DISPUTE SETTLEMENT

DS: European Union — Safeguard Measures on Certain Steel Products

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Summary of the dispute to date

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Consultations

Complaint by Turkey

On 13 March 2020, Turkey requested consultations with the European Union concerning the provisional and definitive safeguard measures imposed by the European Union on imports of certain steel products and the investigation that led to the imposition of those measures.

Turkey claimed that the measures appear to be inconsistent with:

  • Articles 2.1, 2.2, 3.1, 4.1(b), 4.1(c), 4.2, 4.2(a), 4.2(b), 4.2(c), 5.1, 5.2, 6, 7.1, 7.4 and 9.1 of the Agreement on Safeguards; and
      
  • Articles I:1, II:1(b), XIII:1, XIII:2 and XIX:1(a) of the GATT 1994.

 

Panel and Appellate Body proceedings

On 16 July 2020, Turkey requested the establishment of a panel. At its meeting on 29 July 2020, the DSB deferred the establishment of a panel.

At its meeting on 28 August 2020, the DSB established a panel. Argentina, Brazil, Canada, China, India, Japan, Korea, Norway, the Russian Federation, Switzerland, Chinese Taipei, Ukraine, the United Arab Emirates, the United Kingdom and the United States reserved their third-party rights.

Following the agreement of the parties, the panel was composed on 29 September 2020.

On 12 March 2021, the Chair of the panel informed the DSB that, taking into account the working procedures and the timetable prepared in consultation with the parties, the panel did not expect to issue its final report to the parties before the second half of 2021. The Chair indicated that this was due to the complexity and magnitude of the case and the need to ensure that the parties had sufficient time to prepare and present their cases, particularly given the challenges caused by the global COVID-19 pandemic.  The panel issued its final report to the parties on 10 December 2021, and informed the parties that it would circulate the report on 21 December 2021. On 20 December 2021, Turkey asked the panel to suspend its work under Article 12.12 of the DSU. On 19 January, 9 February and 23 February 2022 Turkey asked the panel to extend the suspension of its work. The panel granted all of these requests.

On 22 March 2022, the parties jointly communicated to the panel and to the DSB that they had agreed on procedures for arbitration under Article 25 of the DSU (WT/DS595/10). Through those agreed procedures, the European Union and Turkey jointly requested the Panel to extend indefinitely the suspension of its work pursuant to Article 12.12 of the DSU, except to the extent necessary to effect certain joint requests of the parties. The Panel granted that request. The European Union and Turkey also agreed that if by 25 April 2022 neither party gave notice of recourse to arbitration pursuant to those agreed procedures, the Panel should then resume its work. Neither party gave notice of recourse to arbitration by that deadline. Therefore, the Panel resumed its work and on 29 April 2022 it circulated its final report.

 

On 29 April 2022, the panel report was circulated to Members.

This dispute concerns a provisional safeguard measure and a definitive safeguard measure adopted by the European Union in 2018 and 2019, respectively, on imports of certain steel products.

The European Union applied the measures on the grounds that three unforeseen developments (increased global steel overcapacity, an increase in the use of trade restrictive and trade defence measures on steel, and the US Section 232 measures on steel) had resulted in an increase in imports of certain steel products into the EU market, and that the increase in imports was threatening the EU industry with serious injury. The safeguard measures took the form of duty-free tariff-rate quotas and 25% out-of-quota safeguard duties.

Turkey claimed that the provisional and definitive safeguard measures were inconsistent with various provisions of the Agreement on Safeguards and the GATT 1994.

Measures under review

The Panel declined to review the provisional safeguard measure, which was no longer in force. The Panel reviewed the definitive safeguard measure, which had replaced the provisional safeguard measure.

Product scope

Turkey claimed that the definitive safeguard measure was inconsistent with various provisions of the Agreement on Safeguards and the GATT 1994 because according to Turkey the European Commission applied distinct safeguard measures on 26 products but had not examined whether the circumstances and conditions for imposing a safeguard measure existed for each of those products individually and, moreover, because the European Commission had adopted an internally inconsistent approach to product scope at different stages of the investigation and application of the measures. The Panel rejected Turkey's proposition that the European Commission had applied distinct safeguard measures on 26 products. Instead, the Panel found that the European Commission had applied a single safeguard measure on 26 product categories taken together. The Panel concluded that Turkey did not establish any inconsistencies in relation to the product scope of the European Commission's analysis of the circumstances and conditions for imposing a safeguard measure.

Unforeseen developments

Turkey claimed that the definitive safeguard measure was inconsistent with Article XIX:1(a) of the GATT 1994 because the European Commission had made a number of errors in its assessment of whether increased imports had resulted from unforeseen developments. Specifically, Turkey argued that the European Commission: (a) had not identified unforeseen developments; (b) if it had identified developments, they were not unforeseen; and (c) it had not demonstrated that the injurious increase in imports had occurred “as a result of” the unforeseen developments. The Panel rejected Turkey's arguments that the European Commission had not identified unforeseen developments and that any such developments were in any case not unforeseen. However, the Panel accepted that the European Commission had not established that the increase in imports had taken place “as a result of” the unforeseen developments. Accordingly, the Panel found that the definitive safeguard measure was inconsistent with Article XIX:1(a) in this regard.

Effect of obligations

Turkey claimed that the definitive safeguard measure was inconsistent with Article XIX:1(a) of the GATT 1994 because the European Commission had not identified the relevant “obligations incurred” under the GATT 1994, and had not explained how any such obligations had the effect of constraining the European Union's ability to prevent the threatened injury. The Panel agreed that the European Commission had not identified in its published reports the obligations whose effect resulted in the increase in imports, and accordingly found that the definitive safeguard measure was inconsistent with Article XIX:1(a) in this regard.

Increase in imports

Turkey claimed that the definitive safeguard measure was inconsistent with Articles 2.1 and 4.2(a) of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 because of alleged errors in the European Commission's finding of an increase in imports. The Panel rejected Turkey's contention that decreases in import volumes of certain product categories and families at the end of the period of investigation invalidated the European Commission's “increase” finding. The Panel also found that Turkey had not substantiated its proposition that the “increase” was insufficient. The Panel concluded that Turkey had not established any inconsistencies in relation to the “increase” finding.

Threat of serious injury and causation

Turkey claimed that the European Commission's findings that the domestic industry was under threat of serious injury, and that increased imports caused such threat, were inconsistent with various provisions of the Agreement on Safeguards and the GATT 1994. The Panel found that the European Commission's finding of a threat of serious injury was not “based on facts” as required by Article 4.1(b) of the Agreement on Safeguards. In light of this finding, the Panel did not consider it necessary to examine the other claims and arguments raised by Turkey in relation to the European Commission's findings on threat of serious injury and causation.

The extent and time necessary to prevent serious injury

Turkey claimed that the definitive safeguard measure was inconsistent with Articles 5.1 and 7.1 of the Agreement on Safeguards, and Article XIX:1(a) of the GATT 1994, because it was applied beyond the extent and time necessary to prevent serious injury. The Panel rejected Turkey's contention that the European Commission had applied the definitive safeguard measure beyond the extent necessary to prevent serious injury by not taking into account data from the first six months of 2018 in determining the size of the tariff rate quotas (TRQs). The Panel also found that Turkey had not established that the double remedy regulation suspending the application of certain anti-dumping and countervailing measures to the extent of their overlap with the relevant safeguard duties had resulted in the application of the safeguard measure beyond the extent necessary to prevent serious injury. The Panel concluded that Turkey had not established any inconsistencies in relation to the extent of the application of the safeguard measure. The Panel did not consider it necessary to issue findings on Turkey's claims and arguments that the definitive safeguard measure had been applied beyond the time necessary to prevent serious injury.

The allocation of shares in the Tariff Rate Quotas (TRQs)

Turkey claimed that the definitive safeguard measure was inconsistent with Article XIII:2(d) and the chapeau of Article XIII:2 of the GATT 1994 because the TRQs adopted through the safeguard measure allocated country‑specific shares based on a period that was not representative, and without taking due account of any special factors affecting the trade in the product concerned. Turkey also claimed that the definitive safeguard measure was inconsistent with Article 5.2(a) of the Agreement on Safeguards, “for the same reasons”. The Panel rejected Turkey's contention that the period based on which the European Union allocated country‑specific shares in the relevant TRQs did not qualify as a “previous representative period” under Article XIII:2(d) because it did not include the first six months of 2018. The Panel also rejected Turkey's alternative contention regarding the existence of a special factor that the European Commission improperly failed to take into account in allocating country‑specific shares in TRQs for the relevant product categories. Based on an arguendo assumption that Article 5.2(a) of the Agreement on Safeguards applies to TRQs, the Panel also rejected Turkey's claim under that provision. The Panel concluded that Turkey had not established any inconsistencies in relation to the allocation of shares in the TRQs.

The pace of liberalization and increased restrictiveness

Turkey claimed that the definitive safeguard measure was inconsistent with Articles 5.1 and 7.4 of the Agreement on Safeguards because the first and second review regulations made it more restrictive and reduced its pace of liberalization. The Panel rejected Turkey's proposition that these provisions preclude a reduction in the pace of liberalization relative to the initially announced pace, and also found that Turkey had not demonstrated why the modified pace of liberalization would not facilitate adjustment of the domestic industry in this case. Further, the Panel found that Turkey had not established a prima facie case that the other modifications made through the first and the second review regulations had made the safeguard measure more restrictive than originally determined in a manner inconsistent with the Agreement on Safeguards. The Panel concluded that Turkey had not established any inconsistencies in relation to the pace of liberalization and increased restrictiveness of the safeguard measure.

At its meeting on 31 May 2022, the DSB adopted the panel report.

 

Reasonable period of time

On 5 August 2022, Türkiye and the European Union informed the DSB that they had agreed pursuant to Article 21.3(b) of the DSU, that the reasonable period of time for the European Union to implement the DSB's recommendations and rulings would be 7 months and 16 days. Accordingly, the reasonable period of time was set to expire on 16 January 2023.

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