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XII. Article 11 back to top
A. Text of Article 11
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.
B. Interpretation and Application of Article
11
1. Article 11.1(a)
(a) Relationship with Article XIX of the
GATT 1994
251. With respect to the relationship with Article XIX of the GATT
1994, see paragraphs 4–9
above.
(b) Relationship with other Articles
252. The Panel in 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.(411)
2. Article 11.1(b)
253. The following Members submitted notifications of their
timetables for phasing out or bringing into conformity with the
Agreement measures referred to in Article 11:1(b): Cyprus, European
Communities, Korea, Mauritius, Slovenia, South Africa, Thailand.(412)
The Annex to the Agreement identified an additional grey area measure
maintained by the European Communities, with an expiration date of 31
December 1999. The Committee discussed these measures, which included
both import measures and export restraints.(413)
At the
Committee meeting of 9 November 2000, the Chairman noted that all of
these Members had confirmed that their pre-existing measures were
eliminated by 1 January 2000.(414)
3. Article 11.2
254. At the meeting of the Committee on Safeguards on 24 February
1995, it was clarified that in conformity with Article XVI:2 of the WTO
Agreement, the deadlines in Article 11.2 and 12.7 are calculated from
the date of entry into force of the WTO Agreement.(415)
255. At its meeting on 24 February 1995, the Committee on Safeguards
decided that the information required in the notifications of the
exception under Articles 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.(416) The Committee also adopted a format for
notifications of the exception under Articles 11.2 of the Agreement on
Safeguards(417) 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.(418)
256. Notifications under Articles 11.2 are found in the
G/SG/N/4 and
S/SG/N/5 series.
XIII. Article 12
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A. Text of Article 12
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.
B. Interpretation and Application of Article
12
1. General
(a) Notification formats adopted by the Committee on Safeguards
257. At its first meeting on 24 February 1995, the Committee on
Safeguards approved formats for notifications under Article
12.(419)
However, the Panel in 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).”(420)
258. At its meeting of 19 October 2009, the Committee on Safeguards
approved certain amendments to existing notification formats under
Articles 12.1(a), 12.1(b) and 12.1(c) and 12.4.(421)
259. At its meeting of 19 October 2009, the Committee on Safeguards
also approved of a format for information to be provided upon cessation
of a safeguard measure.(422)
(b) Notification under Article 12: document series
260. Notifications under Article 12 are found in the following
document series: Article 12.1(a) (G/SG/N/6/);
Article 12.1(b) (G/SG/N/8/);
Article 12.1(c) (G/SG/N/10/, G/SG/N/14/); Article 12.4 (G/SG/N/7/);
Article 12.5 (G/SG/N/12/, G/SG/N/13/); Article 12.6 (G/SG/N/1/); and
Article 12.7 (G/SG/N/3/).
2. Article 12.1
(a) “shall immediately notify”
261. The Panel in 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’(423)
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.”(424)
262. The same Panel also notes that “[t]here is no basis in the
wording of Article 12.1 to interpret the term ‘immediately’ to mean
‘as soon as practically possible’”.(425)
263. The Panel in US — Wheat Gluten quoted 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.”(426)
264. The Appellate Body in US
— Wheat Gluten confirmed this
approach and added that “immediate notification” is notification
that allows the Committee on Safeguards as well as WTO Members the “fullest
possible period” to consider and react to a safeguard investigation:
“As regards the meaning of the word ‘immediately’ 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.”(427)
(i) “Immediate” notification under Article 12.1(a)
265. Two panels have had the opportunity to make findings on whether
notifications have 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.”(428)
266. Similarly, the Panel in 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.”(429)
267. The Appellate Body upheld the finding of the Panel in US —
Wheat Gluten, but did not pronounce itself on the Panel’s
determination in Korea — Dairy.(430)
(ii) “Immediate” notification under Article 12.1(b)
268. In respect of a notification of a determination of serious
injury, the Panel 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.”(431)
269. The Panel in US — Wheat Gluten found that “the 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”.(432)
270. The Appellate Body upheld the finding of the Panel in US —
Wheat Gluten, but did not pronounce itself on the Panel’s
determination on Korea — Dairy.(433)
(iii) “Immediate” notification under Article 12.1(c)
271. 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.”(434)
272. In respect of a notification of a final decision to take a
safeguard measure, the Panel 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.”(435)
273. The Appellate Body in US — Wheat Gluten, reversed a
Panel finding 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.(436) The Panel
had considered that Article 12.2 provides relevant context in
determining the timeliness of notifications under Article 12.1(c), and
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 Articles 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 Articles 12.1(c) depends only on
whether the notification was immediate.”
…
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.”(437)
274. The Appellate Body in US — Wheat Gluten 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.”(438)
275. The Appellate Body in US — Wheat Gluten then found that
the notification at issue was consistent with the requirement of
immediate notification under Article 12.1(c). The United States had made
the notification five days after the President of the United States had
“taken the decision” to apply the safeguard measure, a period the
Appellate Body considered sufficient, also taking into account 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.(439)
(b) Content of notifications under
Article 12.1(a)
276. 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.(440) The Committee also adopted formats for notifications
required under Articles 12.1(b) and (c).(441)
277. 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.(442)
278. The Panel in 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 Articles 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.”(443)
279. In examining the conformity with Article 12.1(a) of the
notification at issue, the Panel in 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 Articles
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.”(444)
3. Article 12.2
(a) “all pertinent information”
280. The Panel in Korea — Dairy while analysing the meaning
of the expression “all pertinent information” in Article 12.2 of the
Agreement on Safeguards, inter alia, observed that the standard
of what must be notified to the Committee under Articles 12 of the
Agreement on Safeguards differed from what must be published
domestically pursuant to Articles 3 and
4.(445) The Panel found
that the information contained in the notifications at issue was in
conformity with Article 12.2.(446) 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 …”(447) 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.(448) 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.”(449)
281. 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 it did not interpret “evidence of
serious injury” to mean that all details contained in the report of
the national authorities should be included:
“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’.”(450)
282. 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.”(451)
(b) Notification of a proposed safeguard measure
283. The Panel 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.(452)
284. The Appellate Body Report in US — Wheat Gluten
subsequently found to the contrary. See paragraphs 273–275
above.
4. Article 12.3
(a) “adequate opportunity for prior consultations”
285. The Panel in 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,(453) 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 not the only criterion
for assessing the adequacy of consultations:(454)
“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.”(455)
286. 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),(456)
but upheld the finding on the basis that there had been no opportunity
for consultations on the final proposed measure. In this connection, the
Appellate Body first considered 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 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’ 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.”(457)
287. The Panel in 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 President of
the United States.(458) The Appellate Body noted:
“[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 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.”(459)’(460)
288. 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.(461) 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 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.”(462)
5. Relationship with other Articles
(a) Articles 2 and 4
289. The Panel in 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.”(463)
290. 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.”(464)
(b) Article 7
291. The Panel in Argentina — Footwear (EC) concluded that
it could not examine under Articles 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.”(465)
6. Article 12.5
292. The Committee on Safeguards has approved a format for
notifications under Article 12.5.(466)
7. Article 12.6
293. At its meeting of 24 February 1995, the Committee adopted a
format for notifications of laws, regulations and administrative
procedures relating to safeguard measures.(467) 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.(468)
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.(469)
294. At its meeting on 6 May 1996, the Committee on Safeguards
adopted procedures for future reviews of legislative notifications.(470)
295. As of 22 October 2010, 97 Members had notified the Committee of
their domestic safeguards legislation and/or regulations or made
communications in this regard to the Committee (G/SG/N/1/… series).
29 Members had not as of that date made such a notification. The extent
of the non-compliance with this notification obligation, and the
implications of this situation, were raised by the Chairperson at the
regular meetings of the Committee held during the review period
(G/SG/M/37
and G/SG/M/38).(471)
8. Article 12.7
296. 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.(472)
297. 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.(473) 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.(474) With respect to reporting by
Members regarding elimination of these pre-existing measures, see under Articles 10,
11.2 and 13.
9. Other notification requirements
298. Paragraph 16.1 of the Protocol of Accession of China, which
provides for consultations with China regarding market disruption,
requires that any request be notified immediately to the Committee on
Safeguards.(475)
XIV. Article 13 back to top
A. Text of Article 13
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.
B. Interpretation and Application of Article
13
1. General
(a) Rules of procedure
299. 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.(476)
The Council for Trade in Goods subsequently approved the Committee’s
rules of procedure at its meeting of 22 May 1996.(477)
(b) Observers
300. 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.(478)
2. Article 13.1
301. The Committee reports annually to the Council for Trade in
Goods.(479)
302. 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
would 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.(480)
At its meeting of 9 November, the Committee agreed that there was no
longer any need to report further on this issue, as all pre-existing
measures under
Articles 10 and 11 had been eliminated by 1 January
2000.(481)
303. At its meeting on 6 November 1995, the Committee on Safeguards
decided that, in order to comply with 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.(482)
XV. Article 14 back to top
A. Text of
Article 14
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.
B. Interpretation and Application of Article
14
1. Articles of the Agreement on Safeguards invoked in panel and
Appellate Body proceedings
304. For a table of disputes under the Agreement on Safeguards, see
the table of “Articles of the Covered Agreements Invoked in Panel and
Appellate Body Proceedings” in the Chapter on the DSU.
2. Standard of review
305. In Argentina — Footwear (EC), Argentina argued in its
appeal that the Panel correctly articulated the standard of review but
alleged that the Panel erred in applying that standard of review by
conducting a “de facto de novo review” of the findings and
conclusions of the Argentine authorities. The Appellate Body rejected
Argentina’s argument, stating as follows:
“We have stated, on more than one occasion, that, for all but one
of the covered agreements, Article 11 of the DSU sets forth the
appropriate standard of review for panels.
…
Based on our review of the Panel’s reasoning, we find that the
Panel correctly stated the appropriate standard of review, as set forth
in Article 11 of the DSU. And, with respect to its application of
the standard of review, we do not believe that the Panel conducted a de
novo review of the evidence, or that it substituted its analysis and
judgement for that of the Argentine authorities. Rather, the Panel
examined whether, as required by Article 4 of the Agreement on
Safeguards, the Argentine authorities had considered all the
relevant facts and had adequately explained how the facts supported the
determinations that were made. Indeed, far from departing from its
responsibility, in our view, the Panel was simply fulfilling its
responsibility under Article 11 of the DSU
in taking the approach it
did. To determine whether the safeguard investigation and the resulting
safeguard measure applied by Argentina were consistent with Article 4 of the Agreement on
Safeguards, the Panel was obliged, by the very
terms of Article 4, to assess whether the Argentine authorities had
examined all the relevant facts and had provided a reasoned explanation
of how the facts supported their determination.”(483)
306. In Korea — Dairy, the Panel considered Korea’s
request for the Panel not to engage in a de facto de novo review
of its national authorities’ determination to impose a safeguard. More
specifically, Korea argued that the standard of review of Article 11
implies that the function of the Panel is to assess whether Korea (i)
examined the relevant facts before it at the time of the investigation;
and (ii) provided an adequate explanation of how the facts before it as
a whole supported the determination made. Furthermore, Korea claimed
that a certain deference or latitude should be left to the national
authorities in this respect. The Panel held that it could not grant “total
deference” to the national authorities but agreed that it could not
substitute its assessment for that of the national authority:
“We consider that for the Panel to adopt a policy of total
deference to the findings of the national authorities could not ensure
an ‘objective assessment’ as foreseen by Article 11 of the DSU. This
conclusion is supported, in our view, by previous panel reports that
have dealt with this issue(484). However, we do not see our
review as a substitute for the proceedings conducted by national
investigating authorities. Rather, we consider that the Panel’s
function is to assess objectively the review conducted by the national
investigating authority, in this case the KTC. For us, an objective
assessment entails an examination of whether the KTC had examined all
facts in its possession or which it should have obtained in accordance
with Article 4.2 of the Agreement on Safeguards (including facts which
might detract from an affirmative determination in accordance with the
last sentence of Article 4.2 of the Agreement on Safeguards), whether
adequate explanation had been provided of how the facts as a whole
supported the determination made, and, consequently, whether the
determination made was consistent with the international obligations of
Korea.”(485)
307. In US — Lamb, the Appellate Body held that, in
considering a claim under the Agreement on Safeguards, a panel’s
objective assessment involves both a formal aspect (whether the
competent authorities have evaluated “all relevant factors”) and a substantive
aspect (whether the competent authorities have given a reasoned and
adequate explanation for their determination):
“[A]n ‘objective assessment’ of a claim under Article 4.2 (a)
of the Agreement on Safeguards has, in principle, two elements.
First, a panel must review whether competent authorities have evaluated all
relevant factors, and, second, a panel must review whether the
authorities have provided a reasoned and adequate explanation of
how the facts support their determination.(486) Thus, the panel’s
objective assessment involves a formal aspect and a substantive
aspect. The formal aspect is whether the competent authorities have
evaluated ‘all relevant factors’. The substantive aspect is whether
the competent authorities have given a reasoned and adequate explanation
for their determination.
This dual character of a panel’s review is mandated by the nature
of the specific obligations that Article 4.2 of the Agreement on
Safeguards imposes on competent authorities. under Article 4.2(a),
competent authorities must, as a formal matter, evaluate ‘all relevant
factors’. However, that evaluation is not simply a matter of form, and
the list of relevant factors to be evaluated is not a mere “check list”.
under Article 4.2(a), competent authorities must conduct a substantive
evaluation of ‘the “bearing”, or the “influence”
or “effect”’(487) or ‘impact’ that the relevant
factors have on the ‘situation of [the] domestic industry’.
(emphasis added) By conducting such a substantive evaluation of the
relevant factors, competent authorities are able to make a proper
overall determination, inter alia, as to whether the domestic
industry is seriously injured or is threatened with such injury as
defined in the Agreement.”(488)
308. In US — Lamb, the Appellate Body further stated that
the panel must examine whether the explanation given by the competent
authorities in their published report is reasoned and adequate without
conducting a de novo review of the evidence nor substituting the
authorities’ conclusions:
“It follows that the precise nature of the examination to be
conducted by a panel, in reviewing a claim under Article 4.2 of the Agreement
on Safeguards, stems, in part, from the panel’s obligation to make
an ‘objective assessment of the matter’ under Article 11 of the DSU
and, in part, from the obligations imposed by Article 4.2, to the extent
that those obligations are part of the claim. Thus, as with any claim
under the provisions of a covered agreement, panels are required to
examine, in accordance with Article 11 of the DSU,(489) whether
the Member has complied with the obligations imposed by the particular
provisions identified in the claim. By examining whether the explanation
given by the competent authorities in their published report is reasoned
and adequate, panels can determine whether those authorities have acted
consistently with the obligations imposed by Article 4.2 of the Agreement
on Safeguards.
We wish to emphasize that, although panels are not entitled to
conduct a de novo review of the evidence, nor to substitute
their own conclusions for those of the competent authorities, this does not
mean that panels must simply accept the conclusions of the
competent authorities. To the contrary, in our view, in examining a
claim under Article 4.2(a), a panel can assess whether the competent
authorities’ explanation for its determination is reasoned and
adequate only if the panel critically examines that explanation,
in depth, and in the light of the facts before the panel. Panels must,
therefore, review whether the competent authorities’ explanation fully
addresses the nature, and, especially, the complexities, of the data,
and responds to other plausible interpretations of that data. A panel
must find, in particular, that an explanation is not reasoned, or is not
adequate, if some alternative explanation of the facts is
plausible, and if the competent authorities’ explanation does not seem
adequate in the light of that alternative explanation. Thus, in making
an “objective assessment” of a claim under Article 4.2(a), panels
must be open to the possibility that the explanation given by the
competent authorities is not reasoned or adequate.
In this respect, the phrase ‘de novo review’ should not be
used loosely. If a panel concludes that the competent authorities, in a
particular case, have not provided a reasoned or adequate
explanation for their determination, that panel has not, thereby,
engaged in a de novo review. Nor has that panel substituted its
own conclusions for those of the competent authorities. Rather, the
panel has, consistent with its obligations under the DSU, simply reached
a conclusion that the determination made by the competent authorities is
inconsistent with the specific requirements of Article 4.2 of the Agreement
on Safeguards.”(490)
309. In US — Wheat Gluten, the Appellate Body considered the
duties of competent authorities and stated that an investigation by a
competent authority requires a proper degree of activity. Their “duties
of investigation and evaluation preclude them from remaining passive in
the face of possible short-comings in the evidence submitted”.(491)
They “must undertake additional investigative steps, when the
circumstances so require, in order to fulfil their obligation to
evaluate all relevant factors.”(492) In this case, the
Appellate Body found that the Panel had applied a standard of review
which fell short of what is required by Article 11 of the DSU
by
concluding that the report of the investigating authority contained an
adequate explanation. In the Appellate Body’s view, the Panel had
heavily relied upon supplementary information supplied by the United
States during the Panel proceedings.(493)
310. In US — Steel Safeguards, the Appellate Body reminded
the parties of the importance of providing a reasoned and adequate
explanation of the facts supporting the imposition of safeguard
measures, thereby enabling panels to make their objective assessment as
required under Article 11 of the DSU:
“It bears repeating that a panel will not be in a position to
assess objectively, as it is required to do under Article 11 of the DSU,
whether there has been compliance with the prerequisites that must be
present before a safeguard measure can be applied, if a competent
authority is not required to provide a ‘reasoned and adequate
explanation’ of how the facts support its determination of those
prerequisites, including ‘unforeseen developments’ under Articles
XIX:1(a) of the GATT 1994. A panel must not be left to wonder why
a safeguard measure has been applied.
It is precisely by ‘setting forth findings and reasoned conclusions
on all pertinent issues of fact and law’, Articles 3.1, and by
providing ‘a detailed analysis of the case under investigation as well
as a demonstration of the relevance of the factors examined’, under
Articles 4.2(c), that competent authorities provide panels with the
basis to ‘make an objective assessment of the matter before it’ in
accordance with Article 11. As we have said before, a panel may not
conduct a de novo review of the evidence or substitute its
judgement for that of the competent authorities.(494) Therefore,
the ‘reasoned conclusions’ and ‘detailed analysis’ as well as
‘a demonstration of the relevance of the factors examined’ that are
contained in the report of a competent authority, are the only bases on
which a panel may assess whether a competent authority has complied with
its obligations under the Agreement on Safeguards and Article
XIX:1(a) of the GATT 1994. This is all the more reason why they must be
made explicit by a competent authority.”
…
[W]e cannot accept the United States’ interpretation that a failure
to explain a finding does not support the conclusion that the USITC ‘did
not actually perform the analysis correctly, thereby breaching
Article 2.1, 4.2, or 4.2(b) [of the Agreement on Safeguards]’.(495)
As we stated above, because a panel may not conduct a de novo
review of the evidence before the competent authority, it is the explanation
given by the competent authority for its determination that alone
enables panels to determine whether there has been compliance with the
requirements of Article XIX of the GATT 1994 and of
Articles 2 and 4 of
the Agreement on Safeguards. It may well be that, as the United
States argues, the competent authorities have performed the appropriate
analysis correctly. However, where a competent authority has not
provided a reasoned and adequate explanation to support its
determination, the panel is not in a position to conclude that the
relevant requirement for applying a safeguard measure has been fulfilled
by that competent authority. Thus, in such a situation, the panel has no
option but to find that the competent authority has not performed the
analysis correctly.”(496)
XVI. Annex
back to top
A. Text of the Annex
Annex: Exception Referred to in Paragraph 2 of Article 11
|
Members concerned |
Product |
Termination |
|
EC/Japan |
Passenger cars, off road vehicles, light commercial vehicles,
light trucks (up to 5 tonnes), and the same vehicles in wholly
knocked-down form (CKD sets). |
31 December 1999 |
B. Interpretation and
Application of the Annex
311. See above under Articles 11.2 regarding notification and
elimination of measures under Articles 11.2 that were in existence prior
to the date of entry into force of the WTO Agreement.
XVII. Other back to top
A. Accession Protocol of China Transitional Safeguard
16. Transitional Product-Specific Safeguard Mechanism
1. In cases where products of Chinese origin are being imported into
the territory of any WTO Member in such increased quantities or under
such conditions as to cause or threaten to cause market disruption to
the domestic producers of like or directly competitive products, the WTO
Member so affected may request consultations with China with a view to
seeking a mutually satisfactory solution, including whether the affected
WTO Member should pursue application of a measure under the Agreement on
Safeguards. Any such request shall be notified immediately to the
Committee on Safeguards.
2. If, in the course of these bilateral consultations, it is agreed
that imports of Chinese origin are such a cause and that action is
necessary, China shall take such action as to prevent or remedy the
market disruption. Any such action shall be notified immediately to the
Committee on Safeguards.
3. If consultations do not lead to an agreement between China and the
WTO Member concerned within 60 days of the receipt of a request for
consultations, the WTO Member affected shall be free, in respect of such
products, to withdraw concessions or otherwise to limit imports only to
the extent necessary to prevent or remedy such market disruption. Any
such action shall be notified immediately to the Committee on
Safeguards.
4. Market disruption shall exist whenever imports of an article, like
or directly competitive with an article produced by the domestic
industry, are increasing rapidly, either absolutely or relatively, so as
to be a significant cause of material injury, or threat of material
injury to the domestic industry. In determining if market disruption
exists, the affected WTO Member shall consider objective factors,
including the volume of imports, the effect of imports on prices for
like or directly competitive articles, and the effect of such imports on
the domestic industry producing like or directly competitive products.
5. Prior to application of a measure pursuant to
paragraph 3, the WTO
Member taking such action shall provide reasonable public notice to all
interested parties and provide adequate opportunity for importers,
exporters and other interested parties to submit their views and
evidence on the appropriateness of the proposed measure and whether it
would be in the public interest. The WTO Member shall provide written
notice of the decision to apply a measure, including the reasons for
such measure and its scope and duration.
6. A WTO Member shall apply a measure pursuant to this Section only
for such period of time as may be necessary to prevent or remedy the
market disruption. If a measure is taken as a result of a relative
increase in the level of imports, China has the right to suspend the
application of substantially equivalent concessions or obligations under
the GATT 1994 to the trade of the WTO Member applying the measure, if
such measure remains in effect more than two years. However, if a
measure is taken as a result of an absolute increase in imports, China
has a right to suspend the application of substantially equivalent
concessions or obligations under the GATT 1994 to the trade of the WTO
Member applying the measure, if such measure remains in effect more than
three years. Any such action by China shall be notified immediately to
the Committee on Safeguards.
7. In critical circumstances, where delay would cause damage which it
would be difficult to repair, the WTO Member so affected may take a
provisional safeguard measure pursuant to a preliminary determination
that imports have caused or threatened to cause market disruption. In
this case, notification of the measures taken to the Committee on
Safeguards and a request for bilateral consultations shall be effected
immediately thereafter. The duration of the provisional measure shall
not exceed 200 days during which the pertinent requirements of paragraphs 1, 2 and 5 shall be met. The duration of any provisional
measure shall be counted toward the period provided for under paragraph
6.
8. If a WTO Member considers that an action taken under
paragraphs 2,
3 or 7 causes or threatens to cause significant diversions of trade into
its market, it may request consultations with China and/or the WTO
Member concerned. Such consultations shall be held within 30 days after
the request is notified to the Committee on Safeguards. If such
consultations fail to lead to an agreement between China and the WTO
Member or Members concerned within 60 days after the notification, the
requesting WTO Member shall be free, in respect of such product, to
withdraw concessions accorded to or otherwise limit imports from China,
to the extent necessary to prevent or remedy such diversions. Such
action shall be notified immediately to the Committee on Safeguards.
9. Application of this Section shall be terminated 12 years after the
date of accession.(497)
B. Interpretation and
Application
1. Procedural requirements for transitional safeguards under
Paragraph 16
312. The Working Party Report on China’s accession to the WTO
provides as follows concerning the procedural requirements for any
action under the product-specific transitional safeguard provisions in
Paragraph 16:
245. With respect to implementation of the product-specific
safeguard, the representative of China expressed particular concern that
WTO Members provide due process and use objective criteria in
determining the existence of market disruption or trade diversion,
because WTO Members did not have wide experience in implementing the
provisions of Section 16 of the Draft Protocol. He stated that with
respect to trade diversion, WTO Members needed to apply objective
criteria to determine whether an action by China or another WTO Member
under the product-specific safeguard to prevent or remedy market
disruption caused or threatened to cause significant diversion of trade.
Such criteria should include the actual or imminent increase in market
share or volume of imports from China, the nature or extent of the
action taken by China or the other WTO Member and other similar
criteria. In addition, WTO Members should provide an opportunity for
importers, exporters and all interested parties to submit their views on
the matter.
246. Members of the Working Party noted that the Draft Protocol
included specific requirements that WTO Members needed to follow in
connection with an action under that Section. Members of the Working
Party confirmed that in implementing the provisions on market
disruption, WTO Members would comply with those provisions and the
following:
(a) An action to address market disruption would be taken only after
an investigation by the competent authorities of the importing WTO
Member pursuant to procedures previously established and made available
to the public;
(b) The competent authority of the importing Member would publish
notice of the commencement of any investigation under the
product-specific safeguard provisions of the Draft Protocol and would,
within a reasonable time thereafter, hold a public hearing or provide
other appropriate means for the purpose of permitting interested parties
to present evidence and their views as to the appropriateness of whether
or not to take a measure and to respond to the presentations of other
parties;
…
(d) The competent authorities would publish any measure proposed to
be taken and provide the opportunity, including a public hearing, if
requested, or provide other appropriate means, for importers, exporters
and other interested parties to submit their views and evidence on the
appropriateness of the proposed measure and whether it would be in the
public interest;
(e) The competent authority would promptly publish notice of the
decision to apply a measure, including an explanation of the basis for
the decision and the scope and duration of the measure;
(f) The period of application of the measure could be extended,
provided that the competent authorities of the importing WTO Member had
determined that action continued to be necessary to prevent or remedy
market disruption. The competent authorities of the importing WTO Member
would publish notice of the commencement of any proceeding to consider
whether to extend the duration of an action and would, within a
reasonable time thereafter, hold a public hearing or provide other
appropriate means for the purpose of permitting all interested parties
to have an opportunity to present evidence or their views and to respond
to the presentations of other parties;
(g) Except for good cause, no investigation under Section 16 of the
Protocol on the same subject matter could be initiated less than one
year after the completion of a previous investigation; and
(h) A WTO Member would apply a measure only for such period of time
as was necessary to prevent or remedy market disruption.(498)
2. General
(a) Standard of review under Paragraph 16
313. The Appellate Body in
US — Tyres (China) upheld the Panel’s
determination that since China’s Accession Protocol is silent
regarding the appropriate standard of review, the applicable standard of
review is provided by Article 11 of the DSU.(499) See further at
paragraphs 147–153 above concerning the application of the
Article 11
standard of review.
(b) Burden of proof
314. The Panel in US — Tyres (China) found that in
accordance with the general principles on burden of proof applicable in
WTO dispute settlement, “China, which has claimed that the United
States acted inconsistently with Paragraph 16 of the Protocol … thus
bears the burden of demonstrating that the United States acted
inconsistently with those provisions.”(500)
3. Paragraph 16.1
(a) Paragraphs 16.1 and 16.4 as context for each other
315. In US — Tyres (China), the Panel observed:
“Paragraph 16.1 is concerned with more than the mere right of
Members to seek consultations. Paragraph 16.1 provides the very basis
for action under the Paragraph 16 transitional product-specific
safeguard mechanism, as Paragraph 16.1 consultations are the trigger for
any subsequent action to address the ‘market disruption’ in
question. Indeed, it is only if such consultations fail that
transitional product-specific measures may be imposed (under Paragraph
16.3).
In accordance with Paragraph 16.1, action under Paragraph 16 is
triggered when Chinese imports are being imported ‘in such increased
quantities or under such conditions’(501) ‘as to cause’ ‘market
disruption’. But what do these terms mean substantively? How does a
Member know when imports are in sufficiently ‘increased quantities’
to justify action? What is the degree of harm that the domestic industry
must suffer? And what is the degree of causal relationship required
between those imports and that harm?
… In the context of Paragraph 16, the answers are provided in
Paragraph 16.4, which sets forth a definition of ‘market disruption’
that encompasses the nature of the increase in imports, the nature of
the harm to be suffered by the domestic industry, and the degree of
causal nexus that must exist between those imports and that harm. …
Thus, Paragraphs 16.1 and 16.4 are interrelated. They should be read
together, and each provision provides important context for interpreting
the other. The interrelation between Paragraphs 16.1 and 16.4, the joint
reading of these provisions, and the definitional nature of Paragraph
16.4, suggest that Paragraph 16.4 clarifies the substance of the trigger
conditions provided for in Paragraph 16.1.”(502)
(b) Notifications
316. Paragraph 16.1 provides that any request for consultations “shall
be notified immediately to the Committee on Safeguards”. Notifications
under Article 16.1 have been circulated in the G/SG/N/16 series.
4. Paragraph 16.3: “to the extent necessary”
317. In US — Tyres (China), China argued that a transitional
product-specific safeguard measure should not exceed the amount
necessary to prevent or remedy the market disruption caused by the
subject imports. The Panel agreed that “a remedy imposed under
Paragraph 16 of the Protocol should be limited to the injury / market
disruption caused by the subject imports, rather than the injury /
market disruption caused by all injurious factors generally”(503)
and it further found:
“Although we consider that increasing imports should be viewed ‘in
the context of’ other factors, to ensure a proper finding of
causation, there is no obligation to separate and distinguish the
injurious effects of factors other than increased imports from those
caused by increased imports (as required by the second sentence of
Article 4.2(b) of the Safeguards Agreement). Since there is no
‘full-blown’ non-attribution analysis under the Protocol, there is
no benchmark against which to measure the scope of the remedy. Nor is
there any basis for finding that a failure to separate and distinguish
the injurious effects of rapidly increasing imports from the injurious
effects of other causal factors establishes prima facie that the remedy
is excessive…
…While the lack of a benchmark creates difficulties in any
challenge of the measure, nevertheless, the burden is on China to
establish prima facie that the scope of the measure is excessive. But
the burden is not impossible. …”(504)
318. The Panel further observed:
“To the extent that the condition of the industry deteriorated as a
result of increased imports, a measure designed to improve the condition
of the industry does address the injurious effects of the increased
imports. While there is no guarantee that a measure imposed on this
basis will not be excessive, there is similarly no certainty that a
measure imposed on this basis will necessarily be excessive.
… since the USITC found that the domestic industry suffered
market disruption as a result of rapidly increasing subject imports that
were underselling domestic production, a measure that is aimed at ‘reducing
the quantity of subject imports and raising their price in the U.S.
market’ can be justified. The Panel notes, however, that it does allow
for the possibility of the expansion of non-subject imports rather than
the improvement of the condition of the domestic industry, and observes
that is a consequence of a country-specific safeguard and not a defect
of the remedy in this case.”(505)
5. Paragraph 16.4
(a) Determination of “market disruption” and material injury
319. The Working Party Report on China’s accession provides as
follows regarding the determination of “market disruption” under
Paragraph 16.4:
“In determining whether market disruption existed, including the
causal link between imports which were increasing rapidly, either
absolutely or relatively, and any material injury or threat of material
injury to the domestic industry, the competent authorities would
consider objective factors, including (1) the volume of imports of the
product which was the subject of the investigation; (2) the effect of
imports of such product on prices in the importing WTO Member’s market
for the like or directly competitive products; (3) the effect of imports
of such product on the domestic industry producing like or directly
competitive products”.(506)
320. The Appellate Body Report in US — Tyres (China) noted
that:
“[T]he injury threshold provided for in Paragraph 16.4 of the
Protocol is ‘material injury’, rather than the ‘serious injury’
threshold contained in Article 2.1 of the Agreement on Safeguards.
In US — Lamb, the Appellate Body explained that ‘the word “serious”
connotes a much higher standard of injury than the word “material”‘.(507)
Such lower injury threshold thus seems to imply a lower degree of
injurious effects caused by rapidly increasing imports to the domestic
industry. This reading also appears to be consistent with the meaning of
the term ‘disruption’ in Paragraph 16.4, that is, ‘lack of order
or regular arrangement; disarray, confused state’, which similarly
suggests a lower injury threshold than ‘serious injury’.(508)
(b) Period of investigation and data analysis
321. The Panel in US — Tyres (China) observed that the
five-year period of investigation applied in that case satisfied the
standard in the Protocol:
“[W]e recall that WTO jurisprudence in relation to the Safeguards
Agreement says that where there are no specific rules as to the
length of the period of investigation, the period selected must be
sufficiently long to allow conclusions to be drawn regarding increased
imports, and the period must allow an investigating authority to focus
on recent imports.(509) We consider that the same logic applies
in the context of the Protocol. In our view, given that there are no
precise guidelines in the Protocol, the selection of a five year period
of investigation that ended less than four months before the beginning
of the investigation provides recent data and satisfies the standard
under the Protocol.
…
Given the requirement to consider imports that are ‘increasing
rapidly, either absolutely or relatively’ it seems only practical that
all data be available for any period selected as part of the
investigation period in order to be able to determine whether imports
are ‘increasing rapidly’.”(510)
(c) “increasing rapidly, either absolutely or relatively”
322. The dispute in US — Tyres (China) concerned in part the
application of the “increasing rapidly” threshold in Paragraph 16.4.
The underlying investigation found that import volume increased
absolutely in each of the five years in the investigation period, but
the amount of the increase was smaller in the last year. The Appellate
Body upheld the Panel’s conclusion that “there is nothing in the use
of the present continuous tense in Paragraphs 16.1 and 16.4 of the
Protocol that would require an investigating authority to focus on the
movements in imports during the most recent past, or during the
period immediately preceding the authority’s decision”(511):
“We are not persuaded that the use of the present continuous tense
‘are increasing’ in Paragraph 16.4 of the Protocol requires
investigating authorities to focus exclusively on import increases that
occurred during the most recent past.
… the use of the present continuous tense in the phrase ‘is
being imported’ requires investigating authorities to examine ‘recent’
import trends. For this reason, investigating authorities must select a
period of investigation that is sufficiently recent to provide a
reasonable indication of current trends in imports. Or, as the Appellate
Body put it, ‘the investigation period should be the recent past’.(512)
However, once the period of investigation is selected, and is
sufficiently recent to provide a reasonable indication of current trends
in imports, nothing in the use of the present continuous tense ‘are
increasing’ in Paragraph 16.4 and ‘are being imported’ in
Paragraph 16.1 implies that the analysis must be limited to import data
relating to the very end of the period of investigation.
Moreover, Paragraph 16.1 establishes that market disruption, as
defined in Paragraph 16.4, may be caused when Chinese products “are
being imported … in such increased quantities”. As noted earlier,
reference to “in such increased quantities” suggests a
comparative assessment, indicating that imports must be at significantly
higher levels than earlier in the period of investigation. Investigating
authorities would not be able to determine whether imports have
increased, and whether the level of such increase in imports meets the
threshold requirement implied by the terms “in such increased
quantities”, if they were to focus exclusively on the most recent
period.”(513)
323. The Appellate Body agreed with the Panel that “the USITC’s
finding that imports were ‘increasing rapidly’ in absolute terms
would have, on its own, satisfied the requirements of Paragraph 16.4”.(514)
324. The Appellate Body also agreed that under Paragraph 16.4, it is
imports, and not the rate of increase in imports, that must be
increasing “rapidly”:
“In our view, the text of Paragraph 16.4 requires that imports
— and not the rates of increase in imports — be increasing
‘rapidly’. While it might be useful for investigating authorities to
review rates of increase in imports in assessing whether imports are ‘increasing
rapidly’, we cannot agree with China that imports will only be
increasing ‘rapidly’ when they are increasing at progressively
accelerating rates. To the contrary, we agree with the Panel that a
decline in the yearly rate of increase does not ‘necessarily preclude
a finding that imports are “increasing rapidly’”(515) This
is particularly so because, under Paragraph 16.4, rapid absolute
import increases suffice to establish that imports are ‘increasing
rapidly’. Moreover, one might expect that the rate of increase in
imports will normally decline as imports grow from an increasingly
larger base. Yet this alone would not, in our view, preclude a finding
that imports are ‘increasing rapidly’ in absolute terms.
…the term ‘rapidly’ does not require that the rates of
increase in either the volume or market share of subject imports
progressively increase over the period of investigation. This is because
the volume or market share of subject imports may still be increasing
significantly over a short period of time in situations where the rate
of increase in a given year decelerates in comparison to previous years.
In this sense, we agree with the Panel that the relative change
in either the volume or the market share of subject imports is “a step
further away” from the text of Paragraph 16.4, which requires rapid
increases in either the volume or market share of subject imports.”(516)
(d) Causation
(i) General
325. The Working Party Report on China’s accession set out the
following general considerations regarding determinations of causation
in transitional safeguards investigations:
248. Members of the Working Party agreed that objective criteria had
to be applied in determining whether actions to prevent or remedy market
disruption caused or threatened to cause significant diversion of trade.
Among the factors to be examined were:
(a) the actual or imminent increase in market share of imports from
China in the importing WTO Member;
(b) the nature or extent of the action taken or proposed by China or
other WTO Members;
(c) the actual or imminent increase in the volume of imports from
China due to the action taken or proposed;
(d) conditions of demand and supply in the importing WTO Member’s
market for the products at issue; and
(e) the extent of exports from China to the WTO Member(s) applying a
measure pursuant to paragraphs 2, 3 or 7 of Section 16 of the Draft
Protocol and to the importing WTO Member.(517)
(ii) “a significant cause”
326. The Appellate Body in US — Tyres (China) agreed with
the Panel that the causation standard in paragraph 16.4 means that “rapidly
increasing imports may be one of several causes that contribute to
producing or bringing about material injury to the domestic industry”.(518)
However, the Appellate Body considered that:
“[T]he inclusion of the term ‘significant’ to qualify ‘a
cause’ indicates that rapidly increasing imports must be more than a
mere contributing cause to the material injury of the domestic industry.
Rather, the contribution made by rapidly increasing imports to the
material injury of the domestic industry must be important or notable.”(519)
327. The Appellate Body explained that:
“In our view, these textual and contextual elements [in Paragraph
16.4] suggest that the term ‘significant’ describes the causal
relationship or nexus that must be found to exist between rapidly
increasing imports and material injury to the domestic industry, which
must be such that rapidly increasing imports make an ‘important’ or
‘notable’ contribution in bringing about material injury to the
domestic industry. Such assessment must be carried out on the basis of
the objective factors listed in the second sentence of Paragraph 16.4,
such as the volume of imports, the effect of imports on prices, and the
effect of imports on the domestic industry.
In the light of the above, we do not agree with China that the
inclusion of the term ‘significant’ to qualify the term ‘a cause’
indicates that Paragraph 16.4 of the Protocol imposes a more rigorous
causation standard than other WTO agreements, which require that imports
‘cause’ injury.(520) We do not find China’s comparison
particularly useful, given the distinct causation standard set forth in
the Protocol. …”(521)
328. The Appellate Body continued:
“China is correct that the Protocol provides for restrictive
measures on ‘fair’ trade, and permits, for a transitional period,
the application of such measures on Chinese imports alone. However, as
noted above, we consider that the object and purpose of the Protocol, as
reflected in Section 16 thereof, is to afford temporary relief to
domestic industries that are exposed to market disruption as a result of
a rapid increase in Chinese imports of like or directly competitive
products, subject to the conditions and requirements provided therein.
Therefore, the object and purpose of the Protocol, as reflected in
Section 16 thereof, seems to weigh in favour of an interpretation
pursuant to which temporary relief is available whenever rapidly
increasing imports are making an ‘important’, rather than a ‘particularly
strong [and] substantial’, contribution to the material injury of the
domestic industry.
In sum, Paragraph 16.4 of the Protocol sets forth a distinct
causation standard whereby rapidly increasing imports must be ‘a
significant cause’ of material injury to the domestic industry. This
causation standard requires that rapidly increasing imports from China
make an important contribution in bringing about material injury to the
domestic industry. Pursuant to the second sentence of Paragraph 16.4,
such determination is to be made on the basis of objective criteria,
including the volume of imports, the effects of rapidly increasing
imports on prices, and the effects of rapidly increasing imports on the
domestic industry.”(522)
(iii) Causation analysis required by Paragraph 16 of the Protocol
329. Regarding the cumulative impact of possible causes, the Panel
observed:
“Notwithstanding the lack of any requirement for cumulative
assessment in the Protocol, we acknowledge that there may be cases where
the collective injurious effect of other causal factors might be so
dominant that the injury caused by increasing imports could not properly
be found to be ‘significant. However China has not demonstrated that
this was the case in the underlying USITC investigation.”(523)
330. In response to an argument that the causation standard in
Paragraph 16 requires an analysis of the conditions of competition and
an analysis of the correlation between increased imports and relevant
injury factors (as under Article 2.1 of the Agreement on Safeguards),
the Appellate Body in US — Tyres (China) found:
“Paragraph 16.4 of the Protocol does not provide specific guidance
with respect to the methodology investigating authorities may apply in
determining whether rapidly increasing imports are ‘a significant
cause’ of material injury. Thus, we agree with the Panel that
Paragraph 16.4 gives investigating authorities a certain degree of
discretion in selecting the methodology to assess the existence of a
causal link, provided that such methodology establishes that rapidly
increasing imports are ‘a significant cause’ of material injury to
the domestic industry, and considers the objective factors listed in the
second sentence of Paragraph 16.4. The Appellate Body recently noted
that ‘the appropriateness of a particular method [to establish
causation] may have to be determined on a case-specific basis, depending
on a number of factors and factual circumstances’.(524)
We also agree with the Panel that an analysis of the conditions of
competition and of correlation may prove ‘essential’ in order
properly to establish causation under Paragraph 16.4.(525)
Indeed, rapidly increasing imports from China will be capable of being
‘a significant cause’ of material injury to the domestic industry
only where they are engaged in actual or potential competition with the
like or directly competitive products in the domestic industry.
Similarly, a temporal coincidence between upward trends in imports and a
decline in the performance indicators of the domestic industry may
evidence the existence of a causal link between rapidly increasing
imports and material injury to the domestic industry. However, as China
itself acknowledges, the examination of the conditions of competition
and the analysis of correlation between movements in imports and injury
factors are merely ‘analytical tools’ that may assist an
investigating authority in determining whether rapidly increasing
imports are ‘a significant cause’ of material injury to the domestic
industry. As such, neither of these analytical tools is dispositive of
the question of whether rapidly increasing imports are ‘a significant
cause’ of material injury to the domestic industry under Paragraph
16.4.
…
… [W]e consider that the term ‘a significant cause’ requires
that rapidly increasing imports make an important contribution in
bringing about material injury to the domestic industry. This legal
standard must inform the investigating authority’s analysis of
causation under Paragraph 16.4 of the Protocol. … an investigating
authority may choose to rely — as the USITC did in this case — on
both an analysis of the conditions of competition and an analysis of
correlation to show that rapidly increasing imports are ‘a significant
cause’ of material injury to the domestic industry. A careful analysis
of degrees of competitive overlap and a greater coincidence in the
magnitude of import increases vis-à-vis decreases in injury factors may
provide a more robust basis for a finding of causation. However,
investigating authorities may calibrate their analysis to the particular
circumstances of the case at hand, as long as the analysis provides a
sufficiently reasoned and adequate explanation for a finding that
rapidly increasing imports are ‘a significant cause’ of material
injury. The causation standard set forth in Paragraph 16.4 will be
satisfied where these analytical tools provide a reasoned and adequate
explanation for the investigating authority’s determination that
rapidly increasing imports make an important contribution in bringing
about material injury to the domestic industry.”(526)
(iv) Non-attribution of injury caused by other factors
331. The Panel in US — Tyres (China) also found that “the
causal link between rapidly increasing imports and material injury must
be assessed ‘within the context of other possible causal factors’.
In particular, a finding of causation for the purpose of Paragraph 16.4
should only be made if it is properly established that rapidly
increasing imports have injurious effects that cannot be explained by
the existence of other causal factors.”(527)
332. Following the reasoning in its decision on US — Cotton,
the Appellate Body agreed that “some form of non-attribution analysis
is inherent in the establishment of a causal link between rapidly
increasing imports from China and material injury to the domestic
industry”:(528)
“[S]ome form of analysis of the injurious effects of other factors
is required to demonstrate that subject imports are “a significant
cause” of injury within the meaning of Paragraph 16.4 of the Protocol,
despite the absence of language explicitly requiring a consideration of
other possible causes of injury.(529) As we see it, an
investigating authority can make a determination as to whether subject
imports are a significant cause of material injury only if it properly
ensures that effects of other known causes are not improperly attributed
to subject imports and do not suggest that subject imports are in fact
only a “remote” or “minimal” cause, rather than a “significant”
cause, of material injury to the domestic industry. For this reason, the
significance of the effects of rapidly increasing imports needs to be
assessed in the context of other known causal factors. The extent of the
analysis that is required will depend on the impact of other causes that
are alleged to be relevant and the facts and circumstances of the
particular case.“(530)
6. Paragraph 16.6: duration of remedy
333. The Panel in US — Tyres (China) found that it was for
China to demonstrate that the duration of a remedy under Paragraph 16 is
excessive, and that this burden had not been met:
“[T]here was no obligation on the United States to explain why a
three-year measure was needed to prevent or remedy the market disruption
caused by subject imports. … there was also no obligation on the
United States to quantify the injury caused by increasing imports, or
separate and distinguish that injury from injury caused by other
factors. Accordingly, it is not enough for China to simply “demonstrate[e]
that the USITC failed to ascertain the amount of the alleged effect of
subject imports on the domestic industry”. Instead, the onus is on
China to establish prima facie that a three-year measure was excessive.”(531)
Footnotes:
411. Panel Report, US — Lamb, para. 7.280.
back to text
412. G/SG/N/5 and addenda, G/SG/N/THA; see tables in Annex III of
G/L/272;
G/L/338,
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413. G/SG/M/3,
5,
6,
7,
11,
12,
14.
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414. G/SG/M/16, para. 105;
G/L/409, para. 23.
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415. G/SG/M/1, Section D.
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416. G/SG/M/1, Section E. With respect to the clarification made
by the Chairman concerning the implication of the decision, see G/SG/M/1,
para. 28.
back to text
417. G/SG/M/1, Section H. The text of the adopted format can be
found in G/SG/N/4.
back to text
418. G/SG/M/1, Section H. The text of the adopted format can be
found in G/SG/N/5.
back to text
419. G/SG/1.
back to text
420. Panel Report, Korea — Dairy, para. 7.116.
back to text
421. The new format for notifications under
Articles 12.1(a), 12.1(b) and (c), and 12.4 are found in
G/SG/1/Rev.1.
back to text
422. The new format for notifications of the cessations of
safeguard measures is found in
G/SG/1/Rev.1.
back to text
423. (footnote original) The New Webster Encyclopaedic
Dictionary defines immediately as “without delay, straightaway”; the
New Shorter Oxford Dictionary defines it as “without delay, at once,
instantly”.
back to text
424. Panel Report, Korea — Dairy,
para. 7.128.
back to text
425. Panel Report, Korea — Dairy,
para. 7.134.
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426. Panel Report, US — Wheat Gluten, para. 8.194.
back to text
427. Appellate Body Report, US — Wheat Gluten, paras.
105–106.
back to text
428. Panel Report, Korea — Dairy,
para. 7.134.
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429. Panel Report, US — Wheat Gluten, para. 8.197.
back to text
430. Appellate Body Report, US — Wheat Gluten,
para.
112.
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431. Panel Report, Korea — Dairy,
para. 7.137.
back to text
432. Panel
Report, US — Wheat Gluten, para. 8.199.
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433. Appellate Body Report, US — Wheat Gluten,
para.
116.
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434. Panel Report, Korea — Dairy,
para. 7.140.
back to text
435. Panel Report, Korea — Dairy,
para. 7.145.
back to text
436. Panel Report, US — Wheat Gluten,
paras. 8.200–8.207.
back to text
437. Appellate Body Report, US — Wheat Gluten,
paras.
120 and 123.
back to text
438. Appellate Body Report, US — Wheat Gluten,
paras.
124–125.
back to text
439. Appellate Body Report, US — Wheat Gluten,
paras.
128–130.
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440. G/SG/M/1, Section H. The text of the adopted format can be
found in G/SG/N/6.
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441. G/SG/M/1, Section H. The text of the adopted format can be
found in G/SG/W/1, Annex, Item VI.
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442. G/SG/M/6, Section C. The text of the adopted format can be
found in G/SG/2.
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443. Panel Report, Korea — Dairy,
para. 7.122.
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444. Panel Report, Korea — Dairy,
paras. 7.131–7.133.
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445. Panel Report, Korea — Dairy,
paras. 7.125–7.127.
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446. Panel Report, Korea — Dairy,
paras. 7.136, 7.139
and 7.144.
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447. Panel Report, Korea — Dairy,
para. 7.136.
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448. Appellate Body Report, Korea — Dairy, para. 113.
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449. Appellate Body Report, Korea — Dairy, paras. 107–108.
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450. Appellate Body Report, Korea — Dairy, paras. 109–110.
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451. Appellate Body Report, Korea — Dairy, para. 111.
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452. See Panel Report, Korea — Dairy,
para. 7.120.
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453. Panel Report, Korea — Dairy,
para. 7.150.
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454. Panel Report, Korea — Dairy,
para. 7.151.
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455. Panel Report, Korea — Dairy,
paras. 7.152–7.153.
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456. Appellate Body Report, US — Wheat Gluten,
para.
133.
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457. Appellate Body Report, US — Wheat Gluten,
paras.
136–137.
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458. Panel Report, US — Wheat Gluten,
para. 8.217.
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459. (footnote original) We note that, in so finding, we
do not consider it necessary to determine whether the United States
notified a “proposed measure” to the European Communities as
required by Article 12.2 of the Agreement on Safeguards, as the
European Communities did not argue specifically that the United States
had acted inconsistently with Article 12.2.
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460. Appellate Body Report, US — Wheat Gluten,
paras.
140–142.
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461. Appellate Body Report, US — Line Pipe, para. 107.
In particular, the Appellate Body addressed the issue whether the period
from the initial Article 12.1(b) notification to the day the measure
takes effect is relevant for assessing whether an adequate opportunity
was provided for prior consultations. The Appellate Body found that
notifications in Article 12.1(b) in this case were not sufficiently
precise to allow the exporting Member to conduct meaningful consultation
on the measure at issue. The Appellate Body concurred with the Panel’s
finding, that, as a matter of fact, these proposed measures “differed
substantially”“ from the one announced and eventually applied in
the US — Line Pipe.
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462. Appellate Body Report, US — Line Pipe, para. 112.
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463. Panel Report, Argentina — Footwear (EC), paras.
8.298 and 8.300.
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464. Appellate Body Report, Korea — Dairy,
paras. 107–109.
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465. Panel Report, Argentina — Footwear (EC), paras.
8.302–8.304.
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466. The format for notifications under Articles 12.5 is found in
G/SG/1/Rev.1.
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467. G/SG/M/1, Section H. The text of the adopted format can be
found in G/SG/N/1. The Committee agreed that these notifications would
be distributed as unrestricted documents. G/SG/M/1, Section I, paras. 37–38.
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468. G/SG/M/1, Section I, paras. 64–65.
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469. G/SG/M/1, Section I, paras. 64–65.
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470. G/SG/M/6, Section G. The text of the adopted format can be
found in G/SG/W/116.
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471. G/L/936, para. 7.
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472. G/SG/M/1, Section E. With respect to the clarification made
by the Chairman concerning the implication of the decision, see G/SG/M/1,
para. 28
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473. G/SG/M/1. Section H. The text of the adopted format can be
found in G/SG/N/2.
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474. G/SG/M/1, Section H. The text of the adopted format can be
found in G/SG/N/3.
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475. Notifications circulated in the G/SG/N/16 document series.
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476. G/SG/M/6, Section I; Rules of Procedure,
G/SG/4.
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477. G/C/M/10, Section 1.
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478. G/SG/M/1, Section F.
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479. Reports: G/L/32,
G/L/129,
G/L/200, G/L/272,
G/L/338,
G/L/409,
G/L/494,
G/L/583,
G/L/651,
G/L/703,
G/L/761,
G/L/795,
G/L/832,
G/L/862,
G/L/901, G/L/936.
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480. G/SG/M/1, Section J.
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481. G/SG/M/16, para. 103.
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482. G/SG/M/3, Section E.
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483. Appellate Body Report, Argentina — Footwear (EC),
paras. 118 and 121.
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484. (footnote original) We recall that in US —
Underwear, paras. 7.53–54, a case dealing with a safeguard action
under the ATC, the panel reached the conclusions that the standard of
review was that established in Article 11 of the DSU and commented on
the implications of such standard of review for safeguard measures. See
also the Panel Report in Brazil — Countervailing Duty Proceeding
Concerning Imports of Milk Powder from the European Community, SCM/179:
“It was incumbent upon the investigating authorities to provide a
reasoned opinion explaining how such facts and arguments had led to
their finding.” para. 286.
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485. Panel Report, Korea — Dairy,
para. 7.30.
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486. (footnote original) Clearly, a claim under
Article
4.2(a) might not relate at the same time to both aspects of the review
envisaged here, but only to one of these aspects. For instance, the
claim may be that, although the competent authorities evaluated all
relevant factors, their explanation is either not reasoned or not
adequate.
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487. (footnote original) Appellate Body Report, United
States — Wheat Gluten Safeguard, supra, footnote 19, para.
71.
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488. Appellate Body Report, US — Lamb, paras. 103–104.
See also Appellate Body Report, Steel Safeguards, para. 279.
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489. (footnote original) We note, however, that
Article
17.6 of the Anti-Dumping Agreement sets forth a special standard
of review for claims under that Agreement.
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490. Appellate Body Report, US — Lamb,
paras. 105–107.
See also Appellate Body Report, US — Steel Safeguards,
para. 302.
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491. Appellate Body Report, US — Wheat Gluten,
para. 55.
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492. Appellate Body Report, US — Wheat Gluten,
para. 55.
See also Appellate Body Report, US — Cotton Yarn, para. 73.
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493. Appellate Body Report, US — Wheat Gluten,
paras.
161–162. The Appellate Body found as follows:
“Although the Panel’s conclusion on this issue was that the USITC
Report contained an adequate explanation of the allocation
methodologies, the Panel’s reasoning discloses that the Panel clearly
did not consider this to be the case. The Panel did not feel able to
rely solely or, even, principally, on the explanation actually provided
in the USITC Report and, instead, relied heavily on supplementary
information provided by the United States in response to the Panel’s
questions. Indeed, the most important part of the Panel’s reasoning on
this issue is based on those ‘clarifications’. We consider that the
Panel’s conclusion is at odds with its treatment and description of
the evidence supporting that conclusion. We do not see how the Panel
could conclude that the USITC Report did provide an adequate
explanation of the allocation methodologies, when it is clear that the
Panel itself saw such deficiencies in that Report that it placed
extensive reliance on “clarifications” that were not contained in
the USITC Report.
By reaching a conclusion regarding the USITC Report which relied so
heavily on supplementary information provided by the United States
during the Panel proceedings — information not contained in the USITC
Report — the Panel applied a standard of review which falls short of
what is required by Article 11 of the DSU.”
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494. Appellate Body Report, Argentina — Footwear (EC),
para. 121.
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495. (footnote original) United States’ appellant’s
submission, para. 73. (emphasis original)
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496. Appellate Body Report, US — Steel Safeguards,
paras.
298–299 and 303.
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497. WT/L/432, Protocol on the Accession of the People’s
Republic of China, para. 16.
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498. WT/MIN(01)/3, paras. 245–246.
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499. Panel Report, US — Tyres (China), para. 7.11;
Appellate Body Report, US — Tyres (China), paras. 123–124.
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500. Panel Report, US — Tyres (China), para. 7.22.
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501. (footnote original) In the light of the French and
Spanish texts and in accordance with Article 33(4) of the Vienna
Convention, the word “or” is to be taken to include “and”.
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502. Panel Report, US — Tyres (China), paras. 7.33–7.36.
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503. Panel Report, US — Tyres (China), para. 7.391.
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504. Panel Report, US — Tyres (China), paras. 7.394–7.395.
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505. Panel Report, US — Tyres (China),
para. 7.397–7.398.
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506. WT/MIN(01)/3, para. 246(c).
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507. (footnote original) Appellate Body Report, US — Lamb,
para. 124.
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508. Appellate Body Report, US — Tyres (China), para.
183.
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509. (footnote original) Panel Report, US — Line Pipe,
para. 7.201.
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510. Panel Report, US — Tyres (China),
para. 7.107–7.109.
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511. Panel Report, US — Tyres (China),
para. 7.90.
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512. (footnote original) Appellate Body Report, Argentina — Footwear (EC), footnote 130 to para. 130. (original emphasis)
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513. Appellate Body Report, US — Tyres (China),
paras.
147–148.
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514. Appellate Body Report, US — Tyres (China),
para.
151.
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515. (footnote original) Panel Report, para. 7.92.
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516. Appellate Body Report, US — Tyres (China),
paras.
158–159 (referring to Panel Report, para. 7.99).
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517. WT/MIN(01)/3,
para. 248.
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518. Appellate Body Report, US — Tyres (China),
para.
177.
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519. Appellate Body Report, US — Tyres (China),
para.
177.
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520. (footnote original) See, for example,
Articles 2.1
and 4.2(a) and (b) of the Agreement on Safeguards;
Article 3.5 of
the Anti-Dumping Agreement; and Articles 5 and 15.5 of the SCM
Agreement.
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521. Appellate Body Report, US — Tyres (China),
paras.
180–181.
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522. Appellate Body Report, US — Tyres (China),
paras.
184–185.
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523. Panel Report, US — Tyres (China),
para. 7.377.
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524. (footnote original) Appellate Body Report, EC and
certain member States — Large Civil Aircraft, para. 1376
(referring to Panel Report, US — Upland Cotton, para. 7.1194;
and Panel Report, Korea — Commercial Vessels, para. 7.560).
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525. (footnote original) Panel Report, para. 7.170.
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526. Appellate Body Report, US — Tyres (China),
paras.
191–195.
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527. Panel Report, US — Tyres (China),
para. 7.177.
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528. Appellate Body Report, US — Tyres (China),
para.
252.
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529. (footnote original) For example,
Article 4.2(a) of
the Agreement on Safeguards provides that, “when factors other
than increased imports are causing injury at the same time, such injury
shall not be attributed to increased imports”.
Article 3.5 of
the Anti-Dumping Agreement reads, in relevant part, as follows: “The authorities
shall also examine any known factors other than the dumped imports which
at the same time are injuring the domestic industry, and the injuries
caused by these other factors must not be attributed to the dumped
imports.”
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530. Appellate Body Report, US — Tyres (China),
para.
201.
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531. Panel Report, US — Tyres (China),
para. 7.414.
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