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WTO ANALYTICAL INDEX: DISPUTE SETTLEMENT UNDERSTANDING Agreement on Safeguards |
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> Preamble |
Article 11: Prohibition and Elimination of Certain Measures 1. (a) A Member shall not take or seek any emergency action on imports of particular products as set forth in Article XIX of GATT 1994 unless such action conforms with the provisions of that Article applied in accordance with this Agreement.
(b) Furthermore, a Member shall not seek, take or maintain any voluntary export restraints, orderly marketing arrangements or any other similar measures on the export or the import side.(3, 4) These include actions taken by a single Member as well as actions under agreements, arrangements and understandings entered into by two or more Members. Any such measure in effect on the date of entry into force of the WTO Agreement shall be brought into conformity with this Agreement or phased out in accordance with paragraph 2.
(footnote original) 3 An import quota applied as a safeguard measure in conformity with the relevant provisions of GATT 1994 and this Agreement may, by mutual agreement, be administered by the exporting Member.
(footnote original) 4 Examples of similar measures include export moderation, export-price or import-price monitoring systems, export or import surveillance, compulsory import cartels and discretionary export or import licensing schemes, any of which afford protection.
(c) This Agreement does not apply to measures sought, taken or maintained by a Member pursuant to provisions of GATT 1994 other than Article XIX, and Multilateral Trade Agreements in Annex 1A other than this Agreement, or pursuant to protocols and agreements or arrangements concluded within the framework of GATT 1994.
2. The phasing out of measures referred to in paragraph 1(b) shall be carried out according to timetables to be presented to the Committee on Safeguards by the Members concerned not later than 180 days after the date of entry into force of the WTO Agreement. These timetables shall provide for all measures referred to in paragraph 1 to be phased out or brought into conformity with this Agreement within a period not exceeding four years after the date of entry into force of the WTO Agreement, subject to not more than one specific measure per importing Member(5), the duration of which shall not extend beyond 31 December 1999. Any such exception must be mutually agreed between the Members directly concerned and notified to the Committee on Safeguards for its review and acceptance within 90 days of the entry into force of the WTO Agreement. The Annex to this Agreement indicates a measure which has been agreed as falling under this exception.
(footnote original) 5 The only such exception to which the European Communities is entitled is indicated in the Annex to this Agreement.
3. Members shall not encourage or support the adoption or maintenance by public and private enterprises of non-governmental measures equivalent to those referred to in paragraph 1.
(a) Relationship between the Agreement on Safeguards and Article XIX of GATT 1994 196. With respect to the relationship with Article XIX of GATT 1994, see paragraphs 4-9 above. (b) Relationship with other Articles 197. The Panel on US - Lamb, after making findings of inconsistency with Articles 2.1, 4.1(c), and 4.2(b) of the Agreement on Safeguards (and with Article XIX:1(a) of GATT 1994), exercised judicial economy with respect to claims raised under Article 11 (and Articles 2.2, 3.1, 5.1, 8 and 12) of the Agreement on Safeguards.(284) (c) Relationship with other WTO Agreements 198. The Panel on US - Lamb, after making findings of inconsistency with Article XIX:1(a) of GATT 1994 (and with Articles 2.1, 4.1(c), and 4.2(b) of the Agreement on Safeguards), exercised judicial economy with respect to claims raised under Article 11 (and Articles 2.2, 3.1, 5.1, 8 and 12) of the Agreement on Safeguards.(285) 199. At its meeting on 24 February 1995, the Committee on Safeguards decided that the information required in the notifications of the exception under Article 11.2 of the Agreement on Safeguards should also be provided by signatories that were eligible to become original Members of the WTO within the same time-limits as those which apply to WTO Members.(286) The Committee also adopted a format for notifications of the exception under Article 11.2 of the Agreement on Safeguards(287) as well as a format for notifications on timetables for phasing out measures referred to in Article 11.1(b) or for bringing them into conformity with the Agreement on Safeguards.(288)
XIII. Article 12 back to top Article 12: Notification and Consultation 1. A Member shall immediately notify the Committee on Safeguards upon:
(a) initiating an investigatory process relating to serious injury or threat thereof and the reasons for it;
(b) making a finding of serious injury or threat thereof caused by increased imports; and
(c) taking a decision to apply or extend a safeguard measure.
2. In making the notifications referred to in paragraphs 1(b) and 1(c), the Member proposing to apply or extend a safeguard measure shall provide the Committee on Safeguards with all pertinent information, which shall include evidence of serious injury or threat thereof caused by increased imports, precise description of the product involved and the proposed measure, proposed date of introduction, expected duration and timetable for progressive liberalization. In the case of an extension of a measure, evidence that the industry concerned is adjusting shall also be provided. The Council for Trade in Goods or the Committee on Safeguards may request such additional information as they may consider necessary from the Member proposing to apply or extend the measure.
3. A Member proposing to apply or extend a safeguard measure shall provide adequate opportunity for prior consultations with those Members having a substantial interest as exporters of the product concerned, with a view to, inter alia, reviewing the information provided under paragraph 2, exchanging views on the measure and reaching an understanding on ways to achieve the objective set out in paragraph 1 of Article 8.
4. A Member shall make a notification to the Committee on Safeguards before taking a provisional safeguard measure referred to in Article 6. Consultations shall be initiated immediately after the measure is taken.
5. The results of the consultations referred to in this Article, as well as the results of mid-term reviews referred to in paragraph 4 of Article 7, any form of compensation referred to in paragraph 1 of Article 8, and proposed suspensions of concessions and other obligations referred to in paragraph 2 of Article 8, shall be notified immediately to the Council for Trade in Goods by the Members concerned.
6. Members shall notify promptly the Committee on Safeguards of their laws, regulations and administrative procedures relating to safeguard measures as well as any modifications made to them.
7. Members maintaining measures described in Article 10 and paragraph 1 of Article 11 which exist on the date of entry into force of the WTO Agreement shall notify such measures to the Committee on Safeguards not later than 60 days after the date of entry into force of the WTO Agreement.
8. Any Member may notify the Committee on Safeguards of all laws, regulations, administrative procedures and any measures or actions dealt with in this Agreement that have not been notified by other Members that are required by this Agreement to make such notifications.
9. Any Member may notify the Committee on Safeguards of any non-governmental measures referred to in paragraph 3 of Article 11.
10. All notifications to the Council for Trade in Goods referred to in this Agreement shall normally be made through the Committee on Safeguards.
11. The provisions on notification in this Agreement shall not require any Member to disclose confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.
1. Notification formats adopted by the Committee on Safeguards 200. Formats for certain notifications under the Agreement on Safeguards, including notifications under Article 12, were approved by the Committee on Safeguards on 24 February 1995.(289) The Panel on Korea - Dairy noted that it was clear that the provisions of Article 12 prevailed over the notification formats adopted by the Committee: "It is clear that the provisions of Article 12 of the Agreement on Safeguards prevail over the Guidance issued by the Committee on Safeguards (which contains a disclaimer to that effect) and the Technical Cooperation Handbook on Notification Requirements (prepared by the Secretariat but which explicitly states that it 'does not constitute a legal interpretation of the notification obligations under the respective agreement(s)'). At issue in this case are the notifications required under Articles 12.1(a), (b) and (c)."(290) (a) "shall immediately notify" 201. The Panel on Korea - Dairy read a notion of "urgency" into the phrase "shall immediately notify ..." in Article 12.1, but acknowledged that there is a need under this provision to balance the requirement for some minimum level of information in a notification against the requirement for "immediate" notification: "The ordinary meaning of the term 'immediately' (291) introduces a certain notion of urgency. As discussed above, we believe that the text of Article 12.1, 12.2 and 12.3 makes clear that the notifications on the finding of serious injury and on the proposed measure shall in all cases precede the consultations referred to in Article 12.3. We note finally that no specific number of days is mentioned in Article 12. For us this implies that there is a need under the agreement to balance the requirement for some minimum level of information in a notification against the requirement for 'immediate' notification. The more detail that is required, the less 'instantly' Members will be able to notify. In this context we are also aware that Members whose official language is not a WTO working language, may encounter further delay in preparing their notifications."(292) 202. The same Panel also notes that: "There is no basis in the wording of Article 12.1 to interpret the term 'immediately' to mean 'as soon as practically possible'."(293) 203. The Panel on US - Wheat Gluten quotes the above passage from the Panel Report in Korea - Dairy and emphasized the need of all Members to be kept informed, in a timely manner, of the different steps in a safeguard investigation: "We consider that the text of Article 12.1 SA is clear and requires no further interpretation. The ordinary meaning of the requirement for a Member to notify immediately its decisions or findings prohibits a Member from unduly delaying the notification of the decisions or findings mentioned in Article 12.1 (a) through (c) SA. Observance of this requirement is all the more important considering the nature of a safeguards investigation. A safeguard measure is imposed on imports of a product irrespective of its source and potentially affects all Members. All Members are therefore entitled to be kept informed, without delay, of the various steps of the investigation."(294) 204. The Appellate Body in US - Wheat Gluten confirmed the above approach by the Panels and added that "immediate notification" is such notification which allows the Committee on Safeguards and Members the "fullest possible period" to consider and react to a safeguard investigation: "As regards the meaning of the word 'immediately¹ in the chapeau to Article 12.1, we agree with the Panel that the ordinary meaning of the word 'implies a certain urgency'. The degree of urgency or immediacy required depends on a case-by-case assessment, account being taken of the administrative difficulties involved in preparing the notification, and also of the character of the information supplied. As previous panels have recognized, relevant factors in this regard may include the complexity of the notification and the need for translation into one of the WTO's official languages. Clearly, however, the amount of time taken to prepare the notification must, in all cases, be kept to a minimum, as the underlying obligation is to notify 'immediately'.
'Immediate' notification is that which allows the Committee on Safeguards, and Members, the fullest possible period to reflect upon and react to an ongoing safeguard investigation. Anything less than 'immediate' notification curtails this period. We do not, therefore, agree ... that the requirement of 'immediate' notification is satisfied as long as the Committee on Safeguards and Members of the WTO have sufficient time to review that notification. In our view, whether a Member has made an 'immediate' notification does not depend on evidence as to how the Committee on Safeguards and individual Members of the WTO actually use that notification. Nor can the requirement of 'immediate' notification depend on an ex post facto assessment of whether individual Members suffered actual prejudice through an insufficiency in the notification period."(295) A. "Immediate" notification under Article 12.1(a) 205. Two Panels have had the opportunity to make findings whether notifications within certain periods of specific length amounted to "immediate" notifications under Article 12.1.(a). In Korea - Dairy, the Panel found that: "[T]he 14-day period between Korea's initiation of the investigation and its presentation of the notification related thereto, does not respect the requirements for 'immediate' notification and is in violation of Article 12.1 of the Agreement on Safeguards."(296) 206. Similarly, the Panel on US - Wheat Gluten determined that: "[T]he delay of 16 days between the initiation of the investigation and the notification thereof does not satisfy the requirement of immediate notification of Article 12.1(a) SA."(297) 207. The Appellate Body upheld the finding of the Panel on US - Wheat Gluten, but did not pronounce itself on the Panel's determination in Korea - Dairy.(298) B. "Immediate" notification under Article 12.1(b) 208. In respect of a notification of a determination of serious injury, the Panel Report in Korea - Dairy states: "[A] delay of 40 days ... between the domestic publication of the injury finding and the date of that notification to the Committee on Safeguards ...does not satisfy the requirements for an immediate notification and therefore is in violation of Article 12.1 of the Agreement on Safeguards."(299) 209. The Panel on US - Wheat Gluten found that: "[T]he delay of 26 days between the finding of serious injury and the notification thereof does not satisfy the requirement of immediate notification of Article 12.1(b) SA."(300) 210. The Appellate Body upheld the finding of the Panel on US - Wheat Gluten, but did not pronounce itself on the Panel's determination in Korea - Dairy(301) C. "Immediate" notification under Article 12.1(c) 211. As regards a notification of a proposed safeguard measure, the Panel Report in Korea - Dairy stated: "[W]e note that this notification took place more than 6 weeks after the decision on the proposed measure was taken ...We consider that this delay does not meet the requirements for an 'immediate' notification and therefore is in violation of Article 12.1 of the Agreement on Safeguards."(302) 212. In respect of a notification of a final decision to take a safeguard measure, the Panel Report in Korea - Dairy stated: "[W]e note that Korea notified on 24 March 1997 that on 1 March 1997 a final decision had been taken to impose a quota as a safeguard measure. We fail to see how this can be viewed as an immediate notification. As far as it covers Korea's final decision to take a safeguard measure, we find that the timing of the Korean notification of 24 March 1997 does not meet the requirements of Article 12.1 of the Agreement on Safeguards."(303) 213. In US - Wheat Gluten, the Appellate Body reversed a finding by the Panel in that dispute that a notification of a decision to apply a safeguard measure after the implementation of that decision was inconsistent with Article 12.1(c) of the Agreement on Safeguards.(304) The Panel had considered that Article 12.2, since it specifically refers to notifications made under Articles 12.1(b) and 12.1(c), provides relevant context in determining the timeliness of notifications under Article 12.1(c). Furthermore, the Panel reasoned that a notification under Article 12.1(c) must be of a "proposed measure" and its "proposed date of introduction". On this basis, the Panel concluded that a notification under Article 12.1(c) must be made before the implementation of the "proposed" safeguard measure. The Appellate Body reasoned as follows: "In examining the ordinary meaning of Article 12.1(c), we observe that the relevant triggering event is the 'taking' of a decision. To us, Article 12.1(c) is focused upon whether a 'decision' has occurred, or has been 'taken', and not on whether that decision has been given effect. On the face of the text, the timeliness of a notification under Article 12.1(c) depends only on whether the notification was immediate."(305) 214. The Appellate Body in US - Wheat Gluten went on to state: "Article 12.2 is related to, and complements, Article 12.1 of the Agreement on Safeguards. Whereas Article 12.1 sets forth when notifications must be made during an investigation, Article 12.2 clarifies what detailed information must be contained in the notifications under Articles 12.1(b) and 12.1(c). We do not, however, see the content requirements of Article 12.2 as prescribing when the notification under 12.1(c) must take place. Rather, in our view, timeliness under 12.1(c) is determined by whether a decision to apply or extend a safeguard measure is notified 'immediately'. A separate question arises as to whether notifications made by the Member satisfy the content requirements of Article 12.2. Answering this separate question requires examination of whether, in its notifications under either Article 12.1(b) or Article 12.1(c), the Member proposing to apply a safeguard measure has notified 'all pertinent information', including the 'mandatory components' specifically enumerated in Article 12.2."(306) 215. The Appellate Body then found that although the obligations under Article 12.1(b), 12.1(c) and 12.2. were "related", they constituted "discrete obligations": "Thus, the obligations set forth under Articles 12.1(b), 12.1(c) and 12.2 relate to different aspects of the notification process. Although related, these obligations are discrete. A Member could notify 'all pertinent information' in its Articles 12.1(b) and 12.1(c) notifications, and thereby satisfy Article 12.2, but still act inconsistently with Article 12.1 because the relevant notifications were not made 'immediately'. Similarly, a Member could satisfy the Article 12.1 requirement of 'immediate' notification, but act inconsistently with Article 12.2 if the content of its notifications was deficient.
In our view, in finding that the United States acted inconsistently with Article 12.1(c) solely because the decision to apply a safeguard measure was notified after that decision had been implemented, the Panel confused the separate obligations imposed on Members pursuant to Article 12.1(c) and Article 12.2 and, thereby, added another layer to the timeliness requirements in Article 12.1(c). Instead of insisting on 'immediate' notification, as stipulated by Article 12.1(c), the Panel required notification to be made both 'immediately' and before implementation of the safeguard measure. We see no basis in Article 12.1(c) for this conclusion."(307) 216. The Appellate Body then found that notification at issue was consistent with the requirement of immediate notification under Article 12.1(c). The United States had made the notification only five days after the President of the United States had "taken the decision" to apply the safeguard measure, a period which the Appellate Body considered sufficient, also in the light of the fact that the notification was made the day after the decision of the President of the United States had been published in the United States Federal Register.(308) (b) Content of notifications under Article 12.1(a) 217. At its meeting on 24 February 1995, the Committee on Safeguards adopted a format for notifications under Article 12.1(a) of the Agreement on Safeguards on initiation of an investigation and the reasons for it.(309) The Committee also adopted formats for notifications required under Articles 12.1(b) and (c).(310) 218. At its meeting on 6 May 1996, the Committee on Safeguards adopted a format for notification of termination of a safeguards investigation where no safeguard measure is imposed.(311) 219. The Panel on Korea - Dairy noted the limited explicit requirements of Article 12.1(a) with respect to the content of notifications: "Regarding the 'content' of notifications under Article 12.1, we note that with regard to the notification of the initiation of an investigation, the terms of Article 12.1(a) only refer to the obligation to notify 'initiating an investigatory process relating to serious injury or threat thereof and the reasons for it."(312) 220. In examining the conformity with Article 12.1(a) of the notification at issue, the Panel on Korea - Dairy rejected an argument "... that such notification should necessarily include a discussion of all of the legal requirements for a safeguard action to be taken such as a discussion of the conditions of the markets, etc.": "We note that initiation is the beginning of the process, and the Agreement on Safeguards does not establish specific standards for the decision to initiate, as do Article 5 of the Agreement on the Implementation of Article VI of GATT 1994 and Article 11 of the Agreement on Subsidies and Countervailing Measures. Thus, to require a discussion in the notification of initiation of evidence regarding the elements that must be found to exist to impose a measure at the end of the investigation would impose a requirement at the initiation stage that is not required by the Agreement on Safeguards itself. We note in the first instance that whatever the relationship between the requirements of Article 12.2 regarding the contents of notifications and the contents of the investigation reports published pursuant to Articles 3.1 and 4.2, this question is not relevant to Article 12.1(a) notifications, as Article 12.2 specifically and exclusively addresses 'notifications referred to in paragraphs [12.]1(b) and [12.]1(c)'.
The format agreed by the Committee for notifications under Article 12.1(a) is not legally binding, although helpful. The guidance in the format is general as to the kind of information to be provided, referring simply to examples of information on the reasons for initiation, and saying nothing about the level of detail of that information.
Although Korea's notification could usefully have included a reference to allegations of serious injury and a cross-reference to any domestic publication(s) in Korea, we think that this notification was sufficient to inform WTO Members adequately of Korea's initiation of an investigation concerning a particular product, so that Members having an interest in the product could avail themselves of their right to participate in the domestic investigation process."(313) (a) "all pertinent information" 221. The Panel on Korea - Dairy analysed the meaning of the expression "all pertinent information" in Article 12.2 of the Agreement on Safeguards, in which connection the Panel observed inter alia that the standard of what must be notified to the Committee under Article 12 of the Agreement on Safeguards differed from what must be published domestically pursuant to Articles 3 and 4.(314) The Panel found that the information contained in the notifications at issue in the dispute before it was in conformity with Article 12.2.(315) In respect of one of these notifications, the Panel noted that "this notification contains sufficient information on what Korea considered to be evidence of injury caused by increased imports ... ."(316) The Appellate Body, however, reversed the finding by the Panel that a notification provided by Korea under Article 12.1(b) of a determination of serious injury met the requirements of Article 12.2.(317) In this context, the Appellate Body interpreted Article 12.2 as follows: "[I]tems listed ... as mandatory components of 'all pertinent information', constitute a minimum notification requirement that must be met if a notification is to comply with the requirements of Article 12.
We do not agree with the Panel that 'evidence of serious injury' in Article 12.2 is determined by what the notifying Member considers to be sufficient information. What constitutes 'evidence of serious injury' is spelled out in Article 4.2(a) of the Agreement on Safeguards ... ... We believe that 'evidence of serious injury' in the sense of Article 12.2 should refer, at a minimum, to the injury factors required to be evaluated under Article 4.2(a). In other words, according to the text and the context of Article 12.2, a Member must, at a minimum, address in its notifications, pursuant to paragraphs 1(b) and 1(c) of Article 12, all the items specified in Article 12.2 as constituting 'all pertinent information', as well as the factors listed in Article 4.2 that are required to be evaluated in a safeguards investigation. We believe that the standard set by Article 12 with respect to the content of 'all pertinent information' to be notified to the Committee on Safeguards is an objective standard independent of the subjective assessment of the notifying Member."(318) 222. While it had found that the standard for determining "all pertinent information" could not be a subjective assessment by the notifying Member, the Appellate Body in Korea - Dairy emphasized at the same time that "evidence of serious injury" should not include all details contained in the report of the national authorities: "In concluding that there is a minimum objective standard, we do not mean to suggest that 'evidence of serious injury' should include all the details of the recommendations and reasoning to be found in the report of the competent authorities. We agree with the Panel that, if such had been the intention of the drafters of the Agreement on Safeguards, they would have simply referred back to Articles 3 and 4 when requiring 'evidence of serious injury' in Article 12.2. There is, however, an intermediate position between notifying the full content of the report of the competent authorities and giving the notifying Member the discretion to determine what may be included in a notification. To comply with the requirements of Article 12.2, the notifications pursuant to paragraphs 1(b) and 1(c) of Article 12 must, at a minimum, address all the items specified in Article 12.2 as constituting 'all pertinent information', as well as the factors listed in Article 4.2 that are required to be evaluated in a safeguards investigation.
We are aware that the last sentence of Article 12.2 provides that the Council for Trade in Goods or the Committee on Safeguards may request such additional information as they may consider necessary from the Member proposing to apply a safeguard measure. ...Contrary to what Korea argued and the Panel reasoned, such a request is not meant to fill in gaps created by omitting elements required under 'all relevant information' or 'evidence of serious injury'."(319) 223. The Appellate Body in Korea - Dairy accordingly reversed the Panel on this point and made the following concluding general statement regarding the object and purpose of the notification requirements at issue: "We believe that the purpose of notification is better served if it includes all the elements of information specified in Articles 12.2 and 4.2. In this way, exporting Members with a substantial interest in the product subject to a safeguard measure will be in a better position to engage in meaningful consultations, as envisaged by Article 12.3, than they would otherwise be if the notification did not include all such elements. And, the Committee on Safeguards can more effectively carry out its surveillance function set out in Article 13 of the Agreement on Safeguards. At the same time, providing the requisite information to the Committee on Safeguards does not place an excessive burden on a Member proposing to apply a safeguard measure as such information is, or should be, readily available to it."(320) (b) Notification of a proposed safeguard measure 224. The Panel Report in Korea - Dairy found that Article 12.1, 12.2 and 12.3, taken together, impose the obligation upon a Member to notify the details of a proposed safeguard measure before it is applied, so that affected Members may consult about it before it takes effect: "Although not explicitly listed in Article 12.1, the wording of Article 12.2 and 12.3 make it clear that any proposed measure must also be notified to the Committee on Safeguards. Article 12.2 provides that the notifications under Article 12.1(b) and 12.1(c) must contain information as to the basis for the serious injury finding, as well as information as to the 'proposed' measure to be applied. Article 12.3 requires that the notifying Member provide an adequate opportunity for 'prior consultations' with interested Members, that is, consultations prior to the actual application of the measure. Article 12.3 further requires that among the information to be discussed in the consultations is the information already notified under Article 12.1(b) and 12.1(c), i.e., the basis for the serious injury finding, and the details of the measure that the notifying Member proposes to apply. Thus, Article 12.1, 12.2 and 12.3 taken together makes it clear that before a definitive safeguard measure may be applied, the Member proposing to apply it must notify all the pertinent information regarding the proposed measure and the factual basis (the injury finding) for applying it, and must provide an opportunity for consultations with Members whose trade will be affected by the proposed measure. In other words, details of the measure proposed must be notified before it is applied, so that affected Members may consult about it before it takes effect."(321) 225. With respect to a notification of a decision to apply a safeguard measure after the implementation of that decision, see paragraphs 213-216 above. (a) "adequate opportunity for prior consultations" 226. The Panel on Korea - Dairy rejected a claim that, by not providing "all pertinent information" in its notifications in advance of consultations, a Member had failed to provide "adequate opportunity for prior consultations" within the meaning of Article 12.3. The Panel had found the content of Korea's notifications in conformity with Article 12 (the Appellate Body subsequently reversed this latter finding, but did not address any of the following issues). The Panel then opined that consultations may be "adequate" even if prior notifications are incomplete, since it considered that one of the purposes of consultations is to review the content of the relevant notifications. The Panel further noted that whether parties eventually reach a mutually agreed solution is no indication of the adequacy of consultations. With respect to the dispute at hand, the Panel stated: "In the present case we note that parties exchanged questions and answers. The European Communities claims that it has always been unsatisfied with the Korean's answers and notifications (together with Korea's determination). This may be the case and would explain why it decided to pursue dispute settlement proceedings, but it does not prove that Korea did not consult in good faith for the purpose of informing interested Members of its investigation, its conclusion and its proposed actions. We note also that Korea did impose a measure at a level and for a duration different, and less restrictive, than initially proposed. Consultations were certainly fruitful in this respect, albeit not sufficient to satisfy the European Communities.
We reject therefore the EC claim that Korea failed to provide adequate opportunity to consult. Moreover, it seems to us that such consultations have led to an important revision of the initial notification and that parties, at some point, entered into very serious negotiations and considered serious elements of a mutually agreed solution. The fact that this proposed settlement was not formalized through the acceptance by the relevant internal authorities of the European Communities is immaterial. What is relevant for the purpose of this EC claim, is the fact that the parties to these consultations were able to negotiate quite effectively, which, in our view, demonstrates that the consultations were adequate. For us, this is the purpose of any consultation process and the scope of the obligation contained in Article 12.3 of the Agreement on Safeguards, i.e. to favour efforts by the parties to reach a mutually agreed solution of their disagreement."(322) 227. In US - Wheat Gluten, the Appellate Body held that the Panel had erred in concluding that the United States had acted inconsistently with Article 12.3 insofar as the Panel had based this conclusion on an erroneous interpretation of Article 12.1(c)(323), but upheld this finding on the basis that there had been no opportunity for consultations on the final proposed measure. In this connection, the Appellate Body first held that Article 12.3 provides that information on a proposed measure must be provided in advance of the consultation: "We note, first, that Article 12.3 requires a Member proposing to apply a safeguard measure to provide an 'adequate opportunity for prior consultations' with Members with a substantial interest in exporting the product concerned. Article 12.3 states that an 'adequate opportunity' for consultations is to be provided 'with a view to': reviewing the information furnished pursuant to Article 12.2; exchanging views on the measure; and reaching an understanding with exporting Members on an equivalent level of concessions. In view of these objectives, we consider that Article 12.3 requires a Member proposing to apply a safeguard measure to provide exporting Members with sufficient information and time to allow for the possibility, through consultations, for a meaningful exchange on the issues identified. To us, it follows from the text of Article 12.3 itself that information on the proposed measure must be provided in advance of the consultations, so that the consultations can adequately address that measure. Moreover, the reference, in Article 12.3, to 'the information provided under' Article 12.2, indicates that Article 12.2 identifies the information that is needed to enable meaningful consultations to occur under Article 12.3. Among the list of 'mandatory components' regarding information identified in Article 12.2 are: a precise description of the proposed measure, and its proposed date of introduction.
Thus, in our view, an exporting Member will not have an 'adequate opportunity' under Article 12.3 to negotiate overall equivalent concessions through consultations unless, prior to those consultations, it has obtained, inter alia, sufficiently detailed information on the form of the proposed measure, including the nature of the remedy."(324) 228. The Panel on US - Wheat Gluten had found that no consultations had been held between the United States and the European Communities on the final measure that was approved by the United States President.(325) The Appellate Body noted in this context that: "[T]he USITC Report set out a number of 'recommendations' to the President of the United States ...
We note that the recommendations made by the USITC did not include specific numerical quota shares for the individual exporting Members concerned, and the recommendations imply, without providing details, that the individual quota shares could be less favourable to imports from the European Communities. We consider that these 'recommendations' did not allow the European Communities to assess accurately the likely impact of the measure being contemplated, nor to consult adequately on overall equivalent concessions with the United States.
Accordingly, we see no error in the Panel's conclusion that the United States notifications under Article 12.1(b) did not provide a description of the measure under consideration sufficiently precise as to allow the European Communities to conduct meaningful consultations with the United States, as required by Article 12.3 of the Agreement on Safeguards.(326)"(327) 229. The Appellate Body in US - Line Pipe, reaffirmed its interpretation in US - Wheat Gluten that the appropriate inquiry for the obligation to provide adequate opportunity for prior consultation is whether the importing Member provided the exporting Members with "sufficient time" to allow for a "meaningful exchange" on the information and that the amount of time needed for a meaningful exchange must be addressed on a case-by-case basis.(328) The Appellate Body also found that failure of the exporting Member to request consultations during an inadequate time period does not excuse the importing Member's obligation to provide adequate opportunity for prior consultation: "The obligation of an importing Member under Article 12.3 is to 'provide adequate opportunity for prior consultations'. (emphasis added) That obligation cannot be met if there is insufficient time prior to the application of the measure to have a meaningful exchange. The importing Member's failure to provide information about a safeguard measure to an exporting Member sufficiently in advance of that measure taking effect is not excused by the fact that the exporting Member did not request consultations during that inadequate time-period."(329) 5. Relationship with other Articles 230. The Panel on Argentina - Footwear (EC) rejected the view that non-compliance with Article 12 ipso facto constitutes a basis for finding a violation of the substantive requirements of Articles 2 and 4, and vice versa: "In our view, the notification requirements of Article 12 are separate from, and in themselves do not have implications for, the question of substantive compliance with Articles 2 and 4. Similarly, we consider that the substantive requirements of Articles 2 and 4 do not have implications for the question of compliance with Article 12. Article 12 serves to provide transparency and information concerning the safeguard-related actions taken by Members. We note in this context that notification under Article 12 is just the first step in a process of transparency that can include, inter alia, review by the Committee as part of its surveillance functions (Article 13.1(f)), requests for additional information by the Council for Trade in Goods or the Committee on Safeguards (Article 12.2), and/or eventual bilateral consultations with affected Members if application of a measure is proposed (Article 12.3). In this regard, the important point is that the notifications be sufficiently descriptive of the actions that have been taken or are proposed to be taken, and of the basis for those actions, that Members with an interest in the matter can decide whether and how to pursue it further. ... Articles 12.2 and 12.3 in our view confirm that Members are not required to notify the full detail of their investigations and findings. Article 12.2 specifically provides for the possibility of requests for further information by the Council for Trade in Goods or the Committee on Safeguards. Article 12.3 provides, inter alia, for consultations, upon request, with other Members, to review the information contained in the notifications. Thus, these provisions specifically create opportunities for further information to be provided, upon request, concerning the details of the actions summarised in the notifications. Ultimately, should a violation of Articles 2 and 4 be alleged, it would be the more detailed information from the record of the investigation, and in particular the published report(s) on the findings and reasoned conclusions of that investigation, that would form the basis for evaluation of such an allegation."(330) 231. In Korea - Dairy, the Appellate Body interpreted the notification requirement of "all pertinent information" as requiring a "minimum objective standard" for such notification so as to reflect "an intermediate position between notifying the full content of the report of the competent authorities and giving the notifying Member the discretion to determine what may be included in a notification." The Appellate Body specifically identified the mandatory factors of all pertinent information as well as factors listed in Article 4.2 of the Agreement on Safeguards that should be covered in the notification: "In order to determine the appropriate meaning of 'all pertinent information', we must examine this phrase in the light of the text and the context of Article 12 as well as the object and purpose of that Article. The text of Article 12.2 makes it clear that a Member proposing to apply a safeguard measure is required to provide the Committee on Safeguards with all pertinent, not just any pertinent, information. Moreover, it provides that such information shall include certain items listed immediately after the phrase 'all pertinent information', namely, evidence of serious injury or threat thereof caused by increased imports, a precise description of the product involved and the proposed measure, the proposed date of introduction, the expected duration of the measure and a timetable for progressive liberalization. These items, which are listed as mandatory components of 'all pertinent information', constitute a minimum notification requirement that must be met if a notification is to comply with the requirements of Article 12.
We do not agree with the Panel that 'evidence of serious injury' in Article 12.2 is determined by what the notifying Member considers to be sufficient information. What constitutes 'evidence of serious injury' is spelled out in Article 4.2(a) of the Agreement on Safeguards which provides:
'... the competent authorities shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the product concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilization, profits and losses, and employment.'
We believe that 'evidence of serious injury' in the sense of Article 12.2 should refer, at a minimum, to the injury factors required to be evaluated under Article 4.2(a). In other words, according to the text and the context of Article 12.2, a Member must, at a minimum, address in its notifications, pursuant to paragraphs 1(b) and 1(c) of Article 12, all the items specified in Article 12.2 as constituting 'all pertinent information', as well as the factors listed in Article 4.2 that are required to be evaluated in a safeguards investigation. We believe that the standard set by Article 12 with respect to the content of 'all pertinent information' to be notified to the Committee on Safeguards is an objective standard independent of the subjective assessment of the notifying Member.
In concluding that there is a minimum objective standard, we do not mean to suggest that 'evidence of serious injury' should include all the details of the recommendations and reasoning to be found in the report of the competent authorities. We agree with the Panel that, if such had been the intention of the drafters of the Agreement on Safeguards, they would have simply referred back to Articles 3 and 4 when requiring 'evidence of serious injury' in Article 12.2. There is, however, an intermediate position between notifying the full content of the report of the competent authorities and giving the notifying Member the discretion to determine what may be included in a notification. To comply with the requirements of Article 12.2, the notifications pursuant to paragraphs 1(b) and 1(c) of Article 12 must, at a minimum, address all the items specified in Article 12.2 as constituting 'all pertinent information', as well as the factors listed in Article 4.2 that are required to be evaluated in a safeguards investigation."(331) 232. The Panel on Argentina - Footwear (EC) concluded that it could not examine under Article 12 a claim regarding a failure to notify a modification of a safeguard measure that increased the restrictiveness of that measure: "We note that the modifications of definitive safeguard measures foreseen in the Agreement (namely early elimination or faster liberalization potentially resulting from mid-term reviews under Article 7.4, and extension of measures beyond the initial period of application under Article 7. [sic] and 7.4), all are subject to notification requirements under Articles 12.5 and 12.1(c)/12.2, respectively.
In this context, we note that the only modifications of safeguard measures that Article 7.4 contemplates are those that reduce its restrictiveness (i.e., to eliminate the measure or to increase their pace of its liberalisation pursuant to a mid-term review). The Agreement does not contemplate modifications that increase the restrictiveness of a measure, and thus contains no notification requirement for such restrictive modifications.
We note that the modifications of the definitive safeguard measure made by Argentina are not contemplated by Article 7, and thus Article 12 does not foresee notification requirements with respect to such modifications. Any substantive issues pertaining to these subsequent Resolutions would need to be addressed under Article 7, but the European Communities made no such claim. Where the situation at issue is primarily one of substance, i.e., modification of a measure in a way not foreseen by the Safeguards Agreement, we believe that we cannot address the alleged procedural violation concerning notification arising therefrom, as no explicit procedural obligation is foreseen. Therefore, we see no possibility for a ruling on this aspect of the European Communities' claim under Article 12."(332) 233. The Panel on US - Lamb, after making findings of inconsistency with Articles 2.1, 4.1(c), and 4.2(b) of the Agreement on Safeguards (and with Article XIX:1(a) of GATT 1994), exercised judicial economy with respect to claims raised under Article 12 (and Articles 2.2, 3.1, 5.1, 8, and 11) of the Agreement on Safeguards.(333) 6. Relationship with other WTO Agreements 234. The Panel on US - Lamb, after making findings of inconsistency with Article XIX:1(a) of GATT 1994 (and with Articles 2.1, 4.1(c), and 4.2(b) of the Agreement on Safeguards), exercised judicial economy with respect to claims raised under Article 12 (and Articles 2.2, 3.1, 5.1, 8, and 11) of the Agreement on Safeguards.(334) 235. At its meeting of 24 February 1995, the Committee adopted a format for notifications of laws, regulations and administrative procedures relating to safeguard measures.(335) Further, the Committee decided that all Members that had available relevant legislation and/or regulations which apply to safeguard measures covered by the Agreement should notify the full and integrated text of that legislation and/or regulations to the Committee by 15 March 1995, with the understanding that if such legislation and/or regulations did not exist or was not yet available, the Member would inform the Committee of this fact, would explain the reasons therefore, and would provide an indicative date by which time a notification was expected.(336) Also, the Committee decided that notification of modifications to legislation should be submitted within 30 days after domestic publication of the modifications, with the understanding the deadline could not be met, the reason would be notified by the deadline, with an indication of when the modification would be notified.(337) 236. At its meeting on 6 May 1996, the Committee on Safeguards adopted procedures for future reviews of legislative notifications.(338) 237. At its meeting on 24 February 1995, the Committee on Safeguards decided that the information required in the notifications under Article 12.7 of the Agreement on Safeguards should also be provided by signatories that were eligible to become original Members of the WTO within the same time-limits as those which apply to WTO Members.(339) 238. At its meeting on 24 February 1995, the Committee on Safeguards adopted a format for notifications of pre-existing Article XIX measures described in Article 10.(340) At the same meeting, the Committee also adopted a format for notifications of measures subject to the prohibition and elimination of certain measures under Article 11.1 of the Agreement on Safeguards.(341) With respect to reporting by Members regarding their progress in phasing out the pre-existing Article XIX measures and measures prohibited under Article 11, see paragraph 241 below.
XIV. Article 13 back to top Article 13: Surveillance 1. A Committee on Safeguards is hereby established, under the authority of the Council for Trade in Goods, which shall be open to the participation of any Member indicating its wish to serve on it. The Committee will have the following functions:
(a) to monitor, and report annually to the Council for Trade in Goods on, the general implementation of this Agreement and make recommendations towards its improvement;
(b) to find, upon request of an affected Member, whether or not the procedural requirements of this Agreement have been complied with in connection with a safeguard measure, and report its findings to the Council for Trade in Goods;
(c) to assist Members, if they so request, in their consultations under the provisions of this Agreement;
(d) to examine measures covered by Article 10 and paragraph 1 of Article 11, monitor the phase-out of such measures and report as appropriate to the Council for Trade in Goods;
(e) to review, at the request of the Member taking a safeguard measure, whether proposals to suspend concessions or other obligations are "substantially equivalent", and report as appropriate to the Council for Trade in Goods;
(f) to receive and review all notifications provided for in this Agreement and report as appropriate to the Council for Trade in Goods; and
(g) to perform any other function connected with this Agreement that the Council for Trade in Goods may determine.
2. To assist the Committee in carrying out its surveillance function, the Secretariat shall prepare annually a factual report on the operation of this Agreement based on notifications and other reliable information available to it.
239. At its meeting on 6 May 1996, the Committee on Safeguards adopted rules of procedure for its meetings, based on the rules of the General Council and the Council for Trade in Goods, and incorporating relevant changes to make them applicable to the Committee.(342) The Council for Trade in Goods subsequently approved the Committee's rules of procedure at its meeting of 22 May 1996.(343) 240. At its meeting on 24 February 1995, the Committee on Safeguards decided that observer governments should provide the Committee with any information the Observer government considers relevant to matters within the purview of the Agreement, including the text of laws and regulations regarding safeguard measures, and information regarding any safeguard measures taken by the observer government.(344) 241. At its meeting on 24 February 1995, the Committee on Safeguards agreed that, in order to perform the task under Article 13.1(d), Members be asked to report at the end of each year on their progress in phasing out pre-existing Article XIX measures and measures subject to prohibition and elimination under Article 11.1 of the Agreement.(345) 242. At its meeting on 6 November 1995, the Committee on Safeguards decided that, in order to perform the provisions of Articles 13.1 (b), (c) and (e), under which the Committee has to provide assistance to Members upon request, the Committee would address these matters on an ad hoc basis, if and when a request in these matters is received, rather than attempt to establish a procedure in advance of any requests for assistance.(346)
XV. Article 14 back to top Article 14: Dispute Settlement The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding shall apply to consultations and the settlement of disputes arising under this Agreement.
243. The following table lists the disputes in which panel and/or Appellate Body reports have been adopted where the provisions of the Agreement on Safeguards were invoked:
XVI. Annex back to top Annex: Exception Referred to in Paragraph 2 of Article 11
No jurisprudence or decision by a competent WTO body.
Footnotes: 284. Panel Report on US - Lamb,
para. 7.280. back to text |
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