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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.7.2-7)
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)
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.7.2-7)     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 USLamb, 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 USLine 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 [ArgentinaFootwear (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 fulfill this requirement for applying a safeguard measure.” Indeed, in our view, the term “such”, which appears in the phrase “such increased quantities” in Articles XIX: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 ArgentinaFootwear (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 ArgentinaFootwear (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 ArgentinaFootwear (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 USLamb, 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 USWheat 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 USLamb, 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 USLine 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 USLine 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 TurkeyRestrictions 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 fulfill 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 USLine 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