margin of dumping even in cases where the pattern of significantly differing export prices has nothing to do with targeting conduct by the exporter. For example, take a hypothetical scenario in which both domestic and export prices are $20 at the beginning of the period of investigation and fall to $10 during the last one of that period as a result of a decline in costs. Under the W-W comparison methodology, the average price in both markets would be $15, and there would be no dumping. Under the second sentence, assuming the export transactions during the last month of the period of investigation were found to constitute "a pattern of export prices which differ significantly among different … time periods", the $10 export price at the end of the period of investigation would be compared with the $15 average domestic price over the entire period, thereby increasing the likelihood of a finding of dumping. We do not consider that the use of the W-T comparison methodology would be appropriate in this hypothetical scenario, even though there will be an increase in the margin of dumping resulting from application of the W-T comparison methodology, since an objective assessment of the facts suggests that the drop in export price at the end of the period of investigation – which occurs at the same time as a similar drop in domestic price – is a reflection of the drop in costs, rather than targeted dumping. Bearing in mind the object and purpose of the second sentence, there is no reason why one of the normal comparison methodologies could not take appropriate account of these price differences.
7.76.
The appropriateness standard set forth in the explanation clause requires an authority to examine these factual circumstances, in order to avoid the second sentence being applied in factual circumstances that have nothing to do with targeted dumping. The United States accepts that "if the evidence were to show that prices in both the domestic market and the export market dropped at nearly the same time and in nearly the same amount, and there was a causal relationship connecting the price decline with the cost decline, that could lead an investigating authority to conclude that one of the 'normal' comparison methodologies could take into account the observed 'pattern' of export prices 'appropriately'".138 This statement suggests that the United States acknowledges the need for an investigating authority to examine the attendant factual circumstances "presented by the interested parties"139 in order to avoid the second sentence being applied in factual circumstances that have nothing to do with targeted dumping. In the Washers anti-dumpinginvestigation, the USDOC failed to consider whether the factual circumstances surrounding the relevant price differences were suggestive of something other than targeted dumping. The USDOC instead focused on the difference between the margin of dumping calculated using the W-W comparison methodology and the margin calculated using the W‑T comparison methodology.140
7.77.
For the above reasons, we find that the USDOC acted inconsistently with the explanation clause of the second sentence of Article 2.4.2 in the Washers anti-dumping investigation. We emphasise that we are not finding that the factual circumstances of the Washers anti-dumping investigation indicate that the relevant price differences were caused by something other than targeted dumping. We are simply finding that the USDOC's failure to consider this possibility is inconsistent with the requirements of the explanation clause.

7.3.4.4.2 Whether it is necessary to address both the W-W and T-T comparison methodologies

7.78.
Korea submits that the USDOC acted inconsistently with the explanation clause in the Washers anti-dumping investigation by failing to explain why the relevant price differences could not be taken into account appropriately by the T-T comparison methodology. Korea observes that the USDOC only provided an explanation in respect of the W-W comparison methodology.
7.81.
Accordingly, we reject Korea's claim that the USDOC acted inconsistently with the explanation clause by failing to explain why the relevant price differences could not be taken into account appropriately by the T-T comparison methodology.

7.3.5 Additional issues concerning the USDOC's application of the W-T comparison methodology in the Washers anti-dumping investigation

7.82.
At paragraph 102 of its second written submission, Korea asserts that the USDOC acted inconsistently with the second sentence of Article 2.4.2 in the Washers anti-dumping investigation by "calculat[ing] standard deviations based on average export prices, not the actual 'export prices' themselves". At paragraph 103 of its second written submission, Korea alleges an inconsistency regarding the USDOC's use of allegedly biased standard deviations based on average, rather than actual, prices. At paragraphs 111 to 117 of its second written submission, Korea refers to an alleged inconsistency regarding the "sufficiency test" allegedly applied by USDOC in the Washers anti-dumping investigation. These alleged inconsistencies were not included in Korea's first written submission, even though paragraph 6 of the Panel's Working Procedures provides that "[b]efore the first substantive meeting of the Panel with the parties, each party shall submit a written submission in which it presents the facts of the case and its arguments". As a result, we must consider the appropriateness of making findings in respect of these allegations.
7.83.
Korea contends that the abovementioned allegations of inconsistency pertain to a claim articulated in its first written submission that "the USDOC improperly finds a 'pattern' based on unreasonable mechanical rules".143 Korea refers in this regard to paragraphs 127 and 349 of its first written submission. We find no reference to any such claim in those parts of Korea's first written submission. Instead, both of those paragraphs refer in relevant part to a claim that "USDOC applies fixed numerical criteria" to determine whether there is a pattern, and "categorically rejects the relevance … of the commercial context". Korea's Request for Establishment of a panel identifies two separate claims that are relevant to the present discussion. First, Korea claims that "[t]he failure of the USDOC to consider legitimate commercial reasons and market explanations for any patterns of differing prices is clearly inconsistent with the meanings of 'pattern' and 'differ significantly'".144 Second, Korea claims that "[t]he mechanical rules used by the USDOC to define 'patterns' of differing prices that 'differ significantly' are statistically unsound and produce economically irrational results".145 We are in no doubt that the first claim is the one referenced in relevant part at paragraphs 127 and 349 of Korea's first written submission, concerning the relevance of the "commercial context". This is also the claim that we have addressed in section 7.3.3 above. There is no reference to the second claim (concerning "statistically unsound" and "unreasonable mechanical rules" that "produce economically irrational results") anywhere in Korea's first written submission, nor any indication of any arguments that might support such claim. Thus, although the second claim is covered by the Panel's terms of reference (as defined by Korea's Request for Establishment of a panel), Korea failed to pursue that claim in its first written submission.146
7.84.
Furthermore, even if the relevant allegations could somehow be treated as arguments pertaining to the claim that was pursued in Korea's first written submission (concerning the USDOC's failure to consider the "commercial context"), there is no doubt that such arguments were not included in Korea's first written submission, contrary to the requirement of paragraph 6 of the Panel's Working Procedures. Korea contends that the relevant allegations could not have been included in its first written submission because they rebut arguments made subsequently by the United States.147 Concerning the allegations of WTO-inconsistency in respect of the USDOC's use of standard deviations and average export prices, Korea contends that these allegations respond to the United States' assertion that the USDOC had applied the NailsII methodology "as a rigorous and holistic analysis".148 Regarding the sufficiency test, Korea contends that the Panel should address this argument because the issue of the sufficiency test was raised by the United States as a rebuttal to Korea's argument about the USDOC's application of the Nails II methodology in the Washers anti-dumping investigation.149 Korea refers in this regard to the United States' response to Panel question No. 2.2, in which the United States asserted that "the USDOC considers, on a case by case basis, whether the volume of export sales which pass the NailsII methodology constitutes a sufficient volume of sales as compared to all sales made by the exporter during the period of investigation".150
7.85.
We accept that rebuttal arguments need not be included in a party's first written submission. In our view, though, the relevant allegations of WTO-inconsistency are more realistically treated as arguments in support of the second claim outlined above (concerning "statistically unsound" and "unreasonable mechanical rules" that "produce economically irrational results") than as arguments rebutting arguments made by the United States in defence of the first claim outlined above (concerning the relevance of the "commercial context"). The subject‑matter of the relevant arguments relates far more closely to Korea's statistical claim than to Korea's "commercial context" claim. Furthermore, we would not normally expect rebuttal arguments to form the basis for specific allegations of WTO-inconsistency, as is the case with the allegations of WTO-inconsistency at issue.151
7.86.
In any event, it is well established that panels are not required to address all arguments made by the parties.152 We do not consider it necessary to address the United States' general assertion that the USDOC conducted a "rigorous and holistic analysis" in applying the Nails II methodology in resolving Korea's claim that the USDOC failed to consider the "commercial context" in establishing the existence of a pattern of transactions. The United States' assertion is very general and therefore not relevant to our evaluation of Korea's claim. Accordingly, there is no need for us to address Korea's alleged rebuttal of the United States' general assertion.
7.87.
The same is true for the sufficiency issue. The United States' assertion regarding the USDOC's application of a sufficiency test was part of the United States' response to a request by the Panel to explain how it had determined the existence of a pattern in the Washers anti-dumping investigation. We do not consider it necessary to consider the United States' explanation regarding the USDOC's application of a sufficiency test in evaluating Korea's claim that the USDOC failed to consider the "commercial context" in establishing the existence of a pattern of transactions.153 For this reason, it is not necessary for us to address Korea's alleged rebuttal of this explanation.
7.88.
For the above reasons, we decline to make any findings regarding the abovementioned allegations of WTO-inconsistency set forth in paragraphs 102, 103 and 111-117 of Korea's second written submission.

7.4 CLAIMS CONCERNING THE DPM

7.89.
We now consider Korea's claims concerning the DPM, which has replaced the Nails II methodology since the Xanthan Gum anti-dumping investigation in March 2013.154 Korea challenges the DPM both "as such", and "as applied" in the first administrative review of the Washers anti-dumping order.155 To the extent that the same three alleged errors concerning the Nails II methodology applied in the Washers anti-dumping investigation are repeated in the application of the DPM in subsequent connected reviews, Korea also challenges them as ongoing conduct.156 Korea indicates that the key point of its multiple challenges is to establish the WTO‑inconsistency of the DPM as the underlying measure.157 Korea indicates that its preference is for the Panel to address its claims concerning the DPM "as such".158
7.90.
The United States disagrees that the DPM is a measure that may be challenged "as such".159 The United States further argues that even if the DPM may be challenged "as such", it cannot be found to be inconsistent with Article 2.4.2 "as such" because it does not necessarily result in a breach of Article 2.4.2.160 The United States asserts that the DPM cannot be challenged "as applied" in the present case, because the first administrative review of the Washers anti-dumping order has not yet been finalised, and it is not within the Panel's terms of reference.161 As regards Korea's ongoing conduct claim, the United States argues that the purported ongoing conduct measure is not within the Panel's terms of reference, as it consists of an indeterminate number of future anti-dumping measures for which no final action had been taken at the time of Korea's panel request.162 Moreover, the United States asserts that the facts in this dispute do not support the conclusion that the challenged practices "would likely continue to be applied in successive proceedings."163
7.91.
We will first address the issue whether the DPM may be challenged "as such". If we find that the DPM may be challenged "as such", we will then proceed to examine the substance of Korea's claims regarding that measure. After that, we will address Korea's "as applied" and "ongoing conduct" claims.

7.4.1 Whether the DPM is a measure that may be challenged "as such"

7.4.1.1 Main arguments of the parties

7.4.1.1.1 Korea

7.92.
Korea submits that the DPM is a rule or norm of general and prospective application that may be challenged in WTO dispute settlement proceedings. Korea asserts that the USDOC has described the nature of the DPM in writing.164 Referring to the jurisprudence of the Appellate Body in US – Zeroing (EC), Korea contends that even if the DPM is not considered to be expressed in the form of a written document, it may be challenged as an unwritten rule or norm if the complaining Member demonstrates (i) that the alleged "rule or norm" is attributable to the responding Member; (ii) its precise content; and (iii) that it has general and prospective application.165 Korea asserts that there can be no dispute that the DPM is attributable to the United States. Korea also asserts that the precise content of the DPM, as reflected in its systematic application since the Xanthan Gum anti-dumping investigation, is invariable.166 Korea asserts that the DPM also constitutes a rule or norm of general and prospective application. Korea argues in this regard that, since the DPM was first applied in an original investigation on 4 March 2013, and in an administrative review on 22 March 2013, the USDOC now applies it in all newly initiated anti‑dumping investigations and administrative reviews.167 Korea provides the Panel with a summary of 138 determinations where the DPM is applied (Exhibit KOR-95)168, the Generic SAS Code which embodies the DPM (Exhibit KOR-24)169, and an "expert opinion" (Exhibit KOR-94) which describes the precise content and the general and prospective application of the DPM.170 Korea also asserts that the USDOC has made it clear that it will continue using the DPM going forward. According to Korea, the USDOC has stated that "[t]he Department is now using a 'differential pricing' analysis instead of the targeted dumping analysis"171, and that it has "switched to a differential pricing analysis for preliminary results issued after March 4 [of 2013]".172

7.4.1.1.2 United States

7.93.
The United States argues that Korea has failed to demonstrate that the DPM exists as a measure that may be challenged "as such".173 The United States asserts that the evidence adduced by Korea is little more than a "string of cases or repeated action".174 Such evidence contrasts sharply with the evidence put forward before the panel in US – Zeroing (EC), and is insufficient to meet the "high threshold" as set out by the Appellate Body in that case.175 The United States points out that there exist instances wherein the USDOC has not applied the DPM. For example, in the Washers anti-dumping investigation the Nails II methodology was applied.176 Furthermore, the United States argues that the USDOC's Request for Comments shows that the USDOC "is seeking comments to further develop and/or refine its differential pricing analysis".177 The United States adds that the Generic SAS Code submitted by Korea does not support its argument that the DPM is a measure consisting of a rule or norm of general and prospective application, because that Code is not permanent or fixed, and may be changed depending on the particular situation in a given proceeding.178 With regards to Korea's summary of the 138 proceedings where the USDOC used the DPM in order to determine whether to use the W‑T comparison methodology, the United States argues that the summary does not establish the content of the determinations or that the USDOC applied one and the same DPM in each of the 138 determinations.179 In the view of the United States, even if Korea were to provide the Panel with actual public documentation pertaining to the 138 determinations, that would not suffice. What is needed is a "close examination of the records of the determinations".180 The United States further points out that several elements of Korea's summary are misleading. First, the figure of 138 proceedings includes 32 preliminary determinations where the USDOC has not rendered final determinations.181 Second, there are a few cases where the USDOC did not apply the DPM because it applied adverse facts available to a respondent, or the USDOC lacked sufficient data to apply the DPM.182 The United States asserts that the USDOC is not applying the same DPM in case after case.183 Finally, the United States challenges the impartiality of Korea's "expert", on the basis that she works for one of the law firms representing Korea in this dispute, and one of the respondents in the Washers proceedings before the USDOC.184

7.4.1.2 Main arguments of the third parties185

7.94.
Brazil argues that the distinction between "as such" and "as applied" claims was a jurisprudential development to facilitate the understanding of the nature of a measure at issue. There is no limitation on the types of measures that may be challenged. According to Brazil, the criteria set out in US – Zeroing (EC) must be assessed on a case-by-case basis, taking into consideration not only the characteristics and the nature of the measure that is being challenged but also the period of time that the measure has been in place.186 Furthermore, recognizing the value of "as such" claims in protecting the security and predictability to conduct future trade, Brazil considers it would be important and of systemic relevance to avoid reaching a situation similar to what WTO Members faced in the "zeroing" saga until very recently in the WTO.187
7.95.
China submits that care is necessary in approaching the novel issues raised by Korea's challenges to both the Nails II methodology and the DPM. China argues that the Panel should be mindful not to go beyond the issues that are squarely before it, because elements of these methodologies not challenged in this case are, or may well be, the subject of distinct proceedings.188
7.96.
The European Union argues that since the DPM was not applied in the Washers anti‑dumping investigation, the Panel does not have before it the confidential documents (such as the Programme Log and Output for each exporter) that would explain precisely what was done. The European Union asserts that the Panel is therefore unable to make findings about either the existence or precise content of the DPM.189

7.4.1.3 Evaluation by the Panel

7.97.
Korea first claims that the DPM is a rule or norm of general and prospective application, which is expressed in the form of a written document.190 As discussed below, the DPM has been described by USDOC in a series of documents. However, Korea has not identified a single document which establishes, normatively, the content of the DPM, that the DPM is the means for applying the second sentence of Article 2.4.2, or that the DPM must be applied in all anti-dumping proceedings. Accordingly, we do not consider that the DPM may be considered as a rule or norm expressed in the form of a written document. Korea asserts that, even if the DPM is considered not to be expressed in the form of a written document, it still can be challenged "as such". In US – Zeroing (EC), the Appellate Body stated that rules or norms may be challenged "as such" even if they are not expressed in the form of a written instrument.191 The Appellate Body cautioned that, when a challenge is brought against a rule or norm that is not expressed in the form of a written document, "the very existence of the challenged 'rule or norm' may be uncertain", and its existence shall not be lightly assumed.192 The Appellate Body articulated the following legal standard for assessing whether a complainant has proven the existence of an unwritten rule or norm of general and prospective application:

In our view, when bringing a challenge against such a "rule or norm" that constitutes a measure of general and prospective application, a complaining party must clearly establish, through arguments and supporting evidence, at least that the alleged "rule or norm" is attributable to the responding Member; its precise content; and indeed, that it does have general and prospective application. It is only if the complaining party meets this high threshold, and puts forward sufficient evidence with respect to each of these elements, that a panel would be in a position to find that the "rule or norm" may be challenged, as such. This evidence may include proof of the systematic application of the challenged "rule or norm". Particular rigour is required on the part of a panel to support a conclusion as to the existence of a "rule or norm" that is not expressed in the form of a written document. A panel must carefully examine the concrete instrumentalities that evidence the existence of the purported "rule or norm" in order to conclude that such "rule or norm" can be challenged, as such.193

7.98.
This legal standard has been applied by panels considering "as such" challenges in US – Zeroing (Japan), US – Stainless Steel (Mexico), US – Shrimp (Viet Nam), US – Shrimp (Viet Nam II)194, and Argentina – Import Measures.195 This standard was confirmed by the Appellate Body in Argentina – Import Measures.196 Accordingly, in assessing whether the evidence presented by Korea is sufficient to prove the existence of the DPM as a measure that can be challenged "as such", we will be guided by the legal standard developed by the Appellate Body in US – Zeroing (EC).197 We will consider, in particular, whether Korea has provided sufficient evidence to clearly establish (i) that the DPM is "attributable to" the United States, (ii) the precise content of the DPM, and (iii) that the DPM has general and prospective application. We will address each of these elements in turn.

7.4.1.3.1 Attribution of the DPM to the United States

7.99.
Korea asserts that there can be no dispute that the DPM is attributable to the United States.198 The United States does not contest this. As will be explained below, the USDOC has adopted a deliberate policy of using the DPM to govern the application of the W-T comparison methodology since March 2013. Furthermore, the precise content of the DPM can be ascertained on the basis of USDOC documents.199 Accordingly, we conclude that the DPM is attributable to the United States.

7.4.1.3.2 The precise content of the DPM

7.100.
Concerning the precise content of the DPM, Korea refers to a number of USDOC memoranda pertaining to particular anti-dumping proceedings.200 These memoranda contain statements confirming that the USDOC applied the DPM in those proceedings. They also contain a detailed description of the nature and content of the DPM applied by the USDOC in those proceedings. For example, the Post-Preliminary Analysis Memorandum in Xanthan Gum from the People's Republic of China describes the DPM in the following terms:

The differential pricing analysis used in this post-preliminary analysis evaluates all purchasers, regions, and time periods to determine whether a pattern of significant price differences exists. The analysis incorporates default group definitions for purchasers, regions, time periods, and comparable merchandise. Purchasers are based on the customer codes reported by Fufeng. Regions are defined using the reported destination code (i.e. zip code) and are grouped into regions based upon standard definitions published by the U.S. Census Bureau. Time periods are defined by the quarter within the period of investigation being examined based upon the reported date of sale. For purposes of analyzing sales transactions by customer, region and time period, comparable merchandise is considered using the product control number and any characteristics of the sales, other than purchaser, region and time period, that the Department uses in making comparisons between export price (or constructed export price) and normal value for the individual dumping margins.

In the first stage of the differential pricing analysis used here, the "Cohen's d test" is applied. The Cohen's d test is a generally recognized statistical measure of the extent of the difference between the mean of a test group and the mean of a comparison group. First, for comparable merchandise, the Cohen's d test is applied when the test and comparison groups of data each have at least two observations, and when the sales quantity for the comparison group account for at least five percent of the total sales quantity of the comparable merchandise. Then, the Cohen's d coefficient is calculated to evaluate the extent to which the net prices to a particular purchaser, region or time period differ significantly from the net prices of all other sales of comparable merchandise. The extent of these differences can be quantified by one of three fixed thresholds defined by the Cohen's d test: small, medium or large. Of these thresholds, the large threshold provides the strongest indication that there is a significant difference between the means of the test and comparison groups, while the small threshold provides the weakest indication that such a difference exists. The difference was considered significant if the calculated Cohen's d coefficient is equal to or exceeds the large (i.e. 0.8) threshold.

Next, a ratio test assesses the extent of the significant price differences for all sales as measured by the Cohen's d test. If the value of sales to purchasers, regions, and time periods that pass the Cohen's d test account for 66 percent or more of the value of total sales, then the identified pattern of export prices that differ significantly supports the consideration of the application of the average-to-transaction method to all sales as an alternative to the average-to-average method. If the value of sales to purchasers, regions, and time periods that pass the Cohen's d test accounts for more than 33 percent and less than 66 percent of the value of total sales, then the results support consideration of the application of an average-to-transaction method to those sales identified as passing the Cohen's d test as an alternative to the average-to-average method. If 33 percent or less of the value of total sales passes the Cohen's d test, then the results of the Cohen's d test do not support consideration of an alternative to the average-to-average method.

If both tests in the first stage (i.e. the Cohen's d test and the ratio test) demonstrate the existence of a pattern of export prices that differ significantly such that an alternative comparison method should be considered, then in the second stage of the differential pricing analysis, we examine whether using only the average-to-average method can appropriately account for such significant price differences. In considering this question, the Department tests whether using an alternative method, based on the results of the ratio test described above, yields a meaningful difference in the weighted-average dumping margin as compared to that resulting from the use of the average to- average method only. If the difference between the two calculations is meaningful, this demonstrates that the average-to-average method cannot account for price differences such as those observed in this analysis, and, therefore, an alternative method would be appropriate. A difference in the weighted-average dumping margins is considered meaningful if 1) there is a 25 percent relative change in the weighted-average dumping margin between the average-to-average method and the alternative method, or 2) the resulting weighted-average dumping margin moves across the de minimis threshold.201

7.102.
The Issues and Decision Memoranda in Citric Acid and Certain Citrate Salts from Canada (Exhibit KOR-52), Fresh Garlic from the People's Republic of China (Exhibit KOR-54) and Xanthan Gum from the People's Republic of China (ExhibitKOR-67)202 also describe the nature and content of the DPM applied by the USDOC in those proceedings in largely identical terms. The substantive content of the DPM in each of these Issues and Decision memoranda is identical: (i) the Cohen's d test, (ii) the ratio test, and (iii) the "meaningful difference" test. These Issues and Decision Memoranda constitute evidence of the precise content of the DPM as applied by the USDOC in general.
7.103.
Korea also refers to the fact that the USDOC sought comments on the DPM in the form of a Request for Comments on the DPM (Exhibit KOR-25). Korea asserts that the USDOC's summary of the DPM in the Request for Comments establishes the precise content of the DPM as a measure. We agree, for the USDOC's Request for Comments on the DPM describes the application of the DPM in terms almost identical to those in the abovementioned Issues and Decision Memoranda, referring in particular to (i) the Cohen's d test, (ii) the ratio test, and (iii) the "meaningful difference" test.
7.104.
In addition, Korea provides further details of the precise content of the DPM through an opinion of a practitioner on the USDOC's Generic SAS Code.203 Korea refers in this regard to an affidavit from Ms Anya Naschak204, an International Trade Analyst with the law firm representing Korea before this Panel, and formerly an analyst with the USDOC (Exhibit KOR-94).205 In her affidavit, Ms Naschak describes in detail how the Generic SAS Code implements the DPM.206 In particular, Ms Naschak identifies the following eight separate "steps" in the Generic SAS Code:

Step 1: Calculate the average weighted mean price for a particular product model (i.e. CONNUM) in the tested group (i.e. customer, region or time) (for example, Model 8 for the first quarter of the year (1Q).

Step 2: Calculate the average weighted mean price for the remainder of the test group (not including those transactions being tested) (that is, for example, the average weighted mean price for Model 8 for all other quarters (2Q, 3Q and 4Q).

Step 3: Calculate the standard deviation for all transactions for the particular model (e.g. Model 8) (including those being tested), and also calculate the Cohen's d test for all model (CONNUM)-basis (time, customer or region) pricing.

Step 4: Insert the results of Step 1, Step 2 and Step 3 into Commerce's differential pricing test.

Step 5: Determine all CONNUM-basis pricing that have a Cohen's d result more than the absolute value of 0.8 (in other words, more than +0.8 or less than -0.8), and then flag all individual sales transaction in those CONNUMs accordingly (e.g. "Pass" or "No Pass" based on the results).

Step 6: Determine percentage of the total U.S. sales transactions (by value) that meet Step 5.

Step 7: Calculate overall AD margin three ways: (a) not applying [the W-T comparison methodology], (b) applying [the W-T comparison methodology] to only those U.S. sales transactions included in Step 5 and (c) applying [the W-T comparison methodology] to all U.S. sales transactions (regardless of whether they are or are not included in Step 5).

Step 8: Determine whether the results of Step 7 result in a "meaningful difference" in the margin, defined as either (a) crossing the de minimus threshold; or (b) resulting in a 25% relative change in the margin between applying [the W-T comparison methodology] and not.207

7.105.
In her affidavit, Ms Naschak also explains that the DPM is enshrined in the Generic SAS Code's "Macros Program", which is not subject to changes by individual case analysts handling anti-dumping investigations and reviews. Based on her personal involvement and analysis of the Generic SAS Code as applied in four USDOC preliminary and final determinations over a two-year time span from March 2013 to March 2015208, Ms Naschak confirms that the SAS code used to apply the DPM in each of these cases was identical in all material respects. Her affidavit also directs our attention to certain actual SAS code language that was utilized in the abovementioned proceedings. That code language was identical in each case, and identical to the Generic SAS Code. We observe that the relevant Generic SAS Code confirms the description of the DPM in the abovementioned Issues and Decisions Memoranda and the USDOC's Request for Comments. In particular, Steps 1-5 above correspond to the Cohen's d test; Steps 6 and 7 correspond to the ratio test; Step 8 corresponds to the "meaningful difference" test.
7.106.
The United States argues that the Generic SAS Code does not support Korea's argument that the DPM is a measure consisting of a rule or norm of general and prospective application, because this Generic SAS Code is not permanent or fixed, and may be changed depending on the particular situation in a given proceeding. However, in response to our question regarding the type of changes to the DPM that can be made by government officials handling an anti-dumping investigation or review, the United States referred only to possible modifications concerning the default group definitions (i.e. how purchasers, regions and time periods are defined), where such changes can be or have been made.209 The United States did not indicate that changes could have been made regarding the Cohen's d test, the ratio test, or the "meaningful difference" test.
7.107.
Based on a careful review of the entirety of the evidence above, we consider that the description of the DPM contained therein is precise and complete. The evidence explains in detail the methods applied to determine the existence of a "pattern of export prices which differs significantly among different purchasers, regions or time periods", and whether the identified pattern of significant price differences cannot be appropriately taken into account by the W-W or T-T comparison methodologies. The evidence also demonstrates that the DPM is applied in a consistent manner. The three main components of the DPM, namely (i) the Cohen's d test, (ii) the ratio test, and (iii) the "meaningful difference" test, feature throughout the evidence supplied by Korea, and are described in virtually identical terms on each occasion. These main components were also included in the United States' own description of the DPM applied in the first administrative review of the Washers anti-dumping duty order.210 Furthermore, the United States has not contested any aspect of Korea's description of the DPM as being imprecise or incorrect.
7.108.
Accordingly, we conclude that Korea has established the precise content of the DPM.

7.4.1.3.3 General and prospective application of the DPM

7.109.
The abovementioned Issues and Decision Memoranda contain statements indicating that the USDOC has adopted a policy choice of applying the DPM since 4 March 2013. For example, the USDOC stated shortly after that date that "[t]he Department is now using a 'differential pricing' analysis instead of the targeted dumping analysis"211, and that it has "switched to a differential pricing analysis for preliminary results issued after March 4".212 Furthermore, in its Request for Comments on the DPM, the USDOC states clearly that:

[T]he Department is developing a new approach for determining whether application of such a comparison method is appropriate in a particular segment of a proceeding pursuant to 19 CFR 351,414(c)(1) and consistent with section 777A(d)(1)(B) of the Act. The new approach is referred to as the "differential pricing" analysis, as a more precise characterization of the purpose and application of section 777A(d)(1)(B) of the Act.213

7.110.
We take particular note of the USDOC's reference to the DPM as the "new approach" for determining whether to apply the W-T comparison methodology. This indicates that the USDOC has adopted a policy choice of applying the DPM, going beyond the simple repetition of the application of that methodology in isolated cases. As previous panels have done214, we consider such policy statements as evidence of the general and prospective nature of the DPM.
7.111.
Korea also relies on a summary of 138 instances in which the DPM has been applied in anti-dumping proceedings since 4 March 2013. The United States argues that Korea must provide a "close examination of the records of the determinations"215 to discharge its burden of proof that one and the same DPM was applied in all of these cases. Although we agree with the United States that the burden of proving the general and prospective application of the DPM rests on Korea, we find the United States' approach to be unduly restrictive and burdensome.216 We note that Korea offered, at the first meeting of the Panel, to provide all public documentation pertaining to the USDOC's application of the DPM in 138 anti-dumping proceedings.217 We do not consider that such an exercise is warranted or necessary in the present dispute. We observe that the summary of the relevant proceedings provided by Korea contains most, if not all, pertinent information relevant to the issue before the Panel: whether the DPM was applied in the determinations, the results of the application of the Cohen's d and the ratio tests, the outcome of the "meaningful difference" test, and the final comparison methodology applied by the USDOC in each of these determinations. The summary provided by Korea confirms that the DPM was applied in all of these determinations, except where its application was not necessary given that the USDOC applied adverse facts available or where there were insufficient comparable sales data.218
7.112.
The United States also argues that certain aspects of the summary of the proceedings provided by Korea are misleading. First, the United States refers to the fact that 32 out of the 138 determinations are preliminary determinations for which the final determinations are not published yet. However, the preliminary nature of these determinations does not change the fact that the DPM has been applied systematically in all proceedings initiated after 4 March 2013. Second, the fact that the DPM was not applied when the USDOC applied adverse facts available, or when there was not sufficient data to apply the DPM, should not be determinative. The United States does not contest that the USDOC applied the DPM in all cases where the potential application of the W-T comparison methodology could have been considered. Nor has the United States suggested that the USDOC would have used some methodology other than the DPM for applying the second sentence of Article 2.4.2, in cases where facts available were used, or where the relevant data was not available.
7.113.
Korea also relies on the affidavit of Ms Naschak that the DPM is "a well-defined policy enshrined in the SAS Code that is being applied consistently and without any material change in every antidumping proceeding before the USDOC".219 We recall that the United States argues that the Generic SAS Code submitted by Korea does not support the general and prospective application of the DPM because it may be changed depending on the particular situation in a given proceeding. However, while not identifying any material change to the DPM, the United States only emphasized in general terms the "continuing evolution of the USDOC's approach to determining whether to apply the alternative, average-to-transaction comparison methodology" as evidenced by its request for comments and the possibility for interested parties to make comments on the DPM in the first administrative review of the Washers anti-dumping duty order.220
7.114.
Finally, we note that the United States argues for an "appropriately broad view" of the evidence by taking into account all methodologies historically used to determine whether or not to resort to the W-T comparison methodology, including those that were applied before the DPM was introduced, such as the Nails II methodology.221 We are not persuaded by this broad view proposed by the United States. As mentioned above, the United States itself refers to the DPM as the "new approach" to determining whether the W-T comparison methodology should be applied. We have also found that the precise content of this "new approach" to applying the second sentence of Article 2.4.2 can be ascertained, as distinct from other methodologies previously used by the USDOC when applying the second sentence of Article 2.4.2. Therefore, our analysis shall focus on the DPM itself, as distinct from other methodologies previously applied by the USDOC for the application of the second sentence of Article 2.4.2.
7.115.