Organization
UNITED STATES – DEFINITIVE SAFEGUARD MEASURES
ON IMPORTS OF CERTAIN STEEL PRODUCTS
AB-2003-3
Report of the Appellate Body
10 November 2003
1.
The United States appeals certain issues of law and legal
interpretations developed in the Panel Reports, United States – Definitive Safeguard Measures on Imports of Certain
Steel Products (the "Panel
Reports").
2.
The Panel was established by the DSB
on 3 June 2002, pursuant to a request by the European Communities, to examine
the consistency of ten safeguard measures applied by the United States on 20
March 2002 on imports of certain steel products. On 14 June 2002, pursuant to Article 9.1 of the DSU, the DSB
referred to the Panel complaints on the same matter brought by Japan and
Korea. On 24 June 2002, the DSB,
pursuant to Article 9.1 of the DSU, also referred to this single Panel
complaints on the same matter submitted by China, Norway, and Switzerland. On 8 July 2002, the DSB, pursuant to Article
9.1 of the DSU, also referred to this single Panel a complaint on the same
matter submitted by New Zealand. On 29
July 2002, the DSB, pursuant to Article 9.1 of the DSU, also referred to this
single Panel a complaint on the same matter submitted by Brazil.
3.
In their requests for the
establishment of a panel, the Complaining Parties claimed that the ten
safeguard measures applied by the United States on imports of certain steel
products were inconsistent with the obligations of the United States contained
in Articles 2, 3, 4, 5, 7, 8, 9, and 12 of the Agreement on Safeguards,
Articles I, II, X, XIII, and XIX of the GATT 1994, as well as Article XVI of
the WTO
Agreement.
4.
The Panel issued eight Panel Reports—in the form of one
document—that were circulated to the Members of the WTO on 11 July 2003. The Panel concluded, in all of the Panel
Reports, that all ten safeguard measures imposed by the United States were
inconsistent with the Agreement on
Safeguards and the GATT 1994.
5.
In particular, the Panel found that:
(a)
the application of safeguard measures by the United States on
imports of CCFRS, hot-rolled bar, and stainless steel rod was inconsistent with
Articles 2.1 and 3.1 of the Agreement on Safeguards, because
"the United States failed to provide a reasoned and adequate explanation
of how the facts supported its determination with respect to 'increased
imports'" ;
(b)
the application of safeguard measures by the United States on imports
of CCFRS, hot-rolled bar, cold-finished bar, rebar, welded pipe, FFTJ, and
stainless steel bar was inconsistent with Articles 2.1, 3.1, and 4.2(b) of the
Agreement on Safeguards,
because "the United States failed to provide a reasoned and adequate
explanation that a 'causal link' existed between any increased imports and
serious injury to the relevant domestic producers";
(c)
the application of safeguard measures by the United States on
imports of tin mill products and stainless steel wire was inconsistent with
Articles 2.1, 3.1, and 4.2(b) of the Agreement
on Safeguards, because "the United States failed to provide a
reasoned and adequate explanation of how the facts supported its determinations
with respect to 'increased imports'" and the existence of a "causal
link" between any increased imports and serious injury, "since the
explanation given consisted of alternative explanations partly departing from
each other, which given the different product bases, cannot be reconciled as a matter
of substance"
(d)
the application of safeguard measures by the United States on
imports of CCFRS, tin mill products, hot-rolled bar, cold-finished bar, rebar,
welded pipe, FFTJ, stainless steel bar, stainless steel rod, and stainless
steel wire was inconsistent with Articles 2.1 and 4.2 of the Agreement on Safeguards, because
"the United States failed to comply with the requirement of 'parallelism'
between the products for which the conditions for safeguard measures had been
established, and the products which were subjected to the safeguard
measure".
6.
In addition, the Panel concluded, in the Panel Reports concerning
the complaints of China, the European Communities, New Zealand, Norway, and
Switzerland, that:
the application of safeguard
measures by the United States on imports of CCFRS, tin mill products,
hot-rolled bar, cold-finished bar, rebar, welded pipe, FFTJ, stainless steel
bar, stainless steel rod, and stainless steel wire was inconsistent with
Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards, because
"the United States failed to provide a reasoned and adequate explanation
demonstrating that 'unforeseen developments' had resulted in increased imports
causing serious injury to the relevant domestic producers".
7.
The Panel concluded that, to the extent that the United States had
acted inconsistently with the provisions of the Agreement on Safeguards and the GATT 1994 set out above, it
had nullified or impaired the benefits accruing to the Complaining Parties
under the Agreement on Safeguards
and the GATT 1994.
The Panel recommended that the DSB request the United States to bring
all the safeguard measures into conformity with its obligations under the
Agreement on Safeguards
and the GATT 1994.
8.
On 28 June 2001, the USITC initiated a safeguard investigation at
the request of the USTR, in order to determine whether certain steel products
were being imported into the United States in such increased quantities as to
cause or threaten to cause serious injury to the domestic industry producing
like or directly competitive products. Pursuant to this investigation, the USITC
made affirmative determinations of serious injury to the domestic industry with
respect to imports of: CCFRS; hot-rolled
bar; cold-finished bar; rebar;
FFTJ; stainless steel bar; stainless steel rod; and a determination of
threat of serious injury with respect to imports of welded pipe. The USITC made divided
determinations with respect to tin mill products; stainless steel wire; stainless
steel fittings and flanges; and tool steel. The USITC recommended that tariffs and tariff-rate quotas be
imposed for the products for which it made affirmative determinations. Subsequently, following a request from the
USTR, the USITC issued supplementary information on the economic analysis of
remedy options, on unforeseen developments, and an injury determination for
imports from all sources other than Canada and Mexico.
9.
Based on the USITC determination, the President of the United States
imposed definitive safeguard measures on imports of certain steel products
pursuant to Proclamation 7529 of 5 March 2002. The Proclamation imposed tariffs ranging
from 30 percent to 8 percent on imports of certain carbon flat-rolled steel,
hot-rolled bar, cold-finished bar, rebar, welded pipe, fittings, flanges and
tool joints, stainless steel bar, stainless steel rod, tin mill products, and
stainless steel wire. The products subject to these
safeguard measures were products for which the USITC had made affirmative
determinations; with respect to tin mill products and stainless steel wire, for
which the USITC had made divided determinations, the President decided to
consider the determinations of the groups of commissioners voting in the
affirmative with regard to each of these products to be the determination of
the USITC. Imports from Canada, Israel,
Jordan, and Mexico were excluded from the application of the
measures. The measures were imposed for
a period of three years and one day , and became effective on 20 March 2002.
10.
Members of the WTO have agreed in the Agreement on Safeguards that Members may suspend their trade
concessions temporarily by applying import restrictions as safeguard measures
if certain prerequisites are met. These
prerequisites are set forth in Article XIX of the GATT 1994, dealing with
"Emergency Action on Imports of Particular Products", and in the
Agreement on Safeguards,
which, by its terms, clarifies and reinforces the disciplines of Article
XIX. Together, 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. In this case, we will
address the issues raised on appeal with respect to the ten safeguard measures
applied by the United States to imports of certain steel products, in the
following order:
(a)
whether the Panel erred in finding that the United States acted
inconsistently with Article XIX:1(a) of the GATT 1994 and Article 3.1 of the
Agreement on Safeguards
by failing to provide a reasoned and adequate explanation demonstrating that
unforeseen developments resulted in increased imports causing serious injury to
the domestic producers of CCFRS, tin mill products, hot-rolled bar, cold-finished
bar, rebar, welded pipe, FFTJ, stainless steel bar, stainless steel rod, and
stainless steel wire;
(b)
whether the Panel erred in finding that the United States acted
inconsistently with Articles 2.1 and 3.1 of the Agreement on Safeguards by failing to provide a reasoned and
adequate explanation of how the facts supported its determinations that imports
of CCFRS, tin mill products, hot-rolled bar, stainless steel rod and stainless
steel wire increased;
(c)
whether the Panel erred in finding that the United States acted
inconsistently with Articles 2.1 and 4.2 of the Agreement on Safeguards by failing to provide a reasoned and
adequate explanation establishing explicitly that imports from sources not
excluded from the scope of the measure satisfy, alone, the conditions required for the application of
safeguard measures on imports of CCFRS, tin mill products, hot-rolled bar,
cold-finished bar, rebar, welded pipe, FFTJ, stainless steel bar, stainless
steel rod, and stainless steel wire;
(d)
whether the Panel erred in finding that the United States acted
inconsistently with Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing
to provide a reasoned and adequate explanation demonstrating the existence of a
causal link between increased imports of CCFRS, tin mill products, hot-rolled
bar, cold-finished bar, rebar, welded pipe, FFTJ, stainless steel bar, and
stainless steel wire, and serious injury or threat of serious injury to the
relevant domestic industry;
(e)
whether the Panel acted inconsistently with Article 11 of the DSU by
failing to make an objective assessment of the matter before it, including an
objective assessment of the facts of the case and the applicability of and
conformity with the GATT 1994 and the Agreement
on Safeguards; and
(f)
whether the Panel acted inconsistently with Article 12.7 of the DSU
by failing to provide the "basic rationale" behind certain of its
findings and conclusions.
11.
For the reasons set out in this Report, the Appellate Body:
(a)
upholds the Panel's conclusions, in the
relevant sections of paragraph 11.2 of the Panel Reports concerning the
complaints of China, the European Communities, New Zealand, Norway, and
Switzerland [1], that the application of all safeguard measures at issue in this dispute
is inconsistent with the requirements of Article XIX:1(a) of the GATT 1994
and Article 3.1 of the Agreement on
Safeguards because "the United States failed to provide a
reasoned and adequate explanation demonstrating that 'unforeseen developments' had
resulted in increased imports causing serious injury to the relevant domestic
producers";
(b)
upholds the Panel's
conclusions, in the relevant sections of paragraph 11.2 of the Panel Reports,
that the application of the safeguard measures on imports of CCFRS, stainless
steel rod and hot-rolled bar is inconsistent with the requirements of
Articles 2.1 and 3.1 of the Agreement
on Safeguards because "the United States failed to provide a
reasoned and adequate explanation of how the facts supported its determination
with respect to 'increased imports'";
(c)
reverses the Panel's conclusions, in the
relevant sections of paragraph 11.2 of the Panel Reports, that the application
of the safeguard measures on imports of tin mill products and stainless steel
wire is inconsistent with Articles 2.1 and 3.1 of the Agreement on Safeguards
because "the United States failed to provide a reasoned and adequate
explanation of how the facts supported its determination with respect to
'increased imports', since the explanation given consisted of alternative
explanations partly departing from each other, which given the different
product bases, cannot be reconciled as a matter of substance"; and finds it unnecessary to complete
the analysis to decide whether the determination with respect to
"increased imports" for tin mill products and stainless steel wire is
consistent with Articles 2.1 and 3.1 of the
Agreement on Safeguards;
(d)
reverses the Panel's
conclusions, in the relevant sections of paragraph 11.2 of the Panel Reports,
that the application of the safeguard measures on imports of tin mill products
and stainless steel wire is inconsistent with Articles 2.1, 4.2(b), and 3.1 of
the Agreement on Safeguards
because "the United States
failed to provide a reasoned and adequate explanation of how the facts
supported its determination of a 'causal link' between any increased imports
and serious injury, since the explanation given consisted of alternative
explanations partly departing from each other, which given the different product
bases, cannot be reconciled as a matter of substance"; and finds it unnecessary to complete
the analysis to decide whether the determination with respect to a "causal
link" for tin mill products and stainless steel wire is consistent with
Articles 2.1, 4.2(b), and 3.1 of the Agreement
on Safeguards;
(e)
upholds the Panel's
conclusions, in the relevant sections of paragraph 11.2 of the Panel Reports,
that the application of all safeguard measures at issue in this dispute is
inconsistent with Articles 2.1 and 4.2 of the Agreement on Safeguards because "the United States
failed to comply with the requirement of 'parallelism' between the products for
which the conditions for safeguard measures had been established, and the
products which were subjected to the safeguard measure";
(f)
finds it unnecessary,
for purposes of resolving this dispute, to rule on whether the Panel was
correct in finding that, with respect to CCFRS, hot-rolled bar, cold-finished
bar, rebar, welded pipe, FFTJ, and stainless steel bar, the United States acted
inconsistently with Articles 2.1, 3.1 and 4.2(b) of the Agreement on Safeguards because the USITC report failed to
demonstrate the existence of a "causal link" between increased
imports from all sources and serious injury to the domestic industry, and
neither reverses nor upholds the Panel's findings on causation;
(g)
finds that the United States did not
substantiate the claim raised under Article 11 of the DSU;
(h)
finds that the Panel
satisfied its duty, under Article 12.7 of the DSU, to set out a "basic
rationale behind [its] findings" with respect to Article XIX:1(a) of the
GATT 1994; and
(i)
declines to rule on the conditional
appeals of the Complaining Parties relating to Articles 2.1, 4.1(c), 5.1, and
9.1 of the Agreement on Safeguards.
12.
The Appellate Body recommends
that the DSB request the United States to bring its safeguard measures, which
have been found in this Report, and in the Panel Reports as modified by this
Report, to be inconsistent with the Agreement
on Safeguards and the GATT 1994, into conformity with its obligations
under those Agreements.
Signed in the original
at Geneva this 23rd day of October 2003.
[1]In upholding claims on "unforeseen developments", the Panel refers to claims made by China, the European Communities, New Zealand, Norway, and Switzerland.