WTO Appellate Body largely upholds Panel report disapproving U.S. 2002 steel safeguard measures
The European Communities had asked the WTO to review the U.S. safeguard measures of March 20, 2002 on ten groupings of steel imports imposing tariff of up to 30%. The WTO convened the Panel in "United States - Definitive Safeguard Measures on Imports of Certain Steel Products" in June 2002. Less than two weeks later, the EU imposed additional duties on various U.S. products in Council Regulation No. 1031/2002. See 2003 International Law Update 117.
The Panel subsequently joined the complaints of Japan, Korea, China, Norway, Switzerland, New Zealand, and Brazil to the dispute. The complaining parties alleged violations of Articles 2, 3, 4, 5, 7, 8, 9 and 12 of the Agreement on Safeguards, Articles I, II, X, XIII, and XIX of GATT 1994, as well as Article XVI of the WTO Agreement.
The Panel issued its Report in July 2003, concluding that all 10 safeguard measures at issue were inconsistent with the Agreement on Safeguards and GATT 1994. In substance, the Panel found that the application of U.S. safeguards to certain steel products were inconsistent with the Agreement on Safeguards because the U.S. failed to provide a reasoned and adequate explanation for its findings of "increased imports" and "causal link," as well as for its alleged "parallelism" between the products for which the safeguard measures had been established and the products which were actually subjected to safeguard measures. In August 2003, the U.S. submitted its notice of appeal. See 2003 International Law Update 111.
The Appellate Body, inter alia, upholds the Panel's conclusion that the application of all safeguard measures at issue does not square with the requirements of Article XIX:1(a) of GATT 1994 and Article 3.1 of the Agreement on Safeguards. It explained that "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."
The appellate tribunal also upholds the Panel's conclusion that the application of safeguard measures to imports of carbon flat-rolled steel (CFRS), stainless steel rod and hot-rolled bar is incompatible with Articles 2.1 and 3.1 of the Agreement on Safeguards. Here, too, the tribunal believed that the U.S. failed to provide a "reasoned and adequate" accounting of the facts underlying its determinations.
The reviewing body further agrees with the Panel's conclusion that applying all the safeguard measures at issue conflicted with Articles 2.1 and 4.2 of the Agreement on Safeguards. Here, the U.S. failed to comply with the requirement of "parallelism" between the products for which the conditions on safeguard measures had been established, and the products that were subject to the safeguard measures.
On the other hand, the Appellate Body overrules the Panel's conclusion that the application of the safeguard measures to tin mill products and stainless steel wire is inconsistent with Articles 2.1 and 3.1 of the Agreement on Safeguards because of the alleged U.S. failure to provide a reasoned explanation.
The Body finds it unnecessary to decide whether the U.S. determination of "increased imports" for these products is consistent with Articles 2.1 and 3.1 of the Agreement on Safeguards. Similarly, the Appellate Body reverses the Panel on the need of reviewing the U.S. determination of a "causal link" for these products under Articles 2.1, 4.2(b), and 3.1 of the Agreement on Safeguards.
The Appellate Body, therefore, recommends that the U.S. bring its inconsistent safeguard measures into conformity with GATT 1994.
Citation: United States - Definitive Safeguard Measures on Imports of Certain Steel Products (AB-2003-3, WT/DS248/AB/R, as well as DS249, DS251, DS252, DS253, DS254, DS258, DS259) (10 November 2003); EU Press Release DP: IP/03/1003 of July 11, 2003. [Appellate Body Report is available on WTO website at “www.wto.org.”]
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