Topics handled by WTO committees and agreements
Issues covered by the WTO’s committees and agreements

REPERTORY OF APPELLATE BODY REPORTS

Safeguards Agreement


ON THIS PAGE:

General
Standard of review. See also Standard of Review, Article 11 of the DSU (S.7.2-8)
Article 2.1 — “like or directly competitive products”. See also Safeguards Agreement, Article 4.1(c) — Domestic industry (S.1.25)
Article 2.1 — Domestic decision-making
Articles 2.1 and 4.1(c) — Territorial application of safeguard measure
Article 2.1 — Increased imports
Article 2.1 — Examination of trends
Article 2.1 — Decrease at the end of an investigation period
Article 2.1 — Increase relative to domestic production
Article 2.1 — Serious injury or threat thereof. See also Safeguards Agreement, Article 4.1(b) — Threat of serious injury (S.1.24)
Article 2.1 — Causation. See also Safeguards Agreement, Article 4.2(b) — Causation (S.1.29-32)
Article 2.1 — “under such conditions”
Article 2 — Parallelism
Article 2 — “factors other than increased imports”
Article 2 — Separate determinations
Article 2.1, footnote 1 — Customs union. See also Regional Trade Agreements, Relationship between Article XXIV of the GATT 1994 and the Safeguards Agreement (R.1.6)
Article 2.2 — Free trade area. See also Regional Trade Agreements, Relationship between Article XXIV of the GATT 1994 and the Safeguards Agreement (R.1.6)
Article 3.1 — General
Article 3.1 — Investigation
Article 3.1 — Multiple findings
Article 3.1 — Published report
Article 3.1 — Reasoned conclusions
Article 4.1(a) — Serious injury
Article 4.1(b) — Threat of serious injury. See also Safeguards Agreement, Article 2.1 — Serious injury or threat thereof (S.1.10); Anti-Dumping Agreement, Article 3.7 — Threat of material injury (A.3.27); SCM Agreement, Article 15.7 — Threat of material injury (S.2.25B)
Article 4.1(c) — Domestic industry
Article 4.2(a) — Evaluation of relevant injury factors. See also Standard of Review, Article 11 of the DSU — Objective assessment of whether the investigating authority’s explanation is reasoned and adequate (S.7.4)
Article 4.2(a) — Data for the injury evaluation
Article 4.2(a) — Injury data relating to the most recent past
Article 4.2(b) — Causation of injury by increased imports
Article 4.2(b) — Causation of injury by increased imports vs. Other factors
Article 4.2(b) — Non-attribution of injury caused by other factors
Article 4.2(b) — Causation — Assumptions regarding increased imports and injury
Article 4.2(c) — Publication of a detailed analysis. See also Safeguards Agreement, Article 3.1 — General (S.1.18); Safeguards Agreement, Relationship between Article XIX of the GATT 1994 and Article 3.1 of the Safeguards Agreement (S.1.46); Safeguards Agreement, Relationship between Article XIX of the GATT 1994 and Article 4.2(c) of the Safeguards Agreement (S.1.47)
Article 5.1 — Application of the safeguard measure to the extent necessary to prevent or remedy serious injury and to facilitate adjustment. See also Principles and Concepts of General Public International Law, Proportionality (P.3.6)
Article 5.1 — Justification of the necessary extent of the application
Relationship between Articles 5.1 and 4.2(b) of the Safeguards Agreement
Article 5.2(b) — Quota modulation
Article 8.1 — Equivalent level of concessions
Article 9.1 — Exclusion of developing country Members from the application of safeguards
Article 12.1 — Immediate notification
Article 12.2 — Notification of all pertinent information
Article 12.3 — “adequate opportunity for prior consultations”
Relationship between the Safeguards Agreement and the Anti-Dumping Agreement
Relationship between the Safeguards Agreement and the GATT 1994
Article XIX of the GATT 1994 — General. See also Agreement on Agriculture, Article 5 — Special safeguard (A.1.14); Safeguards Agreement, General (S.1.1); Textiles and Clothing Agreement, Article 6 — Transitional safeguard (T.7.1)
Relationship between Article XIX of the GATT 1994 and Article 3.1 of the Safeguards Agreement
Relationship between Article XIX of the GATT 1994 and Article 4.2(c) of the Safeguards Agreement
Article XIX of the GATT 1994 — “as a result of”
Article XIX of the GATT 1994 — “such product”
Article XIX of the GATT 1994 — “unforeseen developments”


S.1.1 General     back to top

S.1.1.1 US — Line Pipe, paras. 80, 82-84
(WT/DS202/AB/R)

 

… it is useful to recall that safeguard measures are extraordinary remedies to be taken only in emergency situations. Furthermore, they are remedies that are imposed in the form of import restrictions in the absence of any allegation of an unfair trade practice. In this, safeguard measures differ from, for example, anti-dumping duties and countervailing duties to counter subsidies, which are both measures taken in response to unfair trade practices. …

 

 

… part of the raison d’être of Article XIX of the GATT 1994 and the Agreement on Safeguards is, unquestionably, that of giving a WTO Member the possibility, as trade is liberalized, of resorting to an effective remedy in an extraordinary emergency situation that, in the judgement of that Member, makes it necessary to protect a domestic industry temporarily.

 

There is, therefore, a natural tension between, on the one hand, defining the appropriate and legitimate scope of the right to apply safeguard measures and, on the other hand, ensuring that safeguard measures are not applied against “fair trade” beyond what is necessary to provide extraordinary and temporary relief. A WTO Member seeking to apply a safeguard measure will argue, correctly, that the right to apply such measures must be respected in order to maintain the domestic momentum and motivation for ongoing trade liberalization. In turn, a WTO Member whose trade is affected by a safeguard measure will argue, correctly, that the application of such measures must be limited in order to maintain the multilateral integrity of ongoing trade concessions. The balance struck by the WTO Members in reconciling this natural tension relating to safeguard measures is found in the provisions of the Agreement on Safeguards.

 

This natural tension is likewise inherent in two basic inquiries that are conducted in interpreting the Agreement on Safeguards. These two basic inquiries are: first, is there a right to apply a safeguard measure? And, second, if so, has that right been exercised, through the application of such a measure, within the limits set out in the treaty? These two inquiries are separate and distinct. They must not be confused by the treaty interpreter. One necessarily precedes and leads to the other. …

 

S.1.1.2 US — Steel Safeguards, para. 264
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… Article XIX and the Agreement on Safeguards confirm the right of WTO Members to apply safeguard measures when, as a result of unforeseen developments and of the effect of obligations incurred, including tariff concessions, a product is being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. However, as Article 2.1 of the Agreement on Safeguards makes clear, the right to apply such measures arises “only” if these prerequisites are shown to exist.

 
S.1.2 Standard of review. See also Standard of Review, Article 11 of the DSU (S.7.2-8)     back to top

S.1.2.1 US — Lamb, para. 103
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Thus, an “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. 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.

 

S.1.2.2 US — Lamb, paras. 106-107
(WT/DS177/AB/R, WT/DS178/AB/R)

 

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.

 

S.1.2.3 US — Steel Safeguards, para. 276
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

We explained in US Lamb, in the context of a claim under Article 4.2(a) of the Agreement on Safeguards, that the competent authorities must provide a “reasoned and adequate explanation of how the facts support their determination”. More recently, in US Line Pipe, in the context of a claim under Article 4.2(b) of the Agreement on Safeguards, we said that the competent authorities must, similarly, provide a “reasoned and adequate explanation, that injury caused by factors other than increased imports is not attributed to increased imports”. Our findings in those cases did not purport to address solely the standard of review that is appropriate for claims arising under Article 4.2 of the Agreement on Safeguards. We see no reason not to apply the same standard generally to the obligations under the Agreement on Safeguards as well as to the obligations in Article XIX of the GATT 1994.

 
S.1.3 Article 2.1 — “like or directly competitive products”. See also Safeguards Agreement, Article 4.1(c) — Domestic industry (S.1.25)     back to top

S.1.3.1 US — Lamb, para. 86
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Thus, a safeguard measure is imposed on a specific “product”, namely, the imported product. The measure may only be imposed if that specific product (“such product”) is having the stated effects upon the “domestic industry that produces like or directly competitive products” (emphasis added). The conditions in Article 2.1, therefore, relate in several important respects to specific products. In particular, according to Article 2.1, the legal basis for imposing a safeguard measure exists only when imports of a specific product have prejudicial effects on domestic producers of products that are “like or directly competitive” with that imported product. In our view, it would be a clear departure from the text of Article 2.1 if a safeguard measure could be imposed because of the prejudicial effects that an imported product has on domestic producers of products that are not “like or directly competitive products” in relation to the imported product.

 
S.1.4 Article 2.1 — Domestic decision-making     back to top

S.1.4.1 US — Line Pipe, para. 158
(WT/DS202/AB/R)

 

… we are not concerned with how the competent authorities of WTO Members reach their determinations in applying safeguard measures. The Agreement on Safeguards does not prescribe the internal decision-making process for making such a determination. That is entirely up to WTO Members in the exercise of their sovereignty. We are concerned only with the determination itself, which is a singular act for which a WTO Member may be accountable in WTO dispute settlement. It is of no matter to us whether that singular act results from a decision by one, one hundred, or — as here — six individual decision-makers under the municipal law of that WTO Member. What matters to us is whether the determination, however it is decided domestically, meets the requirements of the Agreement on Safeguards.

 
S.1.5 Articles 2.1 and 4.1(c) — Territorial application of safeguard measure     back to top

S.1.5.1 Argentina — Footwear (EC), para. 111
(WT/DS121/AB/R)

 

… Taken together, the provisions of Articles 2.1 and 4.1(c) of the Agreement on Safeguards demonstrate that a Member of the WTO may only apply a safeguard measure after that Member has determined that a product is being imported into its territory in such increased quantities and under such conditions as to cause or threaten to cause serious injury to its domestic industry within its territory. According to Articles 2.1 and 4.1(c), therefore, all of the relevant aspects of a safeguard investigation must be conducted by the Member that ultimately applies the safeguard measure, on the basis of increased imports entering its territory and causing or threatening to cause serious injury to the domestic industry within its territory.

 
S.1.6 Article 2.1 — Increased imports     back to top

S.1.6.1 Argentina — Footwear (EC), para. 131
(WT/DS121/AB/R)

 

We recall here our reasoning and conclusions above on the meaning of the phrase “as a result of unforeseen developments” in Article XIX:1(a) of the GATT 1994. We concluded there that the increased quantities of imports should have been “unforeseen” or “unexpected”. We also believe that the phrase “in such increased quantities” in Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 is meaningful to this determination. In our view, the determination of whether the requirement of imports “in such increased quantities” is met is not a merely mathematical or technical determination. In other words, it is not enough for an investigation to show simply that imports of the product this year were more than last year — or five years ago. Again, and it bears repeating, not just any increased quantities of imports will suffice. There must be “such increased quantities” as to cause or threaten to cause serious injury to the domestic industry in order to fulfil this requirement for applying a safeguard measure. And this language in both Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994, we believe, requires that the increase in imports must have been recent enough, sudden enough, sharp enough, and significant enough, both quantitatively and qualitatively, to cause or threaten to cause “serious injury”.

 

S.1.6.2 US — Steel Safeguards, para. 346
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… In [Argentina Footwear (EC)] we underlined the importance of reading the requirement of “such increased quantities” in the context in which it appears in both Article XIX:1(a) of the GATT 1994 and Article 2.1 of the Agreement on Safeguards. That context includes the words “to cause or threaten to cause serious injury”. Read in context, it is apparent that “there must be ‘such increased quantities’ as to cause or threaten to cause serious injury to the domestic industry in order to fulfil this requirement for applying a safeguard measure”. Indeed, in our view, the term “such”, which appears in the phrase “such increased quantities” in ArticlesXIX:1(a) and 2.1, clearly links the relevant increased imports to their ability to cause serious injury or the threat thereof. Accordingly, we agree with the United States that our statement in Argentina Footwear (EC) that the “increase in imports must have been recent enough, sudden enough, sharp enough and significant enough … to cause or threaten to cause serious injury”, was a statement about “the entire investigative responsibility of the competent authorities under the Safeguards Agreement”, and that “[w]hether an increase in imports is recent, sudden, sharp and significant enough to cause or threaten serious injury are questions that are answered as the competent authorities proceed with the remainder of their analysis (i.e., their consideration of serious injury/threat and causation).”

 

S.1.6.3 US — Steel Safeguards, para. 350
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we said in Argentina Footwear (EC) that “the increased quantities of imports should have been ‘unforeseen’ or ‘unexpected’ ”. In doing so, we were referring to the fact that the increased imports must, under Article XIX:1(a), result from “unforeseen developments” in order to justify the application of a safeguard measure. Because the “increased imports” must be “as a result” of an event that was “unforeseen” or “unexpected”, it follows that the increased imports must also be “unforeseen” or “unexpected”. Thus, the “extraordinary nature” of the domestic response to increased imports does not depend on the absolute or relative quantities of the product being imported. Rather, it depends on the fact that the increased imports were unforeseen or unexpected.

 
S.1.7 Article 2.1 — Examination of trends     back to top

S.1.7.1 Argentina — Footwear (EC), para. 129
(WT/DS121/AB/R)

 

We agree with the Panel that Articles 2.1 and 4.2(a) of the Agreement on Safeguards require a demonstration not merely of any increase in imports, but, instead, of imports “in such increased quantities … and under such conditions as to cause or threaten to cause serious injury”. In addition, we agree with the Panel that the specific provisions of Article 4.2(a) require that “the rate and amount of the increase in imports … in absolute and relative terms” (emphasis added) must be evaluated. Thus, we do not dispute the Panel’s view and ultimate conclusion that the competent authorities are required to consider the trends in imports over the period of investigation (rather than just comparing the end points) under Article 4.2(a). …

 

S.1.7.2 US — Steel Safeguards, para. 354
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

We concluded in Argentina Footwear (EC) that “the competent authorities are required to consider the trends in imports over the period of investigation (rather than just comparing the end points) under Article 4.2(a)”. A determination of whether there is an increase in imports cannot, therefore, be made merely by comparing the end points of the period of investigation. Indeed, in cases where an examination does not demonstrate, for instance, a clear and uninterrupted upward trend in import volumes, a simple end-point-to-end-point analysis could easily be manipulated to lead to different results, depending on the choice of end points. A comparison could support either a finding of an increase or a decrease in import volumes simply by choosing different starting and ending points.

 

S.1.7.3 US — Steel Safeguards, paras. 355-356
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… a demonstration of “any increase” in imports between any two points in time is not sufficient to demonstrate “increased imports” for purposes of Articles XIX and 2.1. Rather, as we have said, competent authorities are required to examine the trends in imports over the entire period of investigation.

 

We, therefore, reject the United States’ assertion that “the phrase ‘in such increased quantities’ simply states the requirement that, in general, the level of imports at (or reasonably near to) the end of a period of investigation be higher than at some unspecified earlier point in time”. …

 

S.1.7.4 US — Steel Safeguards, para. 374
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

In our view, what is called for in every case is an explanation of how the trend in imports supports the competent authority’s finding that the requirement of “such increased quantities” within the meaning of Articles XIX:1(a) and 2.1 has been fulfilled. It is this explanation concerning the trend in imports — over the entire period of investigation — that allows a competent authority to demonstrate that “a product is being imported in such increased quantities”.

 
S.1.8 Article 2.1 — Decrease at the end of an investigation period     back to top

S.1.8.1 Argentina — Footwear (EC), para. 130
(WT/DS121/AB/R)

 

… In our view, the use of the present tense of the verb phrase “is being imported” in both Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 indicates that it is necessary for the competent authorities to examine recent imports, and not simply trends in imports during the past five years — or, for that matter, during any other period of several years. In our view, the phrase “is being imported” implies that the increase in imports must have been sudden and recent.

 

S.1.8.2 US — Steel Safeguards, para. 367
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… Article 2.1 does not require that imports need to be increasing at the time of the determination. Rather, the plain meaning of the phrase “is being imported in such increased quantities” suggests merely that imports must have increased, and that the relevant products continue “being imported” in (such) increased quantities. We also do not believe that a decrease in imports at the end of the period of investigation would necessarily prevent an investigating authority from finding that, nevertheless, products continue to be imported “in such increased quantities”.

 

S.1.8.3 US — Steel Safeguards, para. 388
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we note here also that, in not explaining the “most recent decrease” in absolute imports, the USITC did not, in our view, provide an explanation concerning the overall trend in imports that occurred during the period of investigation. … In our view, by failing to address the decrease in imports that occurred between interim 2000 and interim 2001, the United States did not — and could not — provide a reasoned and adequate explanation of how the facts supported its finding that imports of hot-rolled bar “increased”, as required by Article 2.1 of the Agreement on Safeguards. This failure to account for the decrease in absolute imports is all the more serious in the light of the fact that the intervening trend that was not addressed by the USITC occurred at the very end of the period of investigation. In US Lamb, we found that the competent authority “must assess” the data from the most recent past “in the context of the data for the entire investigative period”. As the Panel found, it is, precisely, those most recent data that the USITC failed to account for with respect to absolute imports.

 
S.1.9 Article 2.1 — Increase relative to domestic production     back to top

S.1.9.1 US — Steel Safeguards, para. 390
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… Article 2.1 provides that a Member may apply a safeguard measure after a determination that the relevant product is “being imported … in such increased quantities, absolute or relative to domestic production … as to cause or threaten to cause serious injury” (emphasis added). Therefore, a determination of either an absolute or relative increase in imports causing serious injury is sufficient to authorize a Member to apply safeguard measures. Accordingly, the increased imports requirement can be met not only if there is an absolute increase in imports, but also if there is an increase relative to domestic production.

 
S.1.10 Article 2.1 — Serious injury or threat thereof. See also Safeguards Agreement, Article 4.1(b) — Threat of serious injury (S.1.24)     back to top

S.1.10.1 US — Line Pipe, para. 161
(WT/DS202/AB/R)

 

… precisely what kind of “finding” on this “pertinent issue of law” must appear in the published report of the competent authorities? The question is: should the phrase “cause or threaten to cause” in Article 2.1 be read as “cause or threaten to cause” in the sense of either one (“cause”) or the other (“threaten to cause”), but not both? Or should this phrase be read rather as “cause or threaten to cause” in the sense of either one or the other, or both in combination (“cause or threaten to cause”)?

 

S.1.10.2 US — Line Pipe, paras. 163-164
(WT/DS202/AB/R)

 

Our view is that the phrase “cause or threaten to cause” can be read either way. As we read it, the dictionary definition of “or” supports either conclusion. …

 

… “or” can be exclusive, and “or” can also be inclusive. The text of Article 2.1 does not provide decisive interpretative guidance in this respect. This is not to say that we believe that “serious injury” and “threat of serious injury” are the same thing, or that competent authorities may make a finding that both exist at the same time. Rather, we believe that the text of Article 2.1 lends itself to either interpretation.

 

S.1.10.3 US — Line Pipe, para. 167
(WT/DS202/AB/R)

 

… we agree with the Panel that the respective definitions of “serious injury” and “threat of serious injury” are two distinct concepts that must be given distinctive meanings in interpreting the Agreement on Safeguards. Yet, although we agree with the Panel that the Agreement on Safeguards establishes a distinction between “serious injury” and “threat of serious injury”, we do not agree with the Panel that a requirement follows from such a distinction to make a discrete finding either of “serious injury” or of “threat of serious injury” when making a determination relating to the application of a safeguard measure.

 

S.1.10.4 US — Line Pipe, paras. 170-171
(WT/DS202/AB/R)

 

… The question at issue is whether the right [to apply a safeguard measure] exists in this particular case. And, as the right exists if there is a finding by the competent authorities of a “threat of serious injury” or — something beyond — “serious injury”, then it seems to us that it is irrelevant, in determining whether the right exists, if there is “serious injury” or only “threat of serious injury” — so long as there is a determination that there is at least a “threat”. In terms of the rising continuum of an injurious condition of a domestic industry that ascends from a “threat of serious injury” up to “serious injury”, we see “serious injury” — because it is something beyond a “threat” — as necessarily including the concept of a “threat” and exceeding the presence of a “threat” for purposes of answering the relevant inquiry: is there a right to apply a safeguard measure?

 

Based on this analysis of the most relevant context of the phrase “cause or threaten to cause” in Article 2.1, we do not see that phrase as necessarily meaning one or the other, but not both. Rather, that clause could also mean either one or the other, or both in combination. Therefore, for the reasons we have set out, we do not see that it matters — for the purpose of determining whether there is a right to apply a safeguard measure under the Agreement on Safeguards — whether a domestic authority finds that there is “serious injury”, “threat of serious injury”, or, as the USITC found here, “serious injury or threat of serious injury”. In any of those events, the right to apply a safeguard is, in our view, established.

 
S.1.11 Article 2.1 — Causation. See also Safeguards Agreement, Article 4.2(b) — Causation (S.1.29-32)     back to top

S.1.11.1 US — Wheat Gluten, para. 76
(WT/DS166/AB/R)

 

… Thus, under Article 2.1, the causation analysis embraces two elements: the first relating to increased “imports” specifically and the second to the “conditions” under which imports are occurring.

 
S.1.12 Article 2.1 — “under such conditions”     back to top

S.1.12.1 US — Wheat Gluten, para. 78
(WT/DS166/AB/R)

 

… Thus, the phrase “under such conditions” refers generally to the prevailing “conditions”, in the marketplace for the product concerned, when the increase in imports occurs. Interpreted in this way, the phrase “under such conditions” is a shorthand reference to the remaining factors listed in Article 4.2(a), which relate to the overall state of the domestic industry and the domestic market, as well as to other factors “having a bearing on the situation of [the] industry”. The phrase “under such conditions”, therefore, supports the view that, under Articles 4.2(a) and 4.2(b) of the Agreement on Safeguards, the competent authorities should determine whether the increase in imports, not alone, but in conjunction with the other relevant factors, cause serious injury.

 
S.1.13 Article 2 — Parallelism     back to top

S.1.13.1 GENERAL

 

S.1.13.1.1 US — Wheat Gluten, para. 96
(WT/DS166/AB/R)

 

The same phrase — “product … being imported” — appears in both these paragraphs of Article 2. In view of the identity of the language in the two provisions, and in the absence of any contrary indication in the context, we believe that it is appropriate to ascribe the same meaning to this phrase in both Articles 2.1 and 2.2. To include imports from all sources in the determination that increased imports are causing serious injury, and then to exclude imports from one source from the application of the measure, would be to give the phrase “product being imported” a different meaning in Articles 2.1 and 2.2 of the Agreement on Safeguards. In Article 2.1, the phrase would embrace imports from all sources whereas, in Article 2.2, it would exclude imports from certain sources. This would be incongruous and unwarranted. In the usual course, therefore, the imports included in the determinations made under Articles 2.1 and 4.2 should correspond to the imports included in the application of the measure, under Article 2.2.

 

S.1.13.1.2 US — Line Pipe, paras. 179, 181, 194
(WT/DS202/AB/R)

 

The concept of parallelism is derived from the parallel language used in the first and second paragraphs of Article 2 of the Agreement on Safeguards.

 

 

As we then stated in US Wheat Gluten, “the imports included in the determinations made under Articles 2.1 and 4.2 should correspond to the imports included in the application of the measure, under Article 2.2”. We added that a gap between imports covered under the investigation and imports falling within the scope of the measure can be justified only if the competent authorities “establish explicitly” that imports from sources covered by the measure “satisf[y] the conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on Safeguards”. And, as we explained further in US Lamb, in the context of a claim under Article 4.2(a) of the Agreement on Safeguards, “establish[ing] explicitly” implies that the competent authorities must provide a “reasoned and adequate explanation of how the facts support their determination”.

 

 

… To be explicit, a statement must express distinctly all that is meant; it must leave nothing merely implied or suggested; it must be clear and unambiguous.

 

S.1.13.1.3 US — Steel Safeguards, para. 441
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… where, for purposes of applying a safeguard measure, a Member has conducted an investigation considering imports from all sources (that is, including any members of a free-trade area), that Member may not, subsequently, without any further analysis, exclude imports from free-trade area partners from the application of the resulting safeguard measure. As we stated in US Line Pipe, if a Member were to do so, there would be a “gap” between, on the one hand, imports covered by the investigation and, on the other hand, imports falling within the scope of the safeguard measure. …

 

S.1.13.2 PRIMA FACIE CASE

 

S.1.13.2.1 US — Line Pipe, para. 187
(WT/DS202/AB/R)

 

… Korea has demonstrated that the USITC considered imports from all sources in its investigation. Korea has also shown that exports from Canada and Mexico were excluded from the safeguard measure at issue. And, in our view, this is enough to have made a prima facie case of the absence of parallelism in the line pipe measure. …

 
S.1.14 Article 2 — “factors other than increased imports”     back to top

S.1.14.1 US — Steel Safeguards, para. 450
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… the phrase “increased imports” in Articles 4.2(a) and 4.2(b) must, in our view, be read as referring to the same set of imports envisaged in Article 2.1, that is, to imports included in the safeguard measure. Consequently, imports excluded from the application of the safeguard measure must be considered a factor “other than increased imports” within the meaning of Article 4.2(b). The possible injurious effects that these excluded imports may have on the domestic industry must not be attributed to imports included in the safeguard measure pursuant to Article 4.2(b). The requirement articulated by the Panel “to account for the fact that excluded imports may have some injurious impact on the domestic industry” is, therefore, not, as the United States argues, an “extra analytical step” that the Panel added to the analysis of imports from all sources. To the contrary, this requirement necessarily follows from the obligation in Article 4.2(b) for the competent authority to ensure that the effects of factors other than increased imports — a set of factors that subsumes imports excluded from the safeguard measure — are not attributed to imports included in the measure, in establishing a causal link between imports included in the measure and serious injury or threat thereof.

 

S.1.14.2 US — Steel Safeguards, para. 452
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

In order to provide such a reasoned and adequate explanation, the competent authority must explain how it ensured that it did not attribute the injurious effects of factors other than included imports — which subsume “excluded imports” — to the imports included in the measure. As we explained in US Line Pipe in the context of Article 3.1 and “unforeseen developments” in this Report, if the competent authority does not provide such an explanation, a panel is not in a position to find that the competent authority ensured compliance with the clear and express requirement of non-attribution under Article 4.2(b) of the Agreement on Safeguards.

 
S.1.15 Article 2 — Separate determinations     back to top

S.1.15.1 US — Steel Safeguards, paras. 465-466
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… the USITC made two separate determinations — one determination that the exclusion of imports from Canada and Mexico would not change the “injury analysis” of the USITC, and another separate determination that the exclusion of imports from Israel and Jordan would not change the conclusions of the USITC.

 

The requirement of the Agreement on Safeguards to establish explicitly that imports from sources covered by a measure, alone, satisfy the conditions for the application of a safeguard measure cannot be fulfilled by conducting a series of separate and partial determinations. For example, where a WTO Member seeks to establish explicitly that imports from sources other than A and B satisfy the conditions for the application of a safeguard measure, if that Member conducts a separate investigation, and makes a separate determination, on whether imports from sources other than A satisfy the relevant conditions, and then, subsequently, conducts another separate and distinct investigation, and makes a separate determination, on whether imports from sources other than B satisfy the relevant conditions, then these two separate determinations, in our view, do not demonstrate that imports from sources other than A and B together satisfy the requirements for the imposition of a safeguard measure. By making these two separate determinations, that Member will, logically, for each of them, be basing its determination, in part, either on imports from A or on imports from B. If this were permitted, a determination on the application of a safeguard measure could be easily subjected to mathematical manipulation. This could not have been the intent of the Members of the WTO in drafting and agreeing on the Agreement on Safeguards.

 

S.1.15.2 US — Steel Safeguards, para. 468
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

It may not have made a practical difference in the application of the safeguard measures at issue in this appeal, in as much as, on the facts, the quantity of imports from the excluded countries was negligible or virtually non-existent. However, we are of the view that, rather than making two separate determinations — excluding either Canada and Mexico, or, alternatively, Israel and Jordan — from the underlying data on which it based its overall determination, the USITC should have, as the Panel found, provided one single joint determination, supported explicitly by a reasoned and adequate explanation, on whether imports from sources other than Canada, Israel, Jordan, and Mexico, by themselves, satisfied the conditions for the application of a safeguard measure.

 

S.1.15.3 US — Steel Safeguards, para. 471
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

As for the argument that the USITC’s findings on imports from sources other than Canada and Mexico should have been read by the Panel as applying simultaneously to imports from sources other than Canada, Israel, Jordan, and Mexico by virtue of the small import volumes at issue, we observe that the Agreement on Safeguards does not provide for any different application of the parallelism requirement based on the volume of imports. With this argument, the United States is asking us to read something into the Agreement on Safeguards that is not there, and this we cannot do.

 
S.1.16 Article 2.1, footnote 1 — Customs union. See also Regional Trade Agreements, Relationship between Article XXIV of the GATT 1994 and the Safeguards Agreement (R.1.6)     back to top

S.1.16.1 Argentina — Footwear (EC), para. 108
(WT/DS121/AB/R)

 

… at the time the safeguard measures at issue in this case were imposed by the Government of Argentina, these measures were not applied by MERCOSUR “on behalf of” Argentina, but rather, they were applied by Argentina. It is Argentina that is a Member of the WTO for the purposes of Article 2 of the Agreement on Safeguards, and it is Argentina that applied the safeguard measures after conducting an investigation of products being imported into its territory and the effects of those imports on its domestic industry. For these reasons, we do not believe that footnote 1 to Article 2.1 applies to the safeguard measures imposed by Argentina in this case. …

 

S.1.16.2 Argentina — Footwear (EC), para. 109
(WT/DS121/AB/R)

 

… we also are not persuaded that an analysis of Article XXIV of the GATT 1994 was relevant to the specific issue that was before the Panel. This issue, as the Panel itself observed, is whether Argentina, after including imports from all sources in its investigation of “increased imports” of footwear products into its territory and the consequent effects of such imports on its domestic footwear industry, was justified in excluding other MERCOSUR member States from the application of the safeguard measures. In our Report in Turkey Restrictions on Imports of Textile and Clothing Products [Appellate Body Report, para. 58], we stated that under certain conditions, “Article XXIV may justify a measure which is inconsistent with certain other GATT provisions”. We indicated, however, that this defence is available only when it is demonstrated by the Member imposing the measure that “the measure at issue is introduced upon the formation of a customs union that fully meets the requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV” and “that the formation of that customs union would be prevented if it were not allowed to introduce the measure at issue”.

 

S.1.16.3 Argentina — Footwear (EC), para. 114
(WT/DS121/AB/R)

 

… We conclude that Argentina, on the facts of this case, cannot justify the imposition of its safeguard measures only on non-MERCOSUR third country sources of supply on the basis of an investigation that found serious injury or threat thereof caused by imports from all sources, including imports from other MERCOSUR member States. However, as we have stated, we do not agree that the Panel was dealing, on the facts of this case, with a safeguard measure applied by a customs union on behalf of a member State. And we wish to underscore that, as the issue is not raised in this appeal, we make no ruling on whether, as a general principle, a member of a customs union can exclude other members of that customs union from the application of a safeguard measure.

 
S.1.17 Article 2.2 — Free trade area. See also Regional Trade Agreements, Relationship between Article XXIV of the GATT 1994 and the Safeguards Agreement (R.1.6)     back to top

S.1.17.1 US — Line Pipe, para. 198
(WT/DS202/AB/R)

 

… we do not prejudge whether Article 2.2 of the Agreement on Safeguards permits a Member to exclude imports originating in member states of a free-trade area from the scope of a safeguard measure. We need not, and so do not, rule on the question whether Article XXIV of the GATT 1994 permits exempting imports originating in a partner of a free-trade area from a measure in departure from Article 2.2 of the Agreement on Safeguards. The question of whether Article XXIV of the GATT 1994 serves as an exception to Article 2.2 of the Agreement on Safeguards becomes relevant in only two possible circumstances. One is when, in the investigation by the competent authorities of a WTO Member, the imports that are exempted from the safeguard measure are not considered in the determination of serious injury. The other is when, in such an investigation, the imports that are exempted from the safeguard measure are considered in the determination of serious injury, and the competent authorities have also established explicitly, through a reasoned and adequate explanation, that imports from sources outside the free-trade area, alone, satisfied the conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2. …

 
S.1.18 Article 3.1 — General     back to top

S.1.18.1 US — Steel Safeguards, para. 304
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… Members may suspend trade concessions temporarily by applying safeguard measures “only” in accordance with Article XIX of the GATT 1994 and with the Agreement on Safeguards, including Article 3.1 of that Agreement. The last sentence of the latter provision, as elaborated by Article 4.2(c) of that Agreement, requires that:

 

(a) the “competent authorities … publish a report”;

 

(b) the report contain “a detailed analysis of the case”;

 

(c) the report “demonstrat[e] … the relevance of the factors examined”;

 

(d) the report “set forth findings and reasoned conclusions”; and

 

(e) the “findings and reasoned conclusions” cover “all pertinent issues of fact and law” prescribed in Article XIX of the GATT 1994 and the relevant provisions of the Agreement on Safeguards.

 

S.1.18.2 US — Steel Safeguards, para. 331
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… under Article 2.1 of the Agreement on Safeguards, safeguard measures can be justified “only” when, as a result of unforeseen developments and of the effect of obligations incurred, including tariff concessions, a product is being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. It is “only” if these prerequisites set forth in Article XIX:1(a) of the GATT 1994 and the Agreement on Safeguards are shown to exist that the right to apply a safeguard measure arises. The fulfilment of each of these prerequisites is a “pertinent issue … of fact and law” for which “finding[s] and reasoned conclusion[s]” must be included in the published report of the competent authorities, as required by Article 3.1 of the Agreement on Safeguards.

 
S.1.19 Article 3.1 — Investigation     back to top

S.1.19.1 US — Wheat Gluten, para. 53
(WT/DS166/AB/R)

 

… The ordinary meaning of the word “investigation” suggests that the competent authorities should carry out a “systematic inquiry” or a “careful study” into the matter before them. The word, therefore, suggests a proper degree of activity on the part of the competent authorities because authorities charged with conducting an inquiry or a study — to use the treaty language, an “investigation” — must actively seek out pertinent information.

 

S.1.19.2 US — Wheat Gluten, para. 54
(WT/DS166/AB/R)

 

… The focus of the investigative steps mentioned in Article 3.1 is on “interested parties”, who must be notified of the investigation, and who must be given an opportunity to submit “evidence”, as well as their “views”, to the competent authorities. The interested parties are also to be given an opportunity to “respond to the presentations of other parties”. The Agreement on Safeguards, therefore, envisages that the interested parties play a central role in the investigation and that they will be a primary source of information for the competent authorities.

 

S.1.19.3 US — Wheat Gluten, para. 55
(WT/DS166/AB/R)

 

… we note that the competent authorities’ “investigation” under Article 3.1 is not limited to the investigative steps mentioned in that provision, but must simply “include” these steps. Therefore, the competent authorities must undertake additional investigative steps, when the circumstances so require, in order to fulfil their obligation to evaluate all relevant factors.

 

S.1.19.4 US — Lamb, para. 113
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… In arguing claims in dispute settlement, a WTO Member is not confined merely to rehearsing arguments that were made to the competent authorities by the interested parties during the domestic investigation, even if the WTO Member was itself an interested party in that investigation. Likewise, panels are not obliged to determine, and confirm themselves the nature and character of the arguments made by the interested parties to the competent authorities. Arguments before national competent authorities may be influenced by, and focused on, the requirements of the national laws, regulations and procedures. On the other hand, dispute settlement proceedings brought under the DSU concerning safeguard measures imposed under the Agreement on Safeguards may involve arguments that were not submitted to the competent authorities by the interested parties.

 

S.1.19.5 US — Lamb, para. 115
(WT/DS177/AB/R, WT/DS178/AB/R)

 

We wish to emphasize that the discretion that WTO Members enjoy to argue dispute settlement claims in the manner they deem appropriate does not, of course, detract from their obligation, under Article 3.10 of the DSU, “to engage in dispute settlement procedures ‘in good faith in an effort to resolve the dispute’ ”. It follows that WTO Members cannot improperly withhold arguments from competent authorities with a view to raising those arguments later before a panel. …

 
S.1.20 Article 3.1 — Multiple findings     back to top

S.1.20.1 US — Steel Safeguards, para. 414
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we note that Article 3.1 of the Agreement on Safeguards requires the competent authority, inter alia, to “publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law”. We do not read Article 3.1 as necessarily precluding the possibility of providing multiple findings instead of a single finding in order to support a determination under Articles 2.1 and 4 of the Agreement on Safeguards. Nor does any other provision of the Agreement on Safeguards expressly preclude such a possibility. The Agreement on Safeguards, therefore, in our view, does not interfere with the discretion of a WTO Member to choose whether to support the determination of its competent authority by a single explanation or, alternatively, by multiple explanations by members of the competent authority. This discretion reflects the fact that, as we stated in US Line Pipe [Appellate Body Report, para. 158], “the Agreement on Safeguards does not prescribe the internal decision-making process for making a determination [in a domestic safeguard investigation]”.

 

S.1.20.2 US — Steel Safeguards, para. 418 and footnote 388
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… in examining whether one of the multiple sets of explanations set forth by the competent authority, taken individually, provides a reasoned and adequate explanation for the competent authority’s determination, a panel may have to address, inter alia, the question whether, as a matter of WTO obligations, findings by individual Commissioners made on the basis of a broad product grouping can provide a reasoned and adequate explanation for a “single institutional determination” of the USITC concerning a narrow product grouping.388 Accordingly, we do not suggest that the product scope of an affirmative finding by an individual Commissioner is not relevant for the enquiry whether this finding does or does not provide a reasoned and adequate explanation for the competent authority’s determination. Rather, our finding implies that a panel may not conclude that there is no reasoned and adequate explanation for a competent authority’s determination by relying merely on the fact that distinct multiple explanations given by the competent authority are not based on an identically defined like product.

 
S.1.21 Article 3.1 — Published report     back to top

S.1.21.1 US — Lamb, para. 72
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… The first clause [of Article XIX:1(a) of the GATT 1994], as we noted, contains, in part, the “circumstance” of “unforeseen developments”. The second clause, as we said, relates to the three “conditions” for the application of safeguard measures, which are also reiterated in Article 2.1 of the Agreement on Safeguards. Clearly, the fulfilment of these conditions must be the central element of the report of the competent authorities, which must be published under Article 3.1 of the Agreement on Safeguards.

 

S.1.21.2 US — Lamb, para. 76
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… we observe that Article 3.1 requires competent authorities to set forth findings and reasoned conclusions on “all pertinent issues of fact and law” in their published report. As Article XIX:1(a) of the GATT 1994 requires that “unforeseen developments” must be demonstrated, as a matter of fact, for a safeguard measure to be applied, the existence of “unforeseen developments” is, in our view, a “pertinent issue … of fact and law”, under Article 3.1, for the application of a safeguard measure, and it follows that the published report of the competent authorities, under that Article, must contain a “finding” or “reasoned conclusion” on “unforeseen developments”.

 

S.1.21.3 US — Line Pipe, para. 160
(WT/DS202/AB/R)

 

We agree with the Panel that the fulfilment of the basic conditions set out in Article 2.1 is a “pertinent issue of law” for which “finding[s]” or “reasoned conclusion[s]” must be included in the published report of the competent authorities, as required by Article 3.1. We agree with the Panel also that among those “issues” is the condition that the “product” must be “imported … in such increased quantities, … and under such conditions as to cause or threaten to cause serious injury”.

 

S.1.21.4 US — Steel Safeguards, para. 295
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… Although we agree with the United States that competent authorities “may choose any structure, any order of analysis, and any format for [the] explanation that they see fit, as long as the report complies” with Article 3.1, we do not agree that the Panel was requiring that a report be in a certain form. …

 
S.1.22 Article 3.1 — Reasoned conclusions     back to top

S.1.22.1 US — Steel Safeguards, paras. 286-288
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… The requirement of Article 3.1 is that “competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law”. The meaning of Article 3.1 must be established through an examination of the ordinary meaning of the terms of Article 3.1, read in their context and in the light of the object and purpose of the Agreement on Safeguards. Thus, instead of basing an interpretation of Article 3.1 — as the United States does — entirely on the meaning of one word — “reasoned” — in that provision, it is, in our view, appropriate to interpret Article 3.1 by examining the ordinary meaning of all of the words that together prescribe the relevant obligation in that Article.

 

In doing so, we note that the definition of “conclusion” is “the result of a discussion or an examination of an issue” or a “judgement or statement arrived at by reasoning: an inference; a deduction”. Thus, the “conclusion” required by Article 3.1 is a “judgement or statement arrived at by reasoning”. We further note that the word “reasoned”, which the United States defines in terms of the verb “to reason”, is, in fact, used in Article 3.1, last sentence, as an adjective to qualify the term “conclusion”. The relevant definition of the intransitive verb “to reason” is “to think in a connected or logical manner; use one’s reason in forming conclusions”. The definition of the transitive verb “to reason” is “to arrange the thought of in a logical manner, embody reason in; express in a logical form”. Thus, to be a “reasoned” conclusion, the “judgement or statement” must be one which is reached in a connected or logical manner or expressed in a logical form. Article 3.1 further requires that competent authorities must “set forth” the “reasoned conclusion” in their report. The definition of the phrase “set forth” is “give an account of, esp. in order, distinctly, or in detail; expound, relate, narrate, state, describe”. Thus, the competent authorities are required by Article 3.1, last sentence, to “give an account of” a “judgement or statement which is reached in a connected or logical manner or expressed in a logical form”, “distinctly, or in detail”.

 

Panels have a responsibility in WTO dispute settlement to assess whether a competent authority has complied with its obligation under Article 3.1 of the Agreement on Safeguards to “set forth” “findings and reasoned conclusions” for their determinations. The European Communities and Norway argue that panels could not fulfil this responsibility if they were left to “deduce for themselves” from the report of that competent authority the “rationale for the determinations from the facts and data contained in the report of the competent authority”. We agree.

 

S.1.22.2 US — Steel Safeguards, paras. 326, 329
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

Article 3.1 of the Agreement on Safeguards requires that the competent authority set out “reasoned conclusions” on all “pertinent issues of fact and law”. One of those “issues of law” is the requirement to demonstrate the existence of “unforeseen developments” that have resulted in increased imports causing serious injury. In our view, therefore, it was for the USITC to provide a “reasoned conclusion” on “unforeseen developments”. …

 

 

… It is not for the Panel to do the reasoning for, or instead of, the competent authority, but rather to assess the adequacy of that reasoning to satisfy the relevant requirement. In consequence, we cannot agree with the United States that the Panel was “required” to consider the relevant data to which the USITC referred in other sections of its report to support the USITC’s finding that “unforeseen developments” had resulted in increased imports …

 

S.1.22.3 US — Steel Safeguards, para. 506
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… As the United States itself acknowledges, “Article 3.1 assigns the competent authorities — not the panel — the obligation to ‘publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law’ ”. Therefore, it was for the USITC, and not for the Panel, to explain how the facts supported its determination with respect to “unforeseen developments”. The argument of the United States in this appeal seeks to shift the burden of this demonstration to the Panel, whose function, in this regard, is confined to assessing the adequacy of the “reasoned conclusions” put forward by the competent authority. We agree with the Panel that the USITC’s demonstration was insufficient, and we find no error in the Panel’s explanation of that finding.

 
S.1.23 Article 4.1(a) — Serious injury     back to top

S.1.23.1 US — Lamb, para. 124
(WT/DS177/AB/R, WT/DS178/AB/R)

 

The standard of “serious injury” set forth in Article 4.1(a) is, on its face, very high. Indeed, in United States Wheat Gluten Safeguard [Appellate Body Report, para. 149], we referred to this standard as “exacting”. Further, in this respect, we note that the word “injury” is qualified by the adjective “serious”, which, in our view, underscores the extent and degree of “significant overall impairment” that the domestic industry must be suffering, or must be about to suffer, for the standard to be met. We are fortified in our view that the standard of “serious injury” in the Agreement on Safeguards is a very high one when we contrast this standard with the standard of “material injury” envisaged under the Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”) and the GATT 1994. We believe that the word “serious” connotes a much higher standard of injury than the word “material”. Moreover, we submit that it accords with the object and purpose of the Agreement on Safeguards that the injury standard for the application of a safeguard measure should be higher than the injury standard for anti-dumping or countervailing measures …

 

S.1.23.2 US — Line Pipe, para. 168
(WT/DS202/AB/R)

 

… In the sequence of events facing a domestic industry, it is fair to assume that, often, there is a continuous progression of injurious effects eventually rising and culminating in what can be determined to be “serious injury”. Serious injury does not generally occur suddenly. Present serious injury is often preceded in time by an injury that threatens clearly and imminently to become serious injury, as we indicated in US Lamb. Serious injury is, in other words, often the realization of a threat of serious injury. Although, in each case, the investigating authority will come to the conclusion that follows from the investigation carried out in compliance with Article 3 of the Agreement on Safeguards, the precise point where a “threat of serious injury” becomes “serious injury” may sometimes be difficult to discern. But, clearly, “serious injury” is something beyond a “threat of serious injury”.

 

S.1.23.3 US — Line Pipe, para. 170
(WT/DS202/AB/R)

 

… In terms of the rising continuum of an injurious condition of a domestic industry that ascends from a “threat of serious injury” up to “serious injury”, we see “serious injury” — because it is something beyond a “threat” — as necessarily including the concept of a “threat” and exceeding the presence of a “threat”. …

 
S.1.24 Article 4.1(b) — Threat of serious injury. See also Safeguards Agreement, Article 2.1 — Serious injury or threat thereof (S.1.10); Anti-Dumping Agreement, Article 3.7 — Threat of material injury (A.3.27); SCM Agreement, Article 15.7 — Threat of material injury (S.2.25B)     back to top

S.1.24.1 US — Lamb, para. 125
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Returning now to the term “threat of serious injury”, we note that this term is concerned with “serious injury” which has not yet occurred, but remains a future event whose actual materialization cannot, in fact, be assured with certainty. We note, too, that Article 4.1(b) builds on the definition of “serious injury” by providing that, in order to constitute a “threat”, the serious injury must be “clearly imminent”. The word “imminent” relates to the moment in time when the “threat” is likely to materialize. The use of this word implies that the anticipated “serious injury” must be on the very verge of occurring. Moreover, we see the word “clearly”, which qualifies the word “imminent”, as an indication that there must be a high degree of likelihood that the anticipated serious injury will materialize in the very near future. We also note that Article 4.1(b) provides that any determination of a threat of serious injury “shall be based on facts and not merely on allegation, conjecture or remote possibility” (emphasis added). To us, the word “clearly” relates also to the factual demonstration of the existence of the “threat”. Thus, the phrase “clearly imminent” indicates that, as a matter of fact, it must be manifest that the domestic industry is on the brink of suffering serious injury.

 

S.1.24.2 US — Line Pipe, para. 169
(WT/DS202/AB/R)

 

In our view, defining “threat of serious injury” separately from “serious injury” serves the purpose of setting a lower threshold for establishing the right to apply a safeguard measure. Our reading of the balance struck in the Agreement on Safeguards leads us to conclude that this was done by the Members in concluding the Agreement so that an importing Member may act sooner to take preventive action when increased imports pose a “threat” of “serious injury” to a domestic industry, but have not yet caused “serious injury”. And, since a “threat” of “serious injury” is defined as “serious injury” that is “clearly imminent”, it logically follows, to us, that “serious injury” is a condition that is above that lower threshold of a “threat”. A “serious injury” is beyond a “threat”, and, therefore, is above the threshold of a “threat” that is required to establish a right to apply a safeguard measure.

 
S.1.25 Article 4.1(c) — Domestic industry     back to top

S.1.25.1 US — Lamb, para. 84
(WT/DS177/AB/R, WT/DS178/AB/R)

 

The definition of “domestic industry” in this provision refers to two elements. First, the industry consists of “producers”. As the Panel indicated, “producers” are those who grow or manufacture an article; “producers” are those who bring a thing into existence. This meaning of “producers” is, however, qualified by the second element in the definition of “domestic industry”. This element identifies the particular products that must be produced by the domestic “producers” in order to qualify for inclusion in the “domestic industry”. According to the clear and express wording of the text of Article 4.1(c), the term “domestic industry” extends solely to the “producers … of the like or directly competitive products” (emphasis added). The definition, therefore, focuses exclusively on the producers of a very specific group of products. Producers of products that are not “like or directly competitive products” do not, according to the text of the treaty, form part of the domestic industry.

 

S.1.25.2 US — Lamb, para. 86
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Thus, a safeguard measure is imposed on a specific “product”, namely, the imported product. The measure may only be imposed if that specific product (“such product”) is having the stated effects upon the “domestic industry that produces like or directly competitive products” (emphasis added). The conditions in Article 2.1, therefore, relate in several important respects to specific products. In particular, according to Article 2.1, the legal basis for imposing a safeguard measure exists only when imports of a specific product have prejudicial effects on domestic producers of products that are “like or directly competitive” with that imported product. In our view, it would be a clear departure from the text of Article 2.1 if a safeguard measure could be imposed because of the prejudicial effects that an imported product has on domestic producers of products that are not “like or directly competitive products” in relation to the imported product.

 

S.1.25.3 US — Lamb, para. 87
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Accordingly, the first step in determining the scope of the domestic industry is the identification of the products which are “like or directly competitive” with the imported product. Only when those products have been identified is it possible then to identify the “producers” of those products.

 

S.1.25.4 US — Lamb, para. 90
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… If an input product and an end-product are not “like” or “directly competitive”, then it is irrelevant, under the Agreement on Safeguards, that there is a continuous line of production between an input product and an end-product, that the input product represents a high proportion of the value of the end-product, that there is no use for the input product other than as an input for the particular end-product, or that there is a substantial coincidence of economic interests between the producers of these products. In the absence of a “like or directly competitive” relationship, we see no justification, in Article 4.1(c) or any other provision of the Agreement on Safeguards, for giving credence to any of these criteria in defining a “domestic industry”.

 

S.1.25.5 US — Lamb, para. 91
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… The words “as a whole” [in Article 4.1(c)] apply to “producers” and, when read together with the terms “collective output” and “major proportion” which follow, clearly address the number and the representative nature of producers making up the domestic industry. …

 

Article 4.2(a) — “increase in imports”. See Safeguards Agreement, Article 2.1 — Increased imports (S.1.6)

 
S.1.26 Article 4.2(a) — Evaluation of relevant injury factors. See also Standard of Review, Article 11 of the DSU — Objective assessment of whether the investigating authority’s explanation is reasoned and adequate (S.7.4)     back to top

S.1.26.1 Argentina — Footwear (EC), para. 139
(WT/DS121/AB/R)

 

In our view, it is only when the overall position of the domestic industry is evaluated, in light of all the relevant factors having a bearing on a situation of that industry, that it can be determined whether there is “a significant overall impairment” in the position of that industry. Although Article 4.2(a) technically requires that certain listed factors must be evaluated, and that all other relevant factors must be evaluated, that provision does not specify what such an evaluation must demonstrate. Obviously, any such evaluation will be different for different industries in different cases, depending on the facts of the particular case and the situation of the industry concerned. An evaluation of each listed factor will not necessarily have to show that each such factor is “declining”. In one case, for example, there may be significant declines in sales, employment and productivity that will show “significant overall impairment” in the position of the industry, and therefore will justify a finding of serious injury. In another case, a certain factor may not be declining, but the overall picture may nevertheless demonstrate “significant overall impairment” of the industry. Thus, in addition to a technical examination of whether the competent authorities in a particular case have evaluated all the listed factors and any other relevant factors, we believe that it is essential for a panel to take the definition of “serious injury” in Article 4.1(a) of the Agreement on Safeguards into account in its review of any determination of “serious injury”.

 

S.1.26.2 US — Wheat Gluten, para. 55
(WT/DS166/AB/R)

 

… The competent authorities must, in every case, carry out a full investigation to enable them to conduct a proper evaluation of all of the relevant factors expressly mentioned in Article 4.2(a) of the Agreement on Safeguards. Moreover, Article 4.2(a) requires the competent authorities — and not the interested parties — to evaluate fully the relevance, if any, of “other factors”. If the competent authorities consider that a particular “other factor” may be relevant to the situation of the domestic industry, under Article 4.2(a), their duties of investigation and evaluation preclude them from remaining passive in the face of possible shortcomings in the evidence submitted, and views expressed, by the interested parties. In such cases, where the competent authorities do not have sufficient information before them to evaluate the possible relevance of such an “other factor”, they must investigate fully that “other factor”, so that they can fulfil their obligations of evaluation under Article 4.2(a). In that respect, we note that the competent authorities’ “investigation” under Article 3.1 is not limited to the investigative steps mentioned in that provision, but must simply “include” these steps. Therefore, the competent authorities must undertake additional investigative steps, when the circumstances so require, in order to fulfil their obligation to evaluate all relevant factors.

 

S.1.26.3 US — Wheat Gluten, para. 71
(WT/DS166/AB/R)

 

… In evaluating the relevance of a particular factor, the competent authorities must, therefore, assess the “bearing”, or the “influence” or “effect” that factor has on the overall situation of the domestic industry, against the background of all the other relevant factors.

 

S.1.26.4 US — Wheat Gluten, para. 72
(WT/DS166/AB/R)

 

… Thus, we consider that Article 4.2(a) does not support the Panel’s conclusion that some of the “relevant factors” — those related exclusively to increased imports — should be counted towards an affirmative determination of serious injury, while others — those not related to increased imports — should be excluded from that determination.

 

S.1.26.5 US — Lamb, para. 103
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… an “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. 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.

 

S.1.26.6 US — Lamb, para. 104
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… 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”. …

 
S.1.27 Article 4.2(a) — Data for the injury evaluation     back to top

S.1.27.1 US — Lamb, para. 130
(WT/DS177/AB/R, WT/DS178/AB/R)

 

We recognize that the clause “of an objective and quantifiable nature” refers expressly to “factors”, but not expressly to data. We are, however, convinced that factors can only be “of an objective and quantifiable nature” if they allow a determination to be made, as required by Article 4.2(b) of the Agreement on Safeguards, on the basis of “objective evidence”. Such evidence is, in principle, objective data. The words “factors of an objective and quantifiable nature” imply, therefore, an evaluation of objective data which enables the measurement and quantification of these factors.

 

S.1.27.2 US — Lamb, para. 131
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… competent authorities must have a sufficient factual basis to allow them to draw reasoned and adequate conclusions concerning the situation of the “domestic industry”. The need for such a sufficient factual basis, in turn, implies that the data examined, concerning the relevant factors, must be representative of the “domestic industry”. Indeed, a determination made on the basis of insufficient data would not be a determination about the state of the “domestic industry”, as defined in the Agreement, but would, in reality, be a determination pertaining to producers of something less than “a major proportion of the total domestic production” of the products at issue. …

 

S.1.27.3 US — Lamb, para. 132
(WT/DS177/AB/R, WT/DS178/AB/R)

 

We do not wish to suggest that competent authorities must, in every case, actually have before them data pertaining to all those domestic producers whose production, taken together, constitutes a major proportion of the domestic industry. In some instances, no doubt, such a requirement would be both impractical and unrealistic. Rather, the data before the competent authorities must be sufficiently representative to give a true picture of the “domestic industry”. What is sufficient in any given case will depend on the particularities of the “domestic industry” at issue. …

 

S.1.27.4 US — Lamb, footnote 99 to para. 144
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… We note that, earlier in its Report, the Panel stated that competent authorities “may arrive at a threat determination even if the majority of firms within the relevant industry is not facing declining profitability, provided that an evaluation of the injury factors as a whole indicates threat of serious injury” (Panel Report, para. 7.188, emphasis added). In Argentina Footwear Safeguard, we said that the competent authorities’ determination of “serious injury” must be based on “the overall picture” of the domestic industry and that the determination must be made “in light of all the relevant factors”. Accordingly, in evaluating “the overall position of the domestic industry”, no single relevant factor can be accorded decisive importance and, instead, all of the factors must be examined and weighed together (Appellate Body Report, Argentina Footwear Safeguard, supra, footnote 15, para. 139).

 

It follows that the Panel was correct to state that the competent authorities’ determination must be based on “an evaluation of the injury factors as a whole”. Moreover, it is theoretically possible, as the Panel said, that an industry might be threatened with serious injury, even though “a majority of firms … is not facing declining profitability”. Profits are simply one of the relevant factors mentioned in Article 4.2(a) and to accord that factor decisive importance would be to disregard the other relevant factors. However, in our view, it will be a rare case, indeed, where the relevant factors as a whole indicate that there is a threat of serious injury, even though the “majority of firms in the industry” is not facing declining profitability.

 
S.1.28 Article 4.2(a) — Injury data relating to the most recent past     back to top

S.1.28.1 US — Lamb, para. 137
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… we note that the Agreement on Safeguards provides no particular methodology to be followed in making determinations of serious injury or threat thereof. However, whatever methodology is chosen, we believe that data relating to the most recent past will provide competent authorities with an essential, and, usually, the most reliable, basis for a determination of a threat of serious injury. The likely state of the domestic industry in the very near future can best be gauged from data from the most recent past. …

 

S.1.28.2 US — Lamb, para. 138
(WT/DS177/AB/R, WT/DS178/AB/R)

 

However, we believe that, although data from the most recent past has special importance, competent authorities should not consider such data in isolation from the data pertaining to the entire period of investigation. The real significance of the short-term trends in the most recent data, evident at the end of the period of investigation, may only emerge when those short-term trends are assessed in the light of the longer-term trends in the data for the whole period of investigation. If the most recent data is evaluated in isolation, the resulting picture of the domestic industry may be quite misleading. …

 
S.1.29 Article 4.2(b) — Causation of injury by increased imports     back to top

S.1.29.1 Argentina — Footwear (EC), para. 144
(WT/DS121/AB/R)

 

We note that Article 4.2(a) requires the competent authorities to evaluate “the rate and amount of the increase in imports”, “the share of the domestic market taken by increased imports”, as well as the “changes” in the level of factors such as sales, production, productivity, capacity utilization, and others. We see no reason to disagree with the Panel’s interpretation that the words “rate and amount” and “changes” in Article 4.2(a) mean that “the trends — in both the injury factors and the imports — matter as much as their absolute levels”. We also agree with the Panel that, in an analysis of causation, “it is the relationship between the movements in imports (volume and market share) and the movements in injury factors that must be central to a causation analysis and determination” (emphasis added). …

 

S.1.29.2 US — Wheat Gluten, para. 67
(WT/DS166/AB/R)

 

… Article 4.2(b) does not suggest that increased imports be the sole cause of the serious injury, or that “other factors” causing injury must be excluded from the determination of serious injury. To the contrary, the language of Article 4.2(b), as a whole, suggests that “the causal link” between increased imports and serious injury may exist, even though other factors are also contributing, “at the same time”, to the situation of the domestic industry.

 

S.1.29.3 US — Wheat Gluten, para. 70
(WT/DS166/AB/R)

 

… the need to distinguish between the effects caused by increased imports and the effects caused by other factors does not necessarily imply, as the Panel said, that increased imports on their own must be capable of causing serious injury, nor that injury caused by other factors must be excluded from the determination of serious injury.

 
S.1.30 Article 4.2(b) — Causation of injury by increased imports vs. Other factors     back to top

S.1.30.1 US — Wheat Gluten, para. 69
(WT/DS166/AB/R)

 

Article 4.2(b) presupposes, therefore, as a first step in the competent authorities’ examination of causation, that the injurious effects caused to the domestic industry by increased imports are distinguished from the injurious effects caused by other factors. The competent authorities can then, as a second step in their examination, attribute to increased imports, on the one hand, and, by implication, to other relevant factors, on the other hand, “injury” caused by all of these different factors, including increased imports. Through this two stage process, the competent authorities comply with Article 4.2(b) by ensuring that any injury to the domestic industry that was actually caused by factors other than increased imports is not “attributed” to increased imports and is, therefore, not treated as if it were injury caused by increased imports, when it is not. In this way, the competent authorities determine, as a final step, whether “the causal link” exists between increased imports and serious injury, and whether this causal link involves a genuine and substantial relationship of cause and effect between these two elements, as required by the Agreement on Safeguards.

 

S.1.30.2 US — Lamb, paras. 178-181
(WT/DS177/AB/R, WT/DS178/AB/R)

 

We emphasize that these three steps simply describe a logical process for complying with the obligations relating to causation set forth in Article 4.2(b). These steps are not legal “tests” mandated by the text of the Agreement on Safeguards, nor is it imperative that each step be the subject of a separate finding or a reasoned conclusion by the competent authorities. Indeed, these steps leave unanswered many methodological questions relating to the non-attribution requirement found in the second sentence of Article 4.2(b).

 

The primary objective of the process we described in United States Wheat Gluten Safeguard is, of course, to determine whether there is “a genuine and substantial relationship of cause and effect” between increased imports and serious injury or threat thereof. As part of that determination, Article 4.2(b) states expressly that injury caused to the domestic industry by factors other than increased imports “shall not be attributed to increased imports”. In a situation where several factors are causing injury “at the same time”, a final determination about the injurious effects caused by increased imports can only be made if the injurious effects caused by all the different causal factors are distinguished and separated. Otherwise, any conclusion based exclusively on an assessment of only one of the causal factors — increased imports — rests on an uncertain foundation, because it assumes that the other causal factors are not causing the injury which has been ascribed to increased imports. The non-attribution language in Article 4.2(b) precludes such an assumption and, instead, requires that the competent authorities assess appropriately the injurious effects of the other factors, so that those effects may be disentangled from the injurious effects of the increased imports. In this way, the final determination rests, properly, on the genuine and substantial relationship of cause and effect between increased imports and serious injury.

 

As we said in our Report in United States Wheat Gluten Safeguard, the non attribution language in Article 4.2(b) indicates that, logically, the final identification of the injurious effects caused by increased imports must follow a prior separation of the injurious effects of the different causal factors. If the effects of the different factors are not separated and distinguished from the effects of increased imports, there can be no proper assessment of the injury caused by that single and decisive factor. As we also indicated, the final determination about the existence of “the causal link” between increased imports and serious injury can only be made after the effects of increased imports have been properly assessed, and this assessment, in turn, follows the separation of the effects caused by all the different causal factors.

 

We emphasize that the method and approach WTO Members choose to carry out the process of separating the effects of increased imports and the effects of the other causal factors is not specified by the Agreement on Safeguards. What the Agreement requires is simply that the obligations in Article 4.2 must be respected when a safeguard measure is applied.

 
S.1.31 Article 4.2(b) — Non-attribution of injury caused by other factors     back to top

S.1.31.1 US — Line Pipe, para. 208
(WT/DS202/AB/R)

 

Article 4.2(b) of the Agreement on Safeguards establishes two distinct legal requirements for competent authorities in the application of a safeguard measure. First, there must be a demonstration of the “existence of the causal link between increased imports of the product concerned and serious injury or threat thereof”. Second, the injury caused by factors other than the increased imports must not be attributed to increased imports.

 

S.1.31.2 US — Wheat Gluten, para. 68
(WT/DS166/AB/R)

 

… Clearly, the process of attributing “injury”, envisaged by this sentence, can only be made following a separation of the “injury” that must then be properly “attributed”. What is important in this process is separating or distinguishing the effects caused by the different factors in bringing about the “injury”.

 

S.1.31.3 US — Lamb, para. 185
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… to be certain that the injury caused by these other factors, whatever its magnitude, was not attributed to increased imports, the USITC should also have assessed, to some extent, the injurious effects of these other factors. …

 

S.1.31.4 US — Lamb, para. 186
(WT/DS177/AB/R, WT/DS178/AB/R)

 

In the absence of any meaningful explanation of the nature and extent of the injurious effects of these six “other” factors, it is impossible to determine whether the USITC properly separated the injurious effects of these other factors from the injurious effects of the increased imports. It is, therefore, also impossible to determine whether injury caused by these other factors has been attributed to increased imports. In short, without knowing anything about the nature and extent of the injury caused by the six other factors, we cannot satisfy ourselves that the injury deemed by the USITC to have been caused by increased imports does not include injury which, in reality, was caused by these factors.

 

S.1.31.5 US — Line Pipe, paras. 215, 217
(WT/DS202/AB/R)

 

… competent authorities must separate and distinguish the injurious effects of the increased imports from the injurious effects of the other factors … competent authorities are required to identify the nature and extent of the injurious effects of the known factors other than increased imports, as well as explain satisfactorily the nature and extent of the injurious effects of those other factors as distinguished from the injurious effects of the increased imports.

 

 

Thus, to fulfil the requirement of Article 4.2(b), last sentence, the competent authorities must establish explicitly, through a reasoned and adequate explanation, that injury caused by factors other than increased imports is not attributed to increased imports. This explanation must be clear and unambiguous. It must not merely imply or suggest an explanation. It must be a straightforward explanation in express terms.

 

S.1.31.6 US — Line Pipe, para. 262
(WT/DS202/AB/R)

 

… even if the USITC failed to separate and distinguish the injurious effects of the increased imports from the injurious effects of the other factors, it is still possible that the safeguard measure may have been applied in such a manner that it addressed only a portion of the identified injurious effects, namely, the portion that is equal to or less than the injurious effects of increased imports. The United States did not rebut Korea’s prima facie case by showing that this was so. We offer this observation only to emphasize that we are not stating that a violation of the last sentence of Article 4.2(b) implies an automatic violation of the first sentence of Article 5.1 of the Agreement on Safeguards.

 

S.1.31.7 US — Steel Safeguards, para. 489
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… the Agreement on Safeguards — in Article 2.1, as elaborated by Article 4.2, and in combination with Article 3.1 — requires that competent authorities demonstrate the existence of a “causal link” between “increased imports” and “serious injury” (or the threat thereof) on the basis of “objective evidence”. In addition, the competent authorities must provide a reasoned and adequate explanation of how facts (that is, the aforementioned “objective evidence”) support their determination. If these requirements are not met, the right to apply a safeguard measure does not arise.

 
S.1.32 Article 4.2(b) — Causation — Assumptions regarding increased imports and injury     back to top

S.1.32.1 US — Steel Safeguards, footnote 494 to para. 481
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

In paragraph 10.278 of the Panel Reports, the Panel stated that it “assumed for the purposes of its consideration of the issue of causation”, that the relevant domestic producers had been correctly defined and that serious injury or threat thereof existed. We note that the Panel found no “increased imports” for five product categories — CCFRS, hot-rolled bar, stainless steel rod, tin mill, and stainless steel wire. However, the Panel must also have assumed, tacitly, that, for the purposes of its causation analysis, imports had increased for those five products. We do not see anything improper per se in panels making such assumptions, especially when doing so enables panels to make findings they otherwise would not have made, thereby facilitating appellate review. We are mindful that the volume and complexity of this case may have prompted the Panel to exercise judicial economy on several issues and to rely on the corresponding inter-dependent assumptions. We note, however, that the cumulation of several inter-related assumptions could have affected our ability to complete the Panel’s legal analysis had we pursued a ruling on causation.

 

S.1.32.2 US — Steel Safeguards, footnote 495 to para. 481
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… We note that “serious injury” is the purported effect that should be causally linked by the competent authority to “increased imports”. When the determination of “serious injury” is challenged, a panel may only conclude definitively that “the existence of the causal link” has been adequately demonstrated after having established that “increased imports” and “serious injury” were adequately determined in the investigation.

 

S.1.32.3 US — Steel Safeguards, para. 483
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

As we have already found that the measures before us are inconsistent with Article XIX:1(a) of the GATT 1994 and with Articles 2.1, 3.1, and 4.2 of the Agreement on Safeguards, it is unnecessary, for the purposes of resolving this dispute, to rule on whether the Panel was correct in finding that the United States also acted inconsistently with Articles 2.1 and 4.2 of the Agreement on Safeguards because the USITC report failed to demonstrate the existence of a “causal link” between increased imports from all sources (that is, imports covered by the measures and imports not covered by the measures) and serious injury to the domestic industry. We, therefore, decline to rule on the issue of causation. Accordingly, and as we have not examined the Panel’s findings on causation for the seven products that are the focus of this claim by the United States — CCFRS, hot-rolled bar, cold-finished bar, rebar, welded pipe, FFTJ, and stainless steel bar — we neither reverse nor uphold those findings.

 
S.1.33 Article 4.2(c) — Publication of a detailed analysis. See also Safeguards Agreement, Article 3.1 — General (S.1.18); Safeguards Agreement, Relationship between Article XIX of the GATT 1994 and Article 3.1 of the Safeguards Agreement (S.1.46); Safeguards Agreement, Relationship between Article XIX of the GATT 1994 and Article 4.2(c) of the Safeguards Agreement (S.1.47)     back to top

S.1.33.1 US — Steel Safeguards, paras. 289-290
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we see Article 4.2(c) as an elaboration of the requirement set out in Article 3.1, last sentence, to provide a “reasoned conclusion” in a published report.

 

The United States argued at the oral hearing that “Article 4.2(c) does not apply to the competent authorities’ demonstration of unforeseen developments” under Article XIX:1(a) of the GATT 1994. We disagree. Article 4.2(c) is an elaboration of Article 3; moreover “unforeseen developments” under Article XIX:1(a) of the GATT 1994 is one of the “pertinent issues of fact and law” to which the last sentence of Article 3.1 refers. It follows that Article 4.2(c) also applies to the competent authorities’ demonstration of “unforeseen developments” under Article XIX:1(a).

 
S.1.34 Article 5.1 — Application of the safeguard measure to the extent necessary to prevent or remedy serious injury and to facilitate adjustment. See also Principles and Concepts of General Public International Law, Proportionality (P.3.6)     back to top

S.1.34.1 Korea — Dairy, para. 96
(WT/DS98/AB/R)

 

… We agree with the Panel that the wording of this provision leaves no room for doubt that it imposes an obligation on a Member applying a safeguard measure to ensure that the measure applied is commensurate with the goals of preventing or remedying serious injury and of facilitating adjustment. We also agree that this obligation applies regardless of the particular form that a safeguard measure might take. Whether it takes the form of a quantitative restriction, a tariff or a tariff rate quota, the measure in question must be applied “only to the extent necessary” to achieve the goals set forth in the first sentence of Article 5.1.

 

S.1.34.2 US — Line Pipe, para. 84
(WT/DS202/AB/R)

 

… [if] there is a right to apply a safeguard measure in that particular case, then the interpreter must next consider whether the Member has applied that safeguard measure “only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment”, as required by Article 5.1, first sentence, of the Agreement on Safeguards. Thus, the right to apply a safeguard measure — even where it has been found to exist in a particular case and thus can be exercised — is not unlimited. …

 

S.1.34.3 US — Line Pipe, para. 172
(WT/DS202/AB/R)

 

… the permissible extent of a safeguard measure is defined by the share of serious injury that is attributed to increased imports, not by the characterization the competent authority ascribes to the situation of the industry. …

 
S.1.35 Article 5.1 — Justification of the necessary extent of the application     back to top

S.1.35.1 US — Line Pipe, paras. 233-234
(WT/DS202/AB/R)

 

… apart from one exception, Article 5.1, including the first sentence, does not oblige a Member to justify, at the time of application, that the safeguard measure at issue is applied “only to the extent necessary”. The exception we identified in Korea Dairy lies in the second sentence of Article 5.1 [Appellate Body Report, paras. 98—99]. That exception concerns safeguard measures in the form of quantitative restrictions, which reduce the quantity of imports below the average of imports in the last three representative years. That exception does not apply to the line pipe measure.

 

Thus, our findings in Korea Dairy establish that Article 5.1 imposes a general substantive obligation, namely, to apply safeguard measures only to the permissible extent, and also a particular procedural obligation, namely, to provide a clear justification in the specific case of quantitative restrictions reducing the volume of imports below the average of imports in the last three representative years. Article 5.1 does not establish a general procedural obligation to demonstrate compliance with Article 5.1, first sentence, at the time a measure is applied.

 

S.1.35.2 US — Line Pipe, paras. 242-243
(WT/DS202/AB/R)

 

… In stating that Article 4.2(b) should not be read as necessarily implying that increased imports, on their own, must be capable of causing serious injury, or that injury caused by other factors must be excluded from the determination of serious injury, we were addressing the question of whether there is a right to apply a safeguard measure; we were not addressing the permissible extent of the application of a safeguard measure.

 

The United States is, therefore, mistaken in maintaining that our ruling in US Wheat Gluten supports the proposition that Article 5.1, first sentence, permits a Member to apply a safeguard measure to prevent or remedy “the entirety of the serious injury experienced by the domestic industry”. The United States submits that because we “decided that in accordance with Article 4.2(a) serious injury was the entirety of the condition of the industry”, it follows that the serious injury to which Article 5.1, first sentence, refers must be the “entirety” of the serious injury. But, our ruling in US Wheat Gluten makes no mention of the permissible extent to which a safeguard measure may be applied, nor of the “entirety” of serious injury as it relates to that permissible extent. The permissible extent of a safeguard measure is the subject of Article 5.1, first sentence. The meaning of Article 5.1, first sentence, was not at issue in US Wheat Gluten; it is at issue here.

 

S.1.35.3 US — Line Pipe, para. 257
(WT/DS202/AB/R)

 

… If the pain inflicted on exporters by a safeguard measure were permitted to have effects beyond the share of injury caused by increased imports, this would imply that an exceptional remedy, which is not meant to protect the industry of the importing country from unfair or illegal trade practices, could be applied in a more trade-restrictive manner than countervailing and anti-dumping duties. On what basis should the WTO Agreement be interpreted to limit a countermeasure to the extent of the injury caused by unfair practices or a violation of the treaty but not so limit a countermeasure when there has not even been an allegation of a violation or an unfair practice?

 

S.1.35.4 US — Line Pipe, para. 258
(WT/DS202/AB/R)

 

The object and purpose of the Agreement on Safeguards support this reading of the context of Article 5.1, first sentence. The Agreement on Safeguards deals only with imports. It deals only with measures that, under certain conditions, can be applied to imports. The title of Article XIX of the GATT 1994 is “Emergency Action on Imports of Particular Products” (emphasis added). It seems apparent to us that the object and purpose of both Article XIX of the GATT 1994 and the Agreement on Safeguards support the conclusion that safeguard measures should be applied so as to address only the consequences of imports. And, therefore, it seems apparent to us as well that the limited objective of Article 5.1, first sentence, is limited by the consequences of imports.

 
S.1.36 Relationship between Articles 5.1 and 4.2(b) of the Safeguards Agreement     back to top

S.1.36.1 US — Line Pipe, paras. 234, 236
(WT/DS202/AB/R)

 

… Article 5.1 does not establish a general procedural obligation to demonstrate compliance with Article 5.1, first sentence, at the time a measure is applied.

 

 

This does not imply, as Korea seems to assert, that the measure may be devoid of justification or that the multilateral verification of the consistency of the measure with the Agreement on Safeguards is impeded. The Member imposing a safeguard measure must, in any event, meet several obligations under the Agreement on Safeguards. And, meeting those obligations should have the effect of clearly explaining and “justifying” the extent of the application of the measure. By separating and distinguishing the injurious effects of factors other than increased imports from those caused by increased imports, as required by Article 4.2(b), and by including this detailed analysis in the report that sets forth the findings and reasoned conclusions, as required by Articles 3.1 and 4.2(c), a Member proposing to apply a safeguard measure should provide sufficient motivation for that measure. Compliance with Articles 3.1, 4.2(b) and 4.2(c) of the Agreement on Safeguards should have the incidental effect of providing sufficient “justification” for a measure and, as we will explain, should also provide a benchmark against which the permissible extent of the measure should be determined.

 

S.1.36.2 US — Line Pipe, para. 252
(WT/DS202/AB/R)

 

… the non-attribution language of the second sentence of Article 4.2(b) has two objectives. First, it seeks, in situations where several factors cause injury at the same time, to prevent investigating authorities from inferring the required “causal link” between increased imports and serious injury or threat thereof on the basis of the injurious effects caused by factors other than increased imports. Second, it is a benchmark for ensuring that only an appropriate share of the overall injury is attributed to increased imports. As we read the Agreement, this latter objective, in turn, informs the permissible extent to which the safeguard measure may be applied pursuant to Article 5.1, first sentence. Indeed, as we see it, this is the only possible interpretation of the obligation set out in Article 4.2(b), last sentence, that ensures its consistency with Article 5.1, first sentence. It would be illogical to require an investigating authority to ensure that the “causal link” between increased imports and serious injury not be based on the share of injury attributed to factors other than increased imports while, at the same time, permitting a Member to apply a safeguard measure addressing injury caused by all factors.

 

S.1.36.3 US — Line Pipe, paras. 261-262
(WT/DS202/AB/R)

 

… we conclude that, by establishing that the United States violated Article 4.2(b) of the Agreement on Safeguards, Korea has made a prima facie case that the application of the line pipe measure was not limited to the extent permissible under Article 5.1. In the absence of a rebuttal by the United States of this prima facie case by Korea, we find that the United States applied the line pipe measure beyond the “extent necessary to prevent or remedy serious injury and to facilitate adjustment”. …

 

… even if the USITC failed to separate and distinguish the injurious effects of the increased imports from the injurious effects of the other factors, it is still possible that the safeguard measure may have been applied in such a manner that it addressed only a portion of the identified injurious effects, namely, the portion that is equal to or less than the injurious effects of increased imports. The United States did not rebut Korea’s prima facie case by showing that this was so. We offer this observation only to emphasize that we are not stating that a violation of the last sentence of Article 4.2(b) implies an automatic violation of the first sentence of Article 5.1 of the Agreement on Safeguards.

 
S.1.37 Article 5.2(b) — Quota modulation     back to top

S.1.37.1 US — Line Pipe, para. 173
(WT/DS202/AB/R)

 

… we disagree with the support the Panel finds for its conclusions on this issue in the context of Article 5.2(b) of the Agreement on Safeguards. Article 5.2(b) excludes quota modulation in the case of threat of serious injury. It is, in our view, the only provision in the Agreement on Safeguards that establishes a difference in the legal effects of “serious injury” and “threat of serious injury”. Under Article 5.2(b), in order for an importing Member to adopt a safeguard measure in the form of a quota to be allocated in a manner departing from the general rule contained in Article 5.2(a), that Member must have determined that there is “serious injury”. A Member cannot engage in quota modulations if there is only a “threat of serious injury”. This is an exception that must be respected. But we do not think it appropriate to generalize from such a limited exception to justify a general rule. In any event, this exceptional circumstance is not relevant to the line pipe measure. We find nothing in Article 5.2(b), viewed as part of the context of Article 2.1, that would support a finding that, in this case, the USITC acted inconsistently with the Agreement on Safeguards by making a non-discrete determination in this case.

 
S.1.38 Article 8.1 — Equivalent level of concessions     back to top

S.1.38.1 US — Wheat Gluten, paras. 145-146
(WT/DS166/AB/R)

 

Article 8.1 imposes an obligation on Members to “endeavour to maintain” equivalent concessions with affected exporting Members. The efforts made by a Member to this end must be “in accordance with the provisions of” Article 12.3 of the Agreement on Safeguards.

 

In view of this explicit link between Articles 8.1 and 12.3 of the Agreement on Safeguards, a Member cannot, in our view, “endeavour to maintain” an adequate balance of concessions unless it has, as a first step, provided an adequate opportunity for prior consultations on a proposed measure. …

 

S.1.38.2 US — Line Pipe, para. 109
(WT/DS202/AB/R)

 

We note that reaching such an “understanding” [on ways to achieve the objective set out in paragraph 1 of Article 8] serves the interests not only of the exporting Members, but also of the importing Member, who will wish to avoid excessive compensatory measures in response to the safeguard action. As we have said, the Agreement on Safeguards permits Members to impose measures against “fair trade”. As a result, Members against whom such measures are imposed are prevented from enjoying the full benefit of trade concessions. For this reason, Article 8.1 of the Agreement on Safeguards provides that “Members concerned may agree on any adequate means of trade compensation for the adverse effects of the measure on their trade.” If no agreement on compensation is reached, Article 8.2 provides that “the affected … Members shall be free, not later than 90 days after the measure is applied, to suspend … the application of substantially equivalent concessions or other obligations under GATT 1994, to the trade of the Member applying the safeguard measure”. Thus, there is an interest on the part of both the exporting Member and the importing Member applying the safeguard measure to engage in “prior consultations” with a view to reaching an understanding on the import of the measure.

 

S.1.38.3 US — Line Pipe, para. 119
(WT/DS202/AB/R)

 

In our view, our reasoning in US Wheat Gluten is also applicable in this case. Therefore, we agree with the Panel that the United States, “by failing to comply with its obligations under Article 12.3, has also acted inconsistently with its obligations under Article 8.1 to endeavour to maintain a substantially equivalent level of concessions. …” …

 
S.1.39 Article 9.1 — Exclusion of developing country Members from the application of safeguards     back to top

S.1.39.1 US — Line Pipe, paras. 127-128
(WT/DS202/AB/R)

 

… Article 9.1 does not indicate how a Member must comply with this obligation. There is nothing, for example, in the text of Article 9.1 to the effect that countries to which the measure will not apply must be expressly excluded from the measure. Although the Panel may have a point in saying that it is “reasonable to expect” an express exclusion, we see nothing in Article 9.1 that requires one.

 

… it is possible to comply with Article 9.1 without providing a specific list of the Members that are either included in, or excluded from, the measure. Although such a list could, and would, be both useful and helpful by providing transparency for the benefit of all Members concerned, we see nothing in Article 9.1 that mandates one.

 

S.1.39.2 US — Line Pipe, para. 129
(WT/DS202/AB/R)

 

… we note that Article 9.1 is concerned with the application of a safeguard measure on a product. And we note, too, that a duty, such as the supplemental duty imposed by the line pipe measure, does not need actually to be enforced and collected to be “applied” to a product. In our view, duties are “applied against a product” when a Member imposes conditions under which that product can enter that Member’s market — including when that Member establishes, as the United States did here, a duty to be imposed on over-quota imports. Thus, in our view, duties are “applied” irrespective of whether they result in making imports more expensive, in discouraging imports because they become more expensive, or in preventing imports altogether.

 

S.1.39.3 US — Line Pipe, paras. 130-131
(WT/DS202/AB/R)

 

… according to the latest data available at the time the line pipe measure took effect — data found in the Panel record and not disputed by the United States — the 9,000 short-ton exemption from the over-quota duty imposed by the line pipe measure did not represent three per cent of the total imports. Rather, the exemption represented only 2.7 per cent of total imports … The exemption … was, on the evidence, too small.

 

… the United States argued before the Panel that it “expected” the measure would result in a decrease from the total volume of imports … But expectations are not realized “automatically”. The facts indicate that, when the measure was adopted, the 9,000 ton exclusion represented less than three per cent of total imports into the United States market. The over-quota duty applied to imports that exceeded the 9,000 short-ton exemption, irrespective of their origin.

 
S.1.40 Article 12.1 — Immediate notification     back to top

S.1.40.1 US — Wheat Gluten, para. 102
(WT/DS166/AB/R)

 

… Article 12.1 of the Agreement on Safeguards sets out three separate obligations to make notification to the Committee on Safeguards, each of which is triggered “upon” the occurrence of an event specified in one of the three subparagraphs. The chapeau to Article 12.1 stipulates that the notifications must be made “immediately … upon” the occurrence of the triggering events (emphasis added).

 

S.1.40.2 US — Wheat Gluten, paras. 105-106
(WT/DS166/AB/R)

 

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 with the United States 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.

 

S.1.40.3 US — Wheat Gluten, para. 120
(WT/DS166/AB/R)

 

In examining the ordinary meaning of Article 12.1(c), we observe that the relevant triggering event is the “taking” of a decision. To us, Article 12.1(c) is focused upon whether a “decision” has occurred, or has been “taken”, and not on whether that decision has been given effect. On the face of the text, the timeliness of a notification under Article 12.1(c) depends only on whether the notification was immediate.

 
S.1.41 Article 12.2 — Notification of all pertinent information     back to top

S.1.41.1 Korea — Dairy, para. 107
(WT/DS98/AB/R)

 

… 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.

 

S.1.41.2 Korea — Dairy, para. 108
(WT/DS98/AB/R)

 

… 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.

 

S.1.41.3 US — Wheat Gluten, paras. 123-125
(WT/DS166/AB/R)

 

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.

 

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.

 
S.1.42 Article 12.3 — “adequate opportunity for prior consultations”     back to top

S.1.42.1 US — Wheat Gluten, paras. 136-137
(WT/DS166/AB/R)

 

We note, first, that Article 12.3 requires a Member proposing to apply a safeguard measure to provide an “adequate opportunity for prior consultations” with Members with a substantial interest in exporting the product concerned. Article 12.3 states that an “adequate opportunity” for consultations is to be provided “with a view to”: reviewing the information furnished pursuant to Article 12.2; exchanging views on the measure; and reaching an understanding with exporting Members on an equivalent level of concessions. In view of these objectives, we consider that Article 12.3 requires a Member proposing to apply a safeguard measure to provide exporting Members with sufficient information and time to allow for the possibility, through consultations, for a meaningful exchange on the issues identified. To us, it follows from the text of Article 12.3 itself that information on the proposed measure must be provided in advance of the consultations, so that the consultations can adequately address that measure. Moreover, the reference, in Article 12.3, to “the information provided under” Article 12.2, indicates that Article 12.2 identifies the information that is needed to enable meaningful consultations to occur under Article 12.3. Among the list of “mandatory components” regarding information identified in Article 12.2 are: a precise description of the proposed measure, and its proposed date of introduction.

 

Thus, in our view, an exporting Member will not have an “adequate opportunity” under Article 12.3 to negotiate overall equivalent concessions through consultations unless, prior to those consultations, it has obtained, inter alia, sufficiently detailed information on the form of the proposed measure, including the nature of the remedy.

 

S.1.42.2 US — Line Pipe, paras. 103-104
(WT/DS202/AB/R)

 

The notifications that informed the consultations held on 24 January 2000 described the measures proposed by the USITC. The Panel found, as a matter of fact, that these proposed measures “differed substantially” from the one announced by the President on 11 February 2000 and eventually applied by the United States, effective as of 1 March 2000. For this reason, we do not believe that the notifications by the United States under Article 12.1(b) in this case were sufficiently precise to allow Korea to conduct meaningful consultations on the measure at issue.

 

We do not mean by this to imply that the “prior consultations” envisioned by Article 12.3 must be on a proposed measure that is identical, in every respect, to the one that is eventually applied. Presumably, the “prior consultations” will, from time to time, result in some changes in a proposed measure. But where, as here, the proposed measure “differed substantially” from the measure that was later applied, and not as a consequence of “prior consultations”, we fail to see how meaningful “prior consultations” could have occurred, as required by Article 12.3. …

 

S.1.42.3 US — Line Pipe, paras. 106-108
(WT/DS202/AB/R)

 

… 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”. …

 

Article 12.3 does not specify precisely how much time should be made available for consultations. Therefore, a finding on the adequacy of time in any particular case must necessarily be addressed on a case-by-case basis. …

 

… there must be sufficient time “to allow for the possibility …for a meaningful exchange”. This requirement presupposes that exporting Members will obtain the relevant information sufficiently in advance to permit analysis of the measure, and assumes further that exporting Members will have an adequate opportunity to consider the likely consequences of the measure before the measure takes effect. For it is only in such circumstances that an exporting Member will be in a position, as required by Article 12.3, to “reach an understanding on ways to achieve the objective set out in paragraph 1 of Article 8” of “maintain[ing] a substantially equivalent level of concessions and other obligations to that existing under GATT 1994”. We see this specific textual link between Article 12.3 and paragraph 1 of Article 8 as especially significant.

 

S.1.42.4 US — Line Pipe, paras. 109-110
(WT/DS202/AB/R)

 

We note that reaching such an “understanding” serves the interests not only of the exporting Members, but also of the importing Member, who will wish to avoid excessive compensatory measures in response to the safeguard action. As we have said, the Agreement on Safeguards permits Members to impose measures against “fair trade”. As a result, Members against whom such measures are imposed are prevented from enjoying the full benefit of trade concessions. For this reason, Article 8.1 of the Agreement on Safeguards provides that “Members concerned may agree on any adequate means of trade compensation for the adverse effects of the measure on their trade.” If no agreement on compensation is reached, Article 8.2 provides that “the affected … Members shall be free, not later than 90 days after the measure is applied, to suspend … the application of substantially equivalent concessions or other obligations under GATT 1994, to the trade of the Member applying the safeguard measure”. Thus, there is an interest on the part of both the exporting Member and the importing Member applying the safeguard measure to engage in “prior consultations” with a view to reaching an understanding on the import of the measure.

 

Finally, the notion of a meaningful exchange, as we see it, assumes that the importing Member will enter into consultations in good faith and will take the time appropriate to give due consideration to any comments received from exporting Members before implementing the measure. As always, we must assume that WTO Members seek to carry out their WTO obligations in good faith.

 
S.1.43 Relationship between the Safeguards Agreement and the Anti-Dumping Agreement     back to top

S.1.43.1 US — Line Pipe, para. 214
(WT/DS202/AB/R)

 

… As we noted in [US Hot-Rolled Steel]: “[a]lthough the text of the Agreement on Safeguards on causation is by no means identical to that of the Anti-Dumping Agreement, there are considerable similarities between the two Agreements as regards the non-attribution language” [Appellate Body Report, para. 230]. We then went on to say that “adopted panel and Appellate Body reports relating to the non-attribution language in the Agreement on Safeguards can provide guidance in interpreting the non-attribution language in Article 3.5 of the Anti-Dumping Agreement”. We are of the view that this reasoning applies both ways. Our statements in US Hot-Rolled Steel on Article 3.5 of the Anti-Dumping Agreement likewise provide guidance in interpreting the similar language in Article 4.2(b) of the Agreement on Safeguards.

 
S.1.44 Relationship between the Safeguards Agreement and the GATT 1994     back to top

S.1.44.1 Argentina — Footwear (EC), para. 81
(WT/DS121/AB/R)

 

Thus, the GATT 1994 is not the GATT 1947. It is “legally distinct” from the GATT 1947. The GATT 1994 and the Agreement on Safeguards are both Multilateral Agreements on Trade in Goods contained in Annex 1A of the WTO Agreement, and, as such, are both “integral parts” of the same treaty, the WTO Agreement, that are “binding on all Members”. Therefore, the provisions of Article XIX of the GATT 1994 and the provisions of the Agreement on Safeguards are all provisions of one treaty, the WTO Agreement. They entered into force as part of that treaty at the same time. They apply equally and are equally binding on all WTO Members. And, as these provisions relate to the same thing, namely the application by Members of safeguard measures, the Panel was correct in saying that “Article XIX of GATT and the Safeguards Agreement must a fortiori be read as representing an inseparable package of rights and disciplines which have to be considered in conjunction.” Yet a treaty interpreter must read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously. And, an appropriate reading of this “inseparable package of rights and disciplines” must, accordingly, be one that gives meaning to all the relevant provisions of these two equally binding agreements.

 

S.1.44.2 Argentina — Footwear (EC), paras. 83-84
(WT/DS121/AB/R)

 

We see nothing in the language of either Article 1 or Article 11.1(a) of the Agreement on Safeguards that suggests an intention by the Uruguay Round negotiators to subsume the requirements of Article XIX of the GATT 1994 within the Agreement on Safeguards and thus to render those requirements no longer applicable. Article 1 states that the purpose of the Agreement on Safeguards is to establish “rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994” (emphasis added). This suggests that Article XIX continues in full force and effect, and, in fact, establishes certain prerequisites for the imposition of safeguard measures. Furthermore, in Article 11.1(a), the ordinary meaning of the language “unless such action conforms with the provisions of that Article applied in accordance with this Agreement” (emphasis added) clearly is that any safeguard action must conform with the provisions of Article XIX of the GATT 1994 as well as with the provisions of the Agreement on Safeguards. Neither of these provisions states that any safeguard action taken after the entry into force of the WTO Agreement need only conform with the provisions of the Agreement on Safeguards.

 

Thus, we conclude that any safeguard measure imposed after the entry into force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994.

 

S.1.44.3 Korea — Dairy, para. 75
(WT/DS98/AB/R)

 

… The Agreement on Safeguards is one of the thirteen Multilateral Agreements on Trade in Goods contained in Annex 1A of the WTO Agreement. It is important to understand that the WTO Agreement is one treaty. The GATT 1994 and the Agreement on Safeguards are both Multilateral Agreements on Trade in Goods contained in Annex 1A, which are integral parts of that treaty and are equally binding on all Members pursuant to Article II:2 of the WTO Agreement.

 

S.1.44.4 Korea — Dairy, para. 77
(WT/DS98/AB/R)

 

Article 1 states that the purpose of the Agreement on Safeguards is to establish “rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994” (emphasis added). The ordinary meaning of the language in Article 11.1(a) — “unless such action conforms with the provisions of that Article applied in accordance with this Agreement” — is that any safeguard action must conform with the provisions of Article XIX of the GATT 1994 as well as with the provisions of the Agreement on Safeguards. Thus, any safeguard measure imposed after the entry into force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994.

 
S.1.45 Article XIX of the GATT 1994 — General. See also Agreement on Agriculture, Article 5 — Special safeguard (A.1.14); Safeguards Agreement, General (S.1.1); Textiles and Clothing Agreement, Article 6 — Transitional safeguard (T.7.1)     back to top

S.1.45.1 Korea — Dairy, para. 86
(WT/DS98/AB/R)

 

… In our view, the text of Article XIX:1(a) of the GATT 1994, read in its ordinary meaning and in its context, demonstrates that safeguard measures were intended by the drafters of the GATT to be matters out of the ordinary, to be matters of urgency, to be, in short, “emergency actions”. And, such “emergency actions” are to be invoked only in situations when, as a result of obligations incurred under the GATT 1994, an importing Member finds itself confronted with developments it had not “foreseen” or “expected” when it incurred that obligation. The remedy that Article XIX:1(a) allows in this situation is temporarily to “suspend the obligation in whole or in part or to withdraw or modify the concession”. Thus, Article XIX is clearly an extraordinary remedy.

 

S.1.45.2 US — Steel Safeguards, para. 347
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… Because safeguard measures are “emergency actions”, we have noted as well that “when construing the prerequisites for taking such actions, their extraordinary nature must be taken into account”. The requirement relating to “increased imports” in Articles XIX:1(a) and 2.1 must, therefore, be read in the context of the “extraordinary nature” of the “emergency action” that is authorized by Article XIX:1(a) of the GATT 1994. Even so, the fact that safeguard actions are “emergency actions”, and that the prerequisites for taking such actions should therefore be construed while taking into account the “extraordinary nature” of safeguard measures, does not imply that the prerequisites for taking such actions, in and of themselves, must necessarily be “abnormal” or “extraordinary”. The question is one of the “conditions” under which “such” increased quantities of imports occur.

 
S.1.46 Relationship between Article XIX of the GATT 1994 and Article 3.1 of the Safeguards Agreement     back to top

S.1.46.1 US — Lamb, para. 76
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… we observe that Article 3.1 requires competent authorities to set forth findings and reasoned conclusions on “all pertinent issues of fact and law” in their published report. As Article XIX:1(a) of the GATT 1994 requires that “unforeseen developments” must be demonstrated, as a matter of fact, for a safeguard measure to be applied, the existence of “unforeseen developments” is, in our view, a “pertinent issue of fact and law”, under Article 3.1, for the application of a safeguard measure, and it follows that the published report of the competent authorities, under that Article, must contain a “finding” or “reasoned conclusion” on “unforeseen developments”.

 

S.1.46.2 US — Steel Safeguards, para. 279
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

We do not see how a panel could examine objectively the consistency of a determination with Article XIX of the GATT 1994 if the competent authority had not set out an explanation supporting its conclusions on “unforeseen developments”. Indeed, to enable a panel to determine whether there was compliance with the prerequisites that must be demonstrated before the application of a safeguard measure, the competent authority must provide a “reasoned and adequate explanation” of how the facts support its determination for those prerequisites, including “unforeseen developments” under Article XIX:1(a) of the GATT 1994.

 

S.1.46.3 US — Steel Safeguards, paras. 326, 329
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

Article 3.1 of the Agreement on Safeguards requires that the competent authority set out “reasoned conclusions” on all “pertinent issues of fact and law”. One of those “issues of law” is the requirement to demonstrate the existence of “unforeseen developments” that have resulted in increased imports causing serious injury. In our view, therefore, it was for the USITC to provide a “reasoned conclusion” on “unforeseen developments”. …

 

 

… It is not for the Panel to do the reasoning for, or instead of, the competent authority, but rather to assess the adequacy of that reasoning to satisfy the relevant requirement. In consequence, we cannot agree with the United States that the Panel was “required” to consider the relevant data to which the USITC referred in other sections of its report to support the USITC’s finding that “unforeseen developments” had resulted in increased imports …

 
S.1.47 Relationship between Article XIX of the GATT 1994 and Article 4.2(c) of the Safeguards Agreement     back to top

S.1.47.1 US — Steel Safeguards, paras. 289-290
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we see Article 4.2(c) as an elaboration of the requirement set out in Article 3.1, last sentence, to provide a “reasoned conclusion” in a published report.

 

The United States argued at the oral hearing that “Article 4.2(c) does not apply to the competent authorities’ demonstration of unforeseen developments” under Article XIX:1(a) of the GATT 1994. We disagree. Article 4.2(c) is an elaboration of Article 3; moreover “unforeseen developments” under Article XIX:1(a) of the GATT 1994 is one of the “pertinent issues of fact and law” to which the last sentence of Article 3.1 refers. It follows that Article 4.2(c) also applies to the competent authorities’ demonstration of “unforeseen developments” under Article XIX:1(a).

 
S.1.48 Article XIX of the GATT 1994 — “as a result of”     back to top

S.1.48.1 US — Steel Safeguards, para. 315
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

Turning to the term “as a result of” that is also found in Article XIX:1(a), we note that the ordinary meaning of “result” is, as defined in the dictionary, “an effect, issue, or outcome from some action, process or design”. The increased imports to which this provision refers must therefore be an “effect, or outcome” of the “unforeseen developments”. Put differently, the “unforeseen developments” must “result” in increased imports of the product (“such product”) that is subject to a safeguard measure.

 

S.1.48.2 US — Steel Safeguards, para. 350
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we said in Argentina Footwear (EC) that “the increased quantities of imports should have been ‘unforeseen’ or ‘unexpected’ ”. In doing so, we were referring to the fact that the increased imports must, under Article XIX:1(a), result from “unforeseen developments” in order to justify the application of a safeguard measure. Because the “increased imports” must be “as a result” of an event that was “unforeseen” or “unexpected”, it follows that the increased imports must also be “unforeseen” or “unexpected”. Thus, the “extraordinary nature” of the domestic response to increased imports does not depend on the absolute or relative quantities of the product being imported. Rather, it depends on the fact that the increased imports were unforeseen or unexpected.

 
S.1.49 Article XIX of the GATT 1994 — “such product”     back to top

S.1.49.1 US — Steel Safeguards, para. 314
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

The term “such product” in Article XIX:1(a) refers to the product that may be subject to a safeguard measure. That product is, necessarily, the product that “is being imported in such increased quantities”. Read in its entirety, Article XIX:1(a) clearly requires that safeguard measures be applied to the product that “is being imported in such increased quantities”, and that those “increased quantities” are being imported “as a result” of “unforeseen developments”.

 

S.1.49.2 US — Steel Safeguards, para. 316
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

It is evident … that not just any development that is “unforeseen” will do. To trigger the right to apply a safeguard measure, the development must be such as to result in increased imports of the product (“such product”) that is subject to the safeguard measure. Moreover, any product, as Article XIX:1(a) provides, may, potentially, be subject to that safeguard measure, provided that the alleged “unforeseen developments” result in increased imports of that specific product (“such product”). We, therefore, agree with the Panel that, with respect to the specific products subject to the respective determinations, the competent authorities are required by Article XIX:1(a) of the GATT 1994 to demonstrate that the “unforeseen developments identified … have resulted in increased imports [of the specific products subject to] … each safeguard measure at issue”.

 

S.1.49.3 US — Steel Safeguards, paras. 318-319
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

There must … be a “logical connection” linking the “unforeseen developments” and an increase in imports of the product that is causing, or threatening to cause, serious injury. Without such a “logical connection” between the “unforeseen developments” and the product on which safeguard measures may be applied, it could not be determined, as Article XIX:1(a) requires, that the increased imports of “such product” were “a result of” the relevant “unforeseen development”. Consequently, the right to apply a safeguard measure to that product would not arise.

 

… when an importing Member wishes to apply safeguard measures on imports of several products, it is not sufficient merely to demonstrate that “unforeseen developments” resulted in increased imports of a broad category of products that included the specific products subject to the respective determinations by the competent authority. If that could be done, a Member could make a determination and apply a safeguard measure to a broad category of products even if imports of one or more of those products did not increase and did not result from the “unforeseen developments” at issue. Accordingly, we agree with the Panel that such an approach does not meet the requirements of Article XIX:1(a), and that the demonstration of “unforeseen developments” must be performed for each product subject to a safeguard measure.

 
S.1.50 Article XIX of the GATT 1994 — “unforeseen developments”     back to top

S.1.50.1 Argentina — Footwear (EC), para. 92
(WT/DS121/AB/R)

 

… The first clause in Article XIX:1(a) — “as a result of unforeseen developments and of the obligations incurred by a Member under the Agreement, including tariff concessions …” — is a dependent clause which, in our view, is linked grammatically to the verb phrase “is being imported” in the second clause of that paragraph. Although we do not view the first clause in Article XIX:1(a) as establishing independent conditions for the application of a safeguard measure, additional to the conditions set forth in the second clause of that paragraph, we do believe that the first clause describes certain circumstances which must be demonstrated as a matter of fact in order for a safeguard measure to be applied consistently with the provisions of Article XIX of the GATT 1994. In this sense, we believe that there is a logical connection between the circumstances described in the first clause — “as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions …” — and the conditions set forth in the second clause of Article XIX:1(a) for the imposition of a safeguard measure.

 

S.1.50.2 Korea — Dairy, para. 85
(WT/DS98/AB/R)

 

… The first clause in Article XIX:1(a) — “as a result of unforeseen developments and of the obligations incurred by a Member under the Agreement, including tariff concessions …” — is a dependent clause which, in our view, is linked grammatically to the verb phrase “is being imported” in the second clause of that paragraph. Although we do not view the first clause in Article XIX:1(a) as establishing independent conditions for the application of a safeguard measure, additional to the conditions set forth in the second clause of that paragraph, we do believe that the first clause describes certain circumstances which must be demonstrated as a matter of fact in order for a safeguard measure to be applied consistently with the provisions of Article XIX of the GATT 1994. In this sense, we believe that there is a logical connection between the circumstances described in the first clause — “as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions …” — and the conditions set forth in the second clause of Article XIX:1(a) for the imposition of a safeguard measure.

 

S.1.50.3 US — Lamb, para. 72
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Although we stated in these two Reports that, under Article XIX:1(a) of the GATT 1994, unforeseen developments “must be demonstrated as a matter of fact”, we did not have occasion, in those two appeals, to examine when, where or how that demonstration should occur. In conducting such an examination now, we note that the text of Article XIX provides no express guidance on this issue. However, as the existence of unforeseen developments is a prerequisite that must be demonstrated, as we have stated, “in order for a safeguard measure to be applied” consistently with Article XIX of the GATT 1994, it follows that this demonstration must be made before the safeguard measure is applied. Otherwise, the legal basis for the measure is flawed. We find instructive guidance for where and when the “demonstration” should occur in the “logical connection” that we observed previously between the two clauses of Article XIX:1(a). The first clause, as we noted, contains, in part, the “circumstance” of “unforeseen developments”. The second clause, as we said, relates to the three “conditions” for the application of safeguard measures, which are also reiterated in Article 2.1 of the Agreement on Safeguards. Clearly, the fulfilment of these conditions must be the central element of the report of the competent authorities, which must be published under Article 3.1 of the Agreement on Safeguards. In our view, the logical connection between the “conditions” identified in the second clause of Article XIX:1(a) and the “circumstances” outlined in the first clause of that provision dictates that the demonstration of the existence of these circumstances must also feature in the same report of the competent authorities. Any other approach would sever the “logical connection” between these two clauses, and would also leave vague and uncertain how compliance with the first clause of Article XIX:1(a) would be fulfilled.

 

S.1.50.4 US — Steel Safeguards, paras. 289-290
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we see Article 4.2(c) as an elaboration of the requirement set out in Article 3.1, last sentence, to provide a “reasoned conclusion” in a published report.

 

The United States argued at the oral hearing that “Article 4.2(c) does not apply to the competent authorities’ demonstration of unforeseen developments” under Article XIX:1(a) of the GATT 1994. We disagree. Article 4.2(c) is an elaboration of Article 3; moreover “unforeseen developments” under Article XIX:1(a) of the GATT 1994 is one of the “pertinent issues of fact and law” to which the last sentence of Article 3.1 refers. It follows that Article 4.2(c) also applies to the competent authorities’ demonstration of “unforeseen developments” under Article XIX:1(a).

 

S.1.50.5 US — Steel Safeguards, para. 506
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

In our view, the Panel did not simply assume, but rather clearly pointed to, a deficiency in the USITC’s reasoning. The Panel reviewed the USITC’s findings and found that the USITC failed to demonstrate that the “plausible” unforeseen developments did, in fact, result in increased imports of the specific products subject to the safeguard measures at issue. Because the USITC, according to the United States, relied on macroeconomic events having effects across the respective industries, it was for the USITC to show how those events were relevant to each product covered by each of the safeguard measures at issue. As the United States itself acknowledges, “Article 3.1 assigns the competent authorities — not the panel — the obligation to ‘publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law’ ”. Therefore, it was for the USITC, and not for the Panel, to explain how the facts supported its determination with respect to “unforeseen developments”. The argument of the United States in this appeal seeks to shift the burden of this demonstration to the Panel, whose function, in this regard, is confined to assessing the adequacy of the “reasoned conclusions” put forward by the competent authority. We agree with the Panel that the USITC’s demonstration was insufficient, and we find no error in the Panel’s explanation of that finding.

 

388. In this regard, we note that the fact that, pursuant to the domestic law of a WTO Member, a finding made on the basis of a broad product grouping is deemed to support a competent authority’s determination which relates to a narrower product, does not, in and of itself, imply that this conclusion holds true also for the purposes of the Agreement on Safeguards.     back to text


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