World Trade Organization

• Author: International Law Group

The Appellate Body of the World Trade Organization (WTO) has reversed most of the Panel Report in the U.S.-Korea dispute over Dynamic Random Access Memory Semiconductors (DRAMS). The dispute arose when the U.S. Department of Commerce (USDOC) imposed a countervailing duty of 44.29 percent on Korean memory chips.

The earlier Panel Report of February 2005 found that the U.S. had failed to back up its claims that Korea's Hynix Semiconductor, Inc., was getting illegal subsidies. In particular, the Panel held that the USDOC's "Final Subsidy Determination," the U.S. International Trade Commission's "Final Injury Determination," as well as the "Final Countervailing Duty Order" based thereon, were inconsistent with Articles 1, 2 and 15.5 of the Subsidies and Countervailing Measures (SCM) Agreement. See 2005 International Law Update 29.

The U.S. successfully appealed. In essence, the Appellate Body leaves the U.S. measures in place, but does not endorse their legality. In particular, the Appellate Body holds that the Panel erred in three respects. First, it mistakenly failed to examine the USDOC's evidence in its totality and instead demanded that individual pieces of evidence each establish the Korean Government's role in subsidizing...