Analysis, statistics, publications, downloads, links, etc

MANAGING THE CHALLENGES OF WTO PARTICIPATION: CASE STUDY 21

Learning by Doing: The Impact of a Trade Remedy Case in Korea

Junsok Yang*

150pxls.gif (76 bytes)
 Disclaimer:
Opinions expressed in the case studies and any errors or omissions therein are the responsibility of their authors and not of the editors of this volume or of the institutions with which they are affiliated. The authors of the case studies wish to disassociate the institutions with which they are associated from opinions expressed in the case studies and from any errors or omission therein.

Case Studies main page
Introduction

   

ON THIS PAGE: 
I. The problem in context
Korean development and its attitude to trade
Korean perception of trade disputes
The Korean perception of the WTO
II. The local and external players and their roles
> III. Challenges faced and the outcome
The Korean case: the anti-dumping measure
The Korean case: the anti-circumvention investigation
The Korean case: panel request
IV. The outcome
V. Lessons for others: the players’ views and implications for developing countries
The Korean players’ views
VI. Lessons for developing countries


I. The problem in context    back to top

This study deals with a particular case submitted to the WTO Dispute Settlement Mechanism (DSM) dealing with restrictions on the export of Korean(1) colour televisions sets to the United States. It is a story of how Korea used the WTO DSM as part of an overall strategy to eliminate a trade barrier that had been in place for fifteen years. It is also a story of how Korea’s attitude towards the WTO changed. Thus, before we start dealing with this particular case, we need to look at some background, at what Koreans think about trade and their initial perception of the WTO.

 

Korean development and its attitude to trade    back to top

Like many other countries, Koreans tend to have a mercantilist view of trade, where exports are good and imports are bad. Such views are quite surprising, since the value of exports and imports in Korea usually exceed 70% of GDP, and Koreans themselves will readily admit that the country has no choice but to import raw materials, intermediate goods, capital goods and technology from abroad in order to compete in the global marketplace, as well as to fulfil domestic consumer demand. However, the average Korean often believes that Koreans must do everything they can to increase exports, while limiting imports only to ‘necessary’ goods. This mercantilist mindset was born in the 1960s, when Korea’s average annual GDP per capita was around $150.

During the first sixty years of the twentieth century, Korea suffered thirty-six years of Japanese colonial rule. Then, at the end of the Second World War, the country was split into North and South Korea, shortly followed by the three years of the Korean War. By the end of this war, much of Korea’s industrial capacity was in ruins, and the country faced political chaos.

Then, in the late 1960s, Korea began an outward-oriented growth path, using exports as an engine for development. Korea joined GATT in 1967, around the time when it had embarked on the outward-oriented development strategy. While practically every Korean realizes how important exports have been, and still are, to the Korean economy, the fact that imports also played a crucial part is sometimes neglected. Korea extensively liberalized the import of raw materials and intermediate goods so that Korean manufactured goods could compete effectively in the global market.

However, Korea maintained strict controls on imports of consumer goods, in part due to the limited amount of hard currency at the time. Priority for the use of the hard currency was given to exporting firms for the import of raw materials, intermediate goods and capital goods. The government also encouraged private savings in order to provide investment funds to the up-and-coming Korean industrial sector. The attitudes built up during these years, namely a negative view toward conspicuous consumption and imports, has cast a long shadow, apparent even now, when Korea has eliminated almost all of those import barriers and achieved a GDP per capita of $10,000.

Given the mercantilist mindset and the fact that Korea is so dependent on trade for its economic well-being, Koreans often think of their country as a helpless player in the harsh global marketplace, where other countries limit imports of Korean goods for nationalist reasons and have forced Korea to open its markets before the economy is ready, resulting in massive domestic shocks. Considering that it was the gains from trade that allowed Korea to develop, this mindset may be paradoxical, but Korea is hardly alone in having such views about trade; it was, after all, only forty years ago that Korea’s GDP per capita was less than $200.

 

Korean perception of trade disputes    back to top

In the early 1980s Korea’s GDP per capita was around US$1, 600-$2,000, and Korea was on its way to becoming an economic dynamo, but it was still on a weak footing. At that time, Korean companies were beginning to break into the global consumer electronics market. Electronics manufacturers, such as Samsung and Goldstar (now LG), successfully penetrated the US and European markets. However, during the same period the United States, which was Korea’s largest export market, was experiencing record trade deficits, and the US press, when reporting them, often emphasized the growing economic strength of Japan and its neighbour Korea. Thus there had been strong popular feeling in the United States that the US government should limit the market access of goods from Japan and Korea, and that Japanese and Korean markets should be opened to US goods.

Such sentiments tended to strengthen the various US market restriction measures vis-à-vis Korea’s exports. Especially bothersome to many Koreans were the anti-dumping measures which the United States used to limit some of Korea’s most popular export items, such as consumer electronics and steel. The US anti-dumping measure on colour televisions, which is the subject of this article, was also imposed around this time.

Koreans felt that their success in the international marketplace was due to low costs and price competitiveness rather than to ‘unfair’ trading practices as the United States claimed. Some Koreans felt that the international trading environment was unfair, since Korea was rapidly opening up its markets, due in some cases to US pressure, while the United States was seemingly closing its own.

Partly due to the weakness of GATT and the dispute settlement mechanism at the time, these trade disputes resulted in confrontations with heavy political pressure, resulting in ill-will on all sides. People in Korea and the United States often thought of trade as an economic war, rather than a ‘win-win’ situation for all.

 

The Korean perception of the WTO    back to top

In some ways the Uruguay Round (UR) and the WTO were designed to reduce such confrontations on trade disputes. When the UR negotiations were complete and the WTO was formed, there was an expectation by Koreans that trade disputes would be solved not by political confrontation, where Korea was bound to lose to other large countries, but through a third party that would maintain neutrality and keep the global trading environment fair.

In its attempt to ensure that the WTO was such a third party, Korea paid a heavy political price domestically. Agriculture has always had a special place in Korea, and the political institutions and even consumers would support protection for agricultural goods in order to protect the farmers, even though they knew that it would result in higher prices for food. Many of these protective devices for agriculture were dismantled as the result of the Uruguay Round. Other sensitive sectors, such as services, were liberalized as well. Political repercussions from the liberalization are still being felt today.

However, Koreans were soon disappointed in the WTO. During the first few years of its operation, the United States and the European Union brought several cases against Korea. Between 1995 and 1997, eight cases against Korea were brought to the Dispute Settlement Body (DSB), and Korea usually had to accept major changes in its import regime. While these cases were lost on their merits, and even though many Koreans acknowledged that many of Korea’s trade barriers were unfair, they still felt that Korea was under siege from foreign countries, and that the WTO existed for the benefit of advanced economies seeking to open the markets of developing countries. Table 1 shows the cases brought against Korea in the WTO DSM.

 

Table 1
Cases broutht against Korea

Date

Case no.

Complainant

Subject

1995.4.6 DS3 United States Measures Concerning the Testing and Inspection of Agricultural Products
1995.5.3 DS5 United States Measures Concerning the Shelf-Life of Products
1995.11.8 DS20 Canada Measures Concerning Bottled Water
1996.5.9 DS40 EC Laws, Regulations and Practices in the Telecommunications Sector
1996.5.24 DS41 United States Measures Concerning Inspection of Agricultural Products
1997.4.4 DS75 DS84 EC, United States Taxes on Alcoholic Beverages
1997.8.12 DS98 EC Definitive Safeguard Measures on Imports of Certain Dairy Products
1999.2.1 DS161 Australia, Measures Affecting Imports of Fresh,
  DS169 United States Chilled or Frozen Beef
1999.2.16 DS163 United States Measures Affecting Government Procurement
2002.10.21 D273 EC Measures Affecting Trade in Commercial Vessels

Source: WTO, ‘Update of WTO Dispute Settlement Cases’, 26 March 2004.

In early 1997 the European Communities (EC) and the United States filed a case against Korea which proved to be especially sensitive. In that case, known as ‘Taxes on Alcoholic Beverages’, the EC and the United States argued that imported spirits, such as whisky, should be charged the same domestic alcoholic beverage tax rates as soju, a popular Korean traditional alcoholic beverage. Koreans see whisky as an expensive luxury item. In contrast, while the alcohol content of soju may be closer to spirits, Koreans see soju as a simple, cheap and popular beverage, closer in character culturally to beer than to whisky. While the EC and the United States may have been correct in scientific terms, soju was certainly not thought of as being ‘similar’ to whisky by most Koreans, and the case caused heated arguments among Koreans. It did much to reinforce the popular conception that the WTO was a tool of the advanced countries in opening the markets of poorer, smaller countries.

 
 

II. The local and external players and their roles    back to top

In 1997, against this background, Korea brought its first case to the WTO DSB. The case concerned anti-dumping duties on Korean-manufactured colour television receivers. Korea had previously participated in the DSM as a third party, but this case was the first where Korea was the complainant.

There were three major players in this case: Samsung Electronics, producer of various electronic goods including colour televisions and one of the firms facing the anti-dumping measure; the Korean government, which brought the case to the WTO on behalf of Samsung; and the US government, specifically the Department of Commerce, which had the responsibility of reviewing the anti-dumping measure. Other players included US labour unions, which had filed an anti-circumvention suit against Samsung, and the governments of Mexico and Thailand, which became involved in the case due to the anti-circumvention suit. The Korean public was also an important, though passive, observer in the case. The background of the specific case is as follows.

In the late 1970s, Korea became a major exporter of colour television receivers due to price competitiveness. Korean exports of colour televisions to the United States had been restrained through a voluntary export restraint (VER) agreement between February 1979 and June 1982, but following the repeal of the VER in 1982, the export volume and value rose greatly. In 1983, the export volume to the United States was 1.93 million sets, 200% greater than that of the previous year, while the value of exports to the United States rose over 170% from the previous year, to $302.6 million.

In 1983 the United States initiated an anti-dumping action against six Korean colour television producers, and on 30 April 1984 it imposed anti-dumping duties on colour televisions from four of those producers, including Samsung. Investigation covered the period from April 1982 to March 1983, and while the preliminary decision showed that the dumping margins ranged between 0 and 5.31%, the final decision showed the dumping margins to be between 0 and 15.95%.(2)

From April 1985 to March 1991, exports of Korean colour televisions to the United States fell substantially and their price in the United States rose. In subsequent reviews, the United States found that dumping margins for colour television receivers produced by Samsung were below the de minimis margin of 0.5%. Further, Korean electronic manufacturers, including Samsung, moved much of their production abroad to Mexico and Thailand to lower production costs. Thus, from April 1991, Samsung did not export any colour television receivers from Korea. It made periodic requests for the revocation of the anti-dumping order, but the United States still maintained its anti-dumping measures on Samsung colour television receivers, arguing that there was a potential for resumed dumping. In 1996 the United States expanded, of its own accord, the anti-dumping measure to include combination television-video cassette recorder (VCR) units and high definition (HD) televisions, which were typically considered distinct from colour television receivers in terms of goods and tariff classifications.

By 1995 Samsung had made five applications for the revocation of the anti-dumping measure. Four applications were rejected on procedural grounds concerning the timing of applications. The fifth application, filed on 20 July 1995, was not acted on for eleven months. In August 1995 the United States had received a petition from several US labour unions, including the International Brotherhood of Electrical Workers, the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, and the Industrial Union Department, which accused Korean firms of using the production facilities in Mexico and Thailand to disguise Korean exports and circumvent the anti-dumping measure.

In response, the United States had initiated an anti-circumvention investigation in January 1996. While the United States decided to initiate a review of the anti-dumping measure on 24 June 1996, a year elapsed without any definite results. The US government explained that the review for revocation had to await the outcome of an anti-circumvention proceeding which had begun in January 1996.

According to Han-Soo Kim, currently a senior official in the Korean Ministry of Foreign Affairs and Trade (MOFAT), who had been involved in the colour television case, in the mid 1980s Korea, along with Japan and Taiwan, had been the most frequent target of US anti-dumping measures. Small and medium-sized firms often could not afford to fight the anti-dumping decisions because of the costs involved, and were forced to stop exporting. Thus the Korean government considered the anti-dumping measures to be serious trade barriers. When the 1984 anti-dumping measure was announced it generated much shock in Korea since colour televisions were one of its strongest export items.

While Samsung managed an exclusion from paying anti-dumping duties, the anti-dumping order remained, and Samsung had to undergo a review process every year. While Samsung, and subsequently the Korean government, believed that Samsung was eligible for revocation of the anti-dumping order, the US Department of Commerce maintained it. Frustrated with a lack of result, a consensus emerged that this case was suitable for Korea’s first WTO DSM case.

According to Kim, the modifications in the dispute settlement procedures made during the UR negotiations played an important part in Korea’s bringing the colour television case to the WTO DSB. Under the pre-WTO GATT, winning a case in the DSB required positive consensus where all members had explicitly to accept the panel decision, and it would have been difficult at that time for Korea to get a decision accepted by all GATT members. However, the DSM under the WTO operated under a negative consensus, which requires that all GATT members explicitly refuse the panel decision in order not to accept it. Thus the Korean government felt that the United States could not block a favourable panel decision, and felt confident enough to proceed with the DSM.

On Samsung’s side, while it had moved much of its production to Mexico, it felt that the continuing use of the US anti-dumping measure was unfair, and it was also concerned with potential future exports of HD televisions. It therefore encouraged the government to bring the case, and worked closely with the government to prepare it.

 
 

III. Challenges faced and the outcome    back to top

Koreans faced several challenges in using the WTO DSM: Kim pointed to the lack of experience, language problems and budgetary concerns due to the fact that Korea had to use many foreign consultants. Because the Samsung case was the first brought to the WTO DSB by Korea, there was no real knowledge as to how to proceed. Further, there was a general dearth of Koreans with good English skills, the requisite legal skills and a good working knowledge of the dispute. The Korean officials could only learn by experience and trial and error. Recognizing these problems, Koreans hired foreign lawyers as consultants, but the high cost was an issue for the ministry.

On the bright side, Samsung and the Korean government were able to work fairly smoothly together, and co-operated to build a strong case for the WTO DSM. Samsung formed a trade dispute team to gather the necessary information and to work with the Korean government. This team is still in place today. The government and Samsung made meticulous preparations; according to one newspaper account, the amount of paperwork prepared for the case could have filled five 8-ton trucks.

 

The Korean case: the anti-dumping measure    back to top

Thus on 16 July 1997, the Korean government filed a request for consultations with the WTO DSB, arguing that the US actions violated Articles VI.1 and VI.6(a) of GATT 1994, and Articles 1 and 11.1 of the Anti-Dumping Agreement, which stipulate that anti-dumping measures shall be applied only if there is dumping and if it causes or threatens material injuries; and that anti-dumping duties shall remain in force only as long as and to the extent necessary. Since Samsung had not exported to the United States from Korea since 1991, and since it had been assessed only on the de minimis margins for the previous six years, Korea argued that the United States was in violation of these Articles.

Further, Korea argued that the United States violated Articles 2, 3.1, 3.2, 3.6, 4.1, 5.4, 5.8, 5.10 and 11.2 of the Anti-Dumping Agreement. Article 3.1 states that a determination of injury shall involve an objective examination of the volume of the dumped imports and the effect of the dumped imports on prices, and the consequent impact on domestic producers of the like product. Article 3.2 states that with regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports. Korea argued that the absence of dumping for six years and the cessation of exports for the subsequent six years fully demonstrate that, under the standards set out in Articles 3.1 and 3.2, there can be no injury.

Article 5.8 of the Anti-Dumping Agreement requires immediate termination of an investigation in the case of de minimis dumping margins, and Article 11.2 provides for revocation of an anti-dumping order if it is no longer necessary to counteract dumping. Korea argued that having found de minimis margins for Samsung for six consecutive years through its annual reviews, the United States should immediately have initiated a revocation review on its own initiative and terminated the anti-dumping order. Further, Korea argued that the provision of the US Tariff Act, which defines a de minimis margin of less than 0.5% as eligible for revocation, is in contravention of Article 5.8 of the Anti-Dumping Agreement which stipulates a de minimis margin of less than 2%.

Article 11.2 of the Anti-Dumping Agreement specifies that the authorities shall review the need for the continued imposition of anti-dumping duties on their own initiative, or upon request by any interested party. Korea argued that by failing to self-initiate a revocation review and by restricting Samsung’s right to request a review, the United States had evaded its Article 11.2 obligations.

Korea also argued that the failure to reach a determination in the Commerce Department’s revocation review also violates Article 11.4, which provides for the expeditious conclusion of such reviews, normally within twelve months of their initiation.

 

The Korean case: the anti-circumvention investigation    back to top

Korea also took issue with the anti-circumvention investigation, stating that the anti-circumvention investigation initiated on 19 January 1996 was in contravention of Article VI of GATT 1994 and Article 1 of the Anti-Dumping Agreement.

Korea pointed out that Article VI.1 of GATT 1994 defines dumping as the introduction of products of one country into the commerce of another country at less than normal value, and Article 2.1 of the Anti-Dumping Agreement defines it as a situation in which the export price of the product exported from one country to another is less than the comparable price for the like product in the exporting country. Thus if another country becomes the exporting country, dumping should be separately determined. Korea argued that by effectively considering exports from Korea and exports from Mexico and Thailand as identical through its circumvention concept, the United States misinterpreted the basic concept of dumping established throughout the GATT and the Anti-Dumping Agreement. Further, Korea stated that it was a violation of Article VI of GATT 1994 and Article 1 of the Anti-Dumping Agreement to initiate an anti-circumvention investigation as an extension of existing anti-dumping measures without initiating a new dumping (and injury) investigation.

Korea also pointed out that the petitioners for the anti-circumvention investigation, namely US labour unions such as the International Brotherhood of Electrical Workers and others, were composed of employees working in various companies dealing in a diverse variety of electric or electronic products. Therefore they could not be said to represent employees of the domestic industry of the like product, namely, colour televisions. Further, Korea argued that the US authorities had neglected to examine whether the petitioners indeed represented the domestic industry, and refused Korean companies’ request for such an examination, thus violating Articles 3.1, 3.6, 4.1 and 5.4 of the Anti-Dumping Agreement. Korea also stated that the failure to make a determination in the ongoing investigation after eighteen months also violated Article 5.10 of the Anti-Dumping Agreement.

Finally, Korea took issue with the fact that the United States linked the revocation review with the anti-circumvention investigation. Korea stated that it was arbitrary and illogical for the United States to respond quickly to the request for an anti-circumvention investigation while delaying for a year its response to Samsung’s request for a revocation review. Korea further stated that it was unreasonable for the United States to investigate the alleged circumvention without first verifying the justification of the anti-dumping order. Further, Korea argued that the attempt to link the results of the anti-circumvention investigation with the revocation determination constituted a further breach of the proper procedural sequence. That is, a decision by the US authorities to revoke the anti-dumping order against Korean colour televisions would remove the legal basis for the anti-circumvention investigation. Thus extending the review period by making the above-mentioned linkage constituted a violation of Article 11.1 of the Anti-Dumping Agreement which requires the immediate termination of the anti-dumping order in the absence of dumping which is causing injury.

 

The Korean case: panel request    back to top

In July 1997 Mexico, Thailand, Hong Kong China, and the EC asked to join consultations. During the consultation phase of the DSM, Korea and the United States held a series of bilateral meetings which were not fruitful. On 6 November 1997 Korea requested the establishment of a panel. In its request, in addition to the points made above, Korea also argued that the United States was in violation of Article X.3 of GATT, and other assorted Articles of the Anti-Dumping Agreement.

Korea argued that the initiation of the anti-circumvention proceeding violated Article VI of GATT 1994 and Articles 1, 2.1 and 3.1 of the Agreement, because it might lead to the imposition of anti-dumping duties on imports of colour televisions from Mexico and Thailand without findings of dumping and resulting injury ever having been made.

Korea also argued that the refusal by the United States to conduct a standing inquiry before initiating its anti-circumvention investigation violated Articles 3.1, 3.6, 4.1 and 5.4 of the Anti-Dumping Agreement, and the failure to make a determination in the anti-circumvention investigation for more than twenty-two months violated Article 5.10 of the Anti-Dumping Agreement.

Finally, Korea argued that the United States violated Article X.3 of GATT and Article 17.6(i) of the Anti-Dumping Agreement, because the United States had not established the facts properly and had not evaluated the facts in an unbiased and objective manner. Korea stated that Samsung had sufficient special reasons to justify its delays in requesting revocation review, including, but not limited to, the United States’ consistent and excessive delays in issuing results of the administrative reviews. The United States, however, unilaterally determined that its untimeliness for the reviews was excusable, while Samsung’s untimeliness was not. Korea also complained that while the initial investigation and review were proceedings for the assessment of basically the same circumstances, the United States applied different standards for determining de minimis dumping margins and negligible imports in the two proceedings.(3)

 
 

IV. The outcome    back to top

Meanwhile, on the US side, on 31 December 1997, at the request of the petitioners, the US anti-circumvention inquiry was terminated. Before termination, the US Department of Commerce found that Samsung had substantial production facilities in Mexico, and several feeder plants established and operated by Korean suppliers unrelated to Samsung. From these facilities, Samsung produced colour televisions sold throughout North, Central and South America, and these televisions entered the United States duty-free under NAFTA tariff preference provisions, implying that they met NAFTA’s rules-of-origin requirements.

On the same date the Department of Commerce published the preliminary results of the changed circumstances review of the anti-dumping duty order on colour televisions from Korea, in which the Department on a preliminary basis determined partially to revoke the anti-dumping duty order with respect to Samsung.(4) On 5 January 1998, as a result of this preliminary order, Korea informed the DSB that it was withdrawing its request for a panel but reserving its right to reintroduce the request. On 2 September 1998, a final determination was made by the US Department of Commerce that changed circumstances warranted revocation of the anti-dumping duty order on colour televisions from Korea as it applied to Samsung.(5) According to one Korean newspaper report, when the fourteen members of Samsung’s trade dispute team heard the news that the United States had finally revoked the anti-dumping measure, they shouted for joy that their struggle, which had lasted for more than fourteen years, was finally over. At the DSB meeting on 22 September 1998 Korea announced that it was definitively withdrawing the request for a panel because the anti-dumping duties had now been revoked.

 
 

V. Lessons for others: the players’ views and implications for developing countries    back to top

The Korean players’ views

After the withdrawal of the request for a panel, each side touted the ‘successful outcome’ of the case. The United States emphasized the facts that Samsung no longer exported colour televisions from Korea and that imports of colour televisions from Korea were unlikely to increase greatly. Korea emphasized the fact that an anti-dumping measure, widely thought to be unfair and unjustifiably maintained for fifteen years, had finally been removed. While the United States claimed that the filing of the request for a panel did not unduly affect the outcome of the case, most of the Korean general public believed that the WTO petition had played a crucial role in the US decision to withdraw the anti-dumping measure. In this case, the anti-dumping measure had been in place for fifteen years, despite continual efforts by Samsung and the Korean government to have it revoked, but soon after the case had been filed with the WTO the measure was withdrawn. Some Korean newspapers reported that it was only after Korea had filed the WTO case that the US Department of Commerce became more responsive to the request by Samsung and Korea for the revocation of the anti-dumping order. In November 1998, Samsung started to export higher-priced televisions to the United States.

The success of the Samsung case, as well as the success of a subsequent WTO Case Concerning Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMs) of One Megabyte or Above, which had been filed against the United States at almost the same time, did much to alleviate the general concern of the Korean public about and its resistance to accepting that the WTO dispute system was fair and objective.

As a consequence, the Korean public also began to realize that the WTO was not just a tool for other countries, but was one that Korea could use as well. These two cases also did much to alleviate public concerns brought about by the non-favourable ruling on the Taxes on Alcoholic Beverages case later in 1998.(6) Most Koreans, while perhaps still not enthusiastic about the WTO, began to acknowledge that it was useful for Korea, and that it could be used to eliminate unfair trade barriers in other countries, including the advanced and powerful ones. The Korean public now acknowledges that the WTO is necessary for maintaining international trade, and while the WTO may act ‘against’ Korea at times, it will also act ‘for’ Korea as circumstances warrant. As a trading nation, Korea needs the WTO.

Han-Soo Kim of MOFAT states that the results of this case encouraged Korea to use the DSM more extensively. Other sources also state that the confidence and experience gained from these two cases encouraged Korea to take the direction of ‘aggressive legalism’ in handling trade disputes,(7) and it has now become one of the more active users of the DSM. While cases are still brought against Korea, Korea is now as likely to be the complainant in the WTO, as can be seen in Table 2.

 

Table 2
Cases brought by Korea, cases where Korea reserved third party rights

Date

Case No.

Defendant

Subject

1996.6.19 DS46 Brazil Export Financing Programme for Aircraft (by Canada) (third party rights)
1996.10.3 DS54 Indonesia Certain Measures Affecting the
1996.10.4 DS55 Automobile Industry (by EC, Japan and United States) (third party rights) Automobile Industry (by EC, Japan and United States) (third party rights)
1996.11.29 DS59 Anti-dumping Duty on Imports of Colour Television Receivers
1996.10.8 DS64    
1997.7.10 DS89 United States Anti-dumping Duty on Imports of Colour Television Receivers
1997.8.14 DS99 United States Anti-dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMs) of One Megabyte or Above
1998.10.6 DS139 EC, Japan Certain Measures Affecting the Automotive Industry (of Canada) (third party rights)
  DS142 EC
1998.8.3 DS141 EC Anti-dumping Duties on Imports of Cotton-Type Bed Linen from India (third party rights)
1998.10.6 DS146 EC Measures Affecting the Automotive Sector (of India) (third party rights)
1999.5.1 DS175 United States
1999.7.30 DS179 United States Anti-dumping Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip
1999.11.18 DS184 United States Anti-dumping Measures on Certain Hot-Rolled Steel Products from Japan (third party rights)
2000.6.13 DS202 United States Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe
2000.11.30 DS214 United States Definitive Safeguard Measures on Imports of Steel Wire Rod and Circular Welded Carbon Quality Line Pipe (third party rights)
2000.12.15 DS215 Philippines Anti-dumping Measures Against Polypropylene Resin
2000.12.21 DS217 United States Continued Dumping and Subsidy Offset Act of 2000 (joint complainant)
2001.5.21 DS234
2002.1.30 DS244 United States Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan (third party rights)
2002.3.20 DS251 United States Definitive Safeguard Measures on Imports of Certain Steel Products (Joint Complainant — along with DS248, DS249, DS252, DS253, DS254, DS258, DS259).
2002.10.7 DS268 United States Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina (third party rights)
2002.12.20 DS277 United States Investigation of the International Trade Commission in Softwood Lumber from Canada (third party rights)
2003.6.30 DS296 United States Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAM)
2003.7.25 DS299 EC Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAM)
2003.9.3 DS301 EC Measures Affecting Commercial Vessels
2004.2.13 DS307 EC Aid for Commercial Vessels

Source: WTO, ‘Update of WTO Dispute Settlement Cases’, 26 March 2004.

 
 

VI. Lessons for developing countries    back to top

There are aspects of Korea’s experience which are useful for developing countries. One should remember that when the United States applied its anti-dumping measure in 1983, Korea was still very definitely a developing country, with GDP per capita of $2,000. The DSM under WTO is much easier to use than the dispute settlement system of the pre-WTO GATT, and developing countries should use the mechanism more actively. However, there are problems which they must consider when using the DSM for the first time.

First, close co-operation must exist between the private sector and the government. While it is the private sector which is the victim of trade barriers, it is the government which must prepare and present the case. Thus, the private sector and the government must be able to work closely together, to gather facts relevant to the case and form a viable legal and diplomatic strategy.

Second, the WTO is useful only if it is used. Some members may be reluctant to bring a case to the WTO because of lack of experience, the costs involved and fears of reprisal. However, the Korean experience shows that gains can outweigh the possible costs. Careful preparation can reduce much of the direct and indirect costs of the case. Further, as the government deals with more cases, it will build experience, which will reduce costs in future cases. The first DSM case should be seen as an investment in the future.

Third, the successful use of the WTO can improve the image of globalization, the government and the WTO itself. Globalization is often seen as harmful because it supposedly imposes the will of stronger countries on weaker ones. Korea’s experience with the WTO DSB shows that this perception is not accurate. Measures which are inconsistent with WTO Agreements can be addressed successfully by smaller countries  if they are willing to try. Thus these countries need not be passive, helpless ‘victims’ of globalization. Such empowerment should reduce resistance against globalization. Further, when a government uses the DSM successfully, people will gain confidence in the diplomatic, legal and economic capability of the government. Finally, the successful use of the DSM can also show that the WTO is not a one-sided tool of pro-globalization advanced countries, but rather a neutral tool for solving disputes, which can build support for trade and globalization.

However, it is vitally important that a country chooses the ‘right’ case, especially for its first case. Because the costs involved will be higher than for subsequent cases, and because the public perception of the WTO will depend greatly on whether the first case is won or lost, the government must choose the first case carefully, to make sure that it has willing partners in the private sector and that it has a strong legal case. The government should also use any resource that is open to it, including foreign legal help, even though it may incur high costs. The indirect benefits of winning the case, through a more favourable view of the government, and of trade and globalization, are likely to outweigh the costs of bringing the case.

 
 

NOTES:
1.- In this paper ‘Korea’ refers to the Republic of Korea (South Korea). back to text
2.- The original US decision can be found in US Federal Register 49 FR 18336. The details of the original decision were taken from Taeho Bark, ‘Antidumping Restrictions against Korean Exports: Major Focus on Consumer Electronics Products’, KIEP Working Paper, May 1991. Downloadable from the KIEP website, http://www.kiep.go.kr. back to text
3.- The details of the case are taken from WTO documents WT/DS89/1 and WT/DS89/7, which were presented to the WTO by the government of Korea; see also Nae-hi Han et al. (1999), Case Studies of Korean Trade Conflicts by Industry (in Korean), Seoul: POSCO Research Institute. back to text
4.- These findings are taken from US Federal Register 63 FR 46759. back to text
5.- Ibid. back to text
6.- Dukgeun Ahn (2002), ‘Korean Experience of the Dispute Settlement in the World Trading System’, KDI School Working Paper 02-03, p. 17, though Ahn emphasizes the DRAM case more than the colour television case. back to text
7.- Wook Chae and Chang-Bae Seo (2001), Assessment of WTO and Korea-Related Trade Disputes and Policy Implications (in Korean), Seoul: Korea Institute for International Economic Policy, p. 24, and Ahn, ‘Korean Experience’, p. 18. back to text
 

150pxls.gif (76 bytes)
* Professor of Economics, Catholic University of Korea, Seoul.