2. Secretary of Commerce's Discretion

a) Claims Raised by Korea

1.162 Korea claims that the DOC's regulations, including the "no likelihood/not likely" criterion, give the Secretary of Commerce unreasonably broad discretion in making revocation determinations and allow the Secretary to maintain the duty in an arbitrary and unjustifiable manner in violation of Article 11. The following are Koreas arguments in support of this claim:

1.163 Under US law, the Secretary may, but is not required to, revoke an order if a Respondent meets the three requirements above. Thus, a Respondent has the burden of establishing each of these elements, but even if the Respondent meets this burden, the Secretary nonetheless has the discretion to refuse to revoke the order. Also, the statute and regulations contain absolutely no standards or factors governing the "not likely" determination.

1.164 The DOC has concurred with this analysis. According to the DOC, this scheme is permitted by the enabling legislation:

1.165 That the Secretary's discretion not to revoke is utter and complete under US law has been confirmed by the US courts. According to the US Court of International Trade:

• "The language of the regulations indicates that the Secretary is not compelled to grant revocation even when plaintiffs satisfy the requirements for revocation";¹⁰⁰
• "The regulation does not present objective criterion for determining whether there is "no likelihood" of resumption of LTFV sales. Instead, the petitioner [the Respondent before the DOC] must establish this fact to the satisfaction of the Secretary";¹⁰¹
• "[The regulation] vests a great deal of discretion in the Secretary to determine the propriety of revocation . . .."
• "[T]he language employed indicates that Commerce is not compelled to grant revocation, as the above noted sections refer to what the Secretary may do when acting on an application for revocation . . .."
• "[E]ven if the administrative reviews reveal that plaintiffs have not been dumping for the periods in question, Commerce may exercise its discretion not to grant revocation";¹⁰² and
• "[E]ven assuming the plaintiffs had, as they claim, satisfied all of the requirements for revocation contained in [the regulation], the ITA was not required to grant their request."¹⁰³

1.166 These excerpts confirm that the Secretary's discretion not to revoke an order is unfettered.

1.167 Finally, the US anti-dumping law and all of the Secretary's determinations that follow it are completely insulated from domestic claims that the US law (or the Secretary's determination) violates a US obligation under any of the WTO agreements, including the AD Agreement. Section 102(a)(1) of the Uruguay Round Agreements Act (the legislation implementing the WTO Agreements) provides:

1.168 Thus, even where the Secretary follows a US law that a reviewing court later finds is inconsistent with a US obligation under a WTO agreement, the court is required by US law to find that the WTO Agreement provision has no effect.

1.169 The United States' revocation scheme completely ignores the requirements of Article 11 of the AD Agreement. It fails to recognize that in certain situations, such as that presented here, the AD Agreement requires the Secretary to revoke an order. This is the purpose--the very essence, if you will--of Article 11. Moreover, as applied in the Third Annual Review of DRAMs from Korea, the US scheme violated Article 11.

1.170 In contrast, the US regime never requires the Secretary to revoke an order. No matter what the circumstances are, the Secretary always has the discretion to refuse to revoke an order. A step-by-step review of the US revocation scheme shows the absolute discretion bestowed on the Secretary.

1.171 First, the US regulations impose three requirements on a Respondent before revocation will even be considered. In brief they are:

The key requirement here is the second--the "no likelihood/not likely" requirement--because the DOC found that Respondents met the first and third requirements, but not the second requirement.

1.172 Under US law, the Respondent bears the burden of establishing that future dumping is "not likely,"¹⁰⁶ and this shifting of the burden of proof is, by itself, a violation of Article 11. However, it is exacerbated by the fact that the "no likelihood/not likely" requirement has no "objective criterion" according to the US court that reviews challenged anti-dumping determinations of the DOC:

1.173 Second, even in those cases where the Secretary finds that a Respondent has satisfied all three requirements, the Secretary still has the discretion to not revoke the order. This is because the regulation states only that "[t]he Secretary may revoke" an order where he finds that the three criteria have been met to his satisfaction.¹⁰⁹

1.174 Finally, the Secretary's exercise of discretion is virtually unrestrained. This is due primarily to US federal court holdings that the decisions of the Secretary are subject to "'tremendous deference'"¹¹⁰ by the reviewing courts (the CIT and the CAFC), and also to the use of the word "may" in the statute and the regulation.

1.175 In sum, the "no likelihood/not likely" requirement grants the Secretary unbounded discretion and, even where the Secretary finds that a Respondent has met each of the three requirements, the Secretary can, by executive fiat, refuse to revoke the duties. Because revocation is not a matter of discretion under the WTO, the United States has turned Article 11 on its head. In the United States, revocation is always a matter of discretion, without any regard to WTO requirements, and, as exercised in this case, the US discretion violated Article 11 of the AD Agreement.

b) Response by the United States

1.176 The following are the United States' arguments in response to Korea's claim:

1.177 The Congress of the United States has given the DOC broad discretion in administering the anti-dumping law, in general, and in the revocation of orders, in particular.¹¹¹ Section 751(d) of the Act states, in part:

1.178 Therefore, except to impose a requirement that revocation occur after a review under section 751 of the Act, Congress has not specified the procedures that the DOC must follow, or the criteria that it must consider, in determining whether to revoke an outstanding anti-dumping duty order.¹¹³ Instead, like legislatures around the world, Congress delegated to an administrative agency (here, the DOC) the responsibility for working out the details.

1.179 This is not to say, however, that the DOC can do whatever it wants, as Korea suggests. The agency's discretion, vis-à-vis interested parties, is limited by its regulations, administrative practice, and relevant administrative law doctrines.¹¹⁴ In the exercise of the authority conferred on it by the Congress, the DOC has promulgated section 353.25 of its regulations which sets out the criteria for revocation.¹¹⁵ This regulation limits the DOC's discretion to an examination of the issues surrounding the established criteria. Furthermore, in applying the regulation, the DOC has developed an administrative practice, from which it may not deviate unless it provides an explanation.¹¹⁶ For the courts of the United States to uphold a deviation from past practice, the explanation must be consistent with a reasonable interpretation of the law and be supported by substantial evidence on the record of the underlying administrative proceeding.¹¹⁷ Even then, the DOC's discretion may be further constrained by the legal doctrines of "collateral estoppel"¹¹⁸ and the "law of the proceeding."¹¹⁹

1.180 In fact, over the years, the DOC's administrative practice regarding revocation has been exceedingly consistent. The "no likelihood"/"not likely" standard first appeared in the DOC's regulations in 1980.¹²⁰ Since then, the DOC has revoked literally hundreds of anti-dumping measures based upon an absence of dumping.

1.181 Lastly, while Korea is presenting its claim before this Panel that the DOC's discretion is "unfettered," the Respondents are currently prosecuting a lawsuit in the CIT challenging the DOC's failure to revoke in the Final Results Third Review.¹²¹ If the DOC's discretion truly was incapable of being checked or regulated by the courts, then Respondents' lawsuit would be pointless.

1.182 Korea claims, quite apart from the Final Results Third Review, that the DOC's regulations confer upon the Secretary of Commerce a level of discretion that violates Article 11 of the AD Agreement. According to Korea, the "not likely" standard in section 353.25(a) of the DOC's regulations has no "objective criterion." Therefore, the DOC allegedly conducts its analysis "without consistent reference to transparent and established standards."¹²²

1.183 First, the DOC's discretion is not "unbounded." The DOC's discretion is limited by its regulations, administrative practice, and administrative law doctrines.

1.184 Secondly, while the statute uses the term "may revoke," and the term "not likely" is not defined further in the DOC's regulations, no panel has ever demanded that a regulation which implements a GATT or WTO obligation must be drafted in such a way as to define each element of the regulation. Indeed, discretionary legislation which arguably permits, but does not require, an administrative agency to promulgate regulations or take other action that is WTO-inconsistent does not, as such, violate the WTO agreements.¹²³ A complaining party must show that the agency actually took WTO-inconsistent action.¹²⁴

1.185 Finally, it is hard to understand how the "not likely" standard can be condemned for lacking so-called "objective criteria," when Article 11, itself, lacks such criteria. For example, there is nothing in the AD Agreement that fleshes out the terms "necessary" or "warranted." If these terms lack "objective criteria," is each WTO Member which considers treaties self-executing under its legal and constitutional systems guilty of violating the AD Agreement if it fails to promulgate regulations that further define these terms?

1.186 The United States, in response to a question from the Panel,¹²⁵ subsequently further argued as follows:

1.187 The discretion granted to the Secretary under section 353.25(a)(2) is subject to legal/judicial control. The DOC's discretion is limited by its regulations, administrative practice, and relevant administrative law doctrines. In addition, in order for a determination by the DOC under section 353.25(a)(2) to be sustained by the US courts, the determination must be consistent with a reasonable interpretation of the law and be supported by substantial evidence on the record of the underlying administrative proceeding.

1.188 Indeed, the US courts themselves have best explained the legal/judicial controls on the DOC's discretion. The US Court of International Trade ("CIT") in Manufacturas Industriales De Nogales, S.A. v. United States, 666 F. Supp. 1562, 1565 (Ct. Int'l Trade 1987), declared that the DOC's discretion is not "unbounded." In addition, the US Court of Appeals for the Federal Circuit, which reviews decisions of the Court of International Trade, has stated:

1.189 As the United States has discussed, the "general standards" to which the court refers include the expectation that the DOC will examine only those issues related to the criteria set forth in its regulation, the requirement to adhere to prior administrative practice, and the necessity that each decision be based upon substantial evidence contained in the administrative record.¹²⁷

1.190 Based upon the manner in which the question has been framed, there is apparent interest by the Panel in whether section 353.25(a)(2) properly reflects the obligations contained in Article 11. The United States maintains that section 353.25(a)(2) actually tracks the obligations contained in Article 11. In this regard, Article 11 requires Members to review whether the continued imposition of a definitive anti-dumping duty is warranted. Similarly, section 353.25(a)(2) requires the DOC, upon proper request, to review whether revocation of an anti-dumping order is appropriate. Moreover, Article 11 requires a Member to terminate the anti-dumping duty if, as a result of a review under Article 11.2, the authorities determine that the anti-dumping duty is no longer warranted. Likewise, section 353.25(a)(2) imposes an obligation on the DOC to revoke the anti-dumping order if the three criteria related to the need for the continued imposition of the order are satisfied.

1.191 The fact that section 353.25(a)(2) contains the term "may," as opposed to the term "shall," is merely a reflection of the discretion accorded to the DOC by the United States Congress. This discretion is embodied in section 751(d) of the Tariff Act, which states that "the administering authority may revoke, in whole or in part, . . . an anti-dumping duty order or finding . . . after review . . ." The DOC, in promulgating section 353.25(a)(2), determined that revocation of an order will occur if the three criteria set forth in that provision are satisfied. Therefore, the use of the term "may" does not connote an ability to deviate from its practice of revoking an anti-dumping order whenever those three criteria are satisfied.

1.192 In its second oral statement before the Panel, the United States further argued:

1.193 Korea also asserts that the United States has misled the Panel by claiming that the DOC has revoked literally hundreds of anti-dumping measures based upon an absence of dumping. The United States has not misled the Panel. First of all, the representation made by the United States is absolutely true and Korea does not present evidence to the contrary. What Korea has done is to recast the statement to cover a different universe of cases -- that is, cases where the DOC received and examined evidence directly bearing on the no likelihood/not likely criterion. This universe of cases, Korea asserts, shows that the DOC only applies the not likely criterion when it wants to "block revocation." However, the United States has already shown that the depth of the agency's analysis under section 353.25 depends, almost exclusively, upon the arguments of the parties and the evidence on the record of the administrative proceeding -- not the whim of the DOC. Secondly, a review of the cases over the past 19 years where the DOC has examined the no likelihood/not likely standard reveals that in a substantial number of cases, the United States revoked the subject order. Now, if the United States only applied the not likely criterion when it wanted to "block revocation," as Korea asserts, wouldn't one expect all, or at least most, of these cases to result in maintenance of the order -- not revocation?

To continue with Speculative Analysis of Future Dumping

⁹⁹ Frozen Concentrated Orange Juice from Brazil, 56 Fed. Reg. 52510, 52513 (Response of the DOC to Comment 3) (21 October 1991) (emphases added by Korea) (Ex. ROK-4).

¹⁰⁰ Toshiba, 15 C.I.T. at 599 (citation omitted) (denying plaintiff/Respondent's challenge to the DOC's determination not to revoke) (Ex. ROK-5).

¹⁰¹ Id. at 600.

¹⁰² Matsushita, 688 F. Supp. at 623 (citations omitted) (denying plaintiff/Respondent's challenge to the DOC's determination not to revoke), aff'd, 861 F.2d 257 (Fed. Cir. 1988) (Ex. ROK-6).

¹⁰³ Manufacturas Industriales, 666 F. Supp. at 1565 (denying plaintiff/Respondent's challenge to the DOC's determination not to revoke) (Ex. ROK-7).

¹⁰⁴ The United States limits application of the two percent de minimis threshold required by Article 5.8 of the AD Agreement to the investigation stage of proceedings. For administrative reviews, the United States maintains its pre-WTO de minimis threshold of 0.5 percent. See 19 C.F.R. � 351.106(c) of the DOC's anti-dumping regulations; 62 Fed. Reg. 27296, 27382-83 (19 May 1997) (Ex. ROK-49).

¹⁰⁵ See 19 C.F.R. � 353.25(a)(2) (1996).

¹⁰⁶ See Sanyo Electric, 15 C.I.T. 609, 1991 C.I.T. LEXIS 441 (Ex. ROK-50); Toshiba, 15 C.I.T. at 600 (Ex. ROK-5); Manufacturas Industriales, 666 F. Supp. at 1566 (Ex. ROK-7).

¹⁰⁷ See Toshiba, 15 C.I.T. at 600 (Ex. ROK-5).

¹⁰⁸ The Secretary apparently considers many factors, but a review of past practice shows that there is no consistent method or means of analysis.

¹⁰⁹ See also 19 U.S.C. � 1675(d)(1) ("The administering authority may revoke . . . an anti-dumping duty . . ." (emphasis added by Korea)).

¹¹⁰ See, e.g., Manufacturas Industriales, 666 F. Supp. at 1567 (quoting Smith-Corona v. United States, 713 F.2d 1568, 1582 (Fed. Cir. 1983)) (Ex. ROK-7).

¹¹¹ Oregon Steel Mills Inc. v. United States, 862 F.2d 1541, 1544 (Fed. Cir. 1988) (Ex. USA-68); Toshiba Corp. v. United States, 15 CIT 597, 599 (1991) (Ex. USA-69).

¹¹² 19 U.S.C. � 1675(d)(1) (1997) (emphasis added by the United States) (Ex. USA-19).

¹¹³ In fact, the statute provides several means by which an anti-dumping duty order may be revoked. For example, section 751(d) of the Act provides that an order may be revoked following a "changed circumstances" review pursuant to section 751(b) of the Act. 19 U.S.C. � 1675(d)(1) (1997) (Ex. USA-19). The principal issue in this case, however, is whether the United States acted in accordance with its international obligations when it did not revoke, in part, the anti-dumping duty order on DRAMs from Korea following an "administrative" review pursuant to section 353.25(a) of the DOC's regulations.

¹¹⁴ Manufacturas, 666 F. Supp. at 1565 (the DOC's discretion is not "unbounded") (Ex. USA-60).

¹¹⁵ See 19 C.F.R. � 353.25(a) (1997) (Ex. USA-24).

¹¹⁶ UAW v. NLRB, 459 F.2d 1329, 1341 (D.C. Cir. 1972) (Ex. USA-70); see also Ipsco v. United States, 687 F. Supp. 614 (Ct. Int'l Trade 1988) (although the DOC needs discretion to formulate and adjust methodologies to new factual situations, it cannot avoid explaining the basis for departing from administrative precedent by pointing to an arbitrary standard not adopted by formal rule-making) (Ex. USA-71).

¹¹⁷ 19 U.S.C. � 1516a (1998) (Ex. USA-62).

¹¹⁸ Under United States law, an administrative agency, such as the DOC, may be collaterally estopped from departing from past determinations of fact where a party has detrimentally relied on those determinations and where the party has been given insufficient notice of the change. See, e.g., 4 Davis, Administrative Law � 20:12 (1983) (Ex. USA-72).

¹¹⁹ Under the "law of the proceeding" doctrine, a well-established administrative practice which has gone unchallenged for some time and upon which the parties have reasonably come to rely may acquire the status of a regulation, such that an administrative agency may not change that practice without an explanation that justifies the change. See, e.g., Shikoku Chemicals v. United States, 795 F. Supp. 417 (Ct. Int'l Trade 1992) (Ex. USA-73).

¹²⁰ Anti-dumping Duties, 45 Fed. Reg. 8182 et seq. (1980) (section 353.54(a)) (Ex. USA-74).

¹²¹ Hyundai Electronics Industries Co., Ltd., et al. v. United States, Consol. Ct. No. 97-08-01409, Ct. Int'l Trade (Before: Judge Richard Goldberg).

¹²² Korea also argues that section 751(d) of the Act confers a level of discretion on the Secretary that violates Article 11 when it uses the words "may revoke." Id. para. 4.26 n. 85.

¹²³ See generally GATT, Analytical Index: Guide to GATT Law and Practice, Updated 6th Edition (1995), 645-48.

¹²⁴ Id.

¹²⁵ The Panel recalls that the question was as follows: "Article 11.2 of the ADP Agreement states that an anti-dumping duty "shall be terminated immediately" if the investigating authorities determine that the duty is 'no longer warranted'. In this regard, could the United States explain why section 353.25(a)(2) of the DOC regulations provides that the Secretary of Commerce 'may' revoke if the three criteria set forth therein are met, rather than specifying that the Secretary of Commerce 'shall' revoke if those criteria are met? Is the exercise of the Secretary's discretion under section 353.25(a)(2) subject to legal / judicial control?"

¹²⁶ Smith-Corona Group v. United States, 713 F.2d 1568, 1571 (1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed. 2d 679 (1984) (emphasis added by the United States)(footnote omitted).

¹²⁷ See id.