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Report of the Panel

WTO AND GATT CASES CITED IN THIS REPORT

Short titleFull case title and citation
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, p. 515
Argentina – Footwear (EC) Panel Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/R, adopted 12 January 2000, as modified by Appellate Body Report WT/DS121/AB/R, DSR 2000:II, p. 575
Argentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of Goods, WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted 26 January 2015
Argentina – Preserved Peaches Panel Report, Argentina – Definitive Safeguard Measure on Imports of Preserved Peaches, WT/DS238/R, adopted 15 April 2003, DSR 2003:III, p. 1037
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p. 3327
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR 2004:VI, p. 2739
Chile – Price Band System Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/R, adopted 23 October 2002, as modified by Appellate Body Report WT/DS207AB/R, DSR 2002:VIII, p. 3127
Dominican Republic – Safeguard Measures Panel Report, Dominican Republic – Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric, WT/DS415/R, WT/DS416/R, WT/DS417/R, WT/DS418/R, and Add.1, adopted 22 February 2012, DSR 2012:XIII, p. 6775
EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) Appellate Body Reports, European Communities – Regime for the Importation, Sale and Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by Ecuador,WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 / European Communities – Regime for the Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of the DSU by the United States, WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008, DSR 2008:XVIII, p. 7165
EC – IT Products Panel Reports, European Communities and its member States – Tariff Treatment of Certain Information Technology Products, WT/DS375/R / WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, p. 9
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3
Korea – Dairy Panel Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/R and Corr.1, adopted 12 January 2000, as modified by Appellate Body Report WT/DS98/AB/R, DSR 2000:I, p. 49
Mexico – Anti‑Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti‑Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Taxes on Soft Drinks Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/R, adopted 24 March 2006, as modified by Appellate Body Report WT/DS308/AB/R, DSR 2006:I, p. 43
US – Cotton Yarn Appellate Body Report, United States –Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan, WT/DS192/AB/R, adopted 5 November 2001, DSR 2001:XII, p. 6027
US – Lamb Appellate Body Report, United States –Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p. 4051
US – Lamb Panel Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/R, WT/DS178/R, adopted 16 May 2001, as modified by Appellate Body Report WT/DS177/AB/R, WT/DS178/AB/R, DSR 2001:IX, p. 4107
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, p. 1403
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, 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, adopted 10 December 2003, DSR 2003:VII, p. 3117
US – Steel Safeguards Panel Reports, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/R / WT/DS249/R / WT/DS251/R / WT/DS252/R / WT/DS253/R / WT/DS254/R / WT/DS258/R / WT/DS259/R / and Corr.1, adopted 10 December 2003, as modified by Appellate Body Report 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, DSR 2003:VIII, p. 3273
US – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted 13 June 2012, DSR 2012:IV, p. 1837
US – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted 5 October 2011, DSR 2011:IX, p. 4811
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717
US – Wheat Gluten Panel Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/R, adopted 19 January 2001, as modified by Appellate Body Report WT/DS166/AB/R, DSR 2001:III, p. 779
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323

ABBREVIATIONS

AbbreviationDescription
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
BCI Business Confidential Information
Commission The Interdepartmental Commission on Foreign Trade of Ukraine
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
Key Findings Key Findings of the Ministry of Economic Development and Trade of Ukraine Based on Special investigation on Imports of Motors Cars to Ukraine Regardless of the Country of Origin and Export
Ministry The Ministry of Economic Development and Trade of Ukraine
Notice of 14 March 2013 Notice of Imposition of Safeguard Measures on Imports of Motor Cars to Ukraine Regardless of Country of Origin and Export, as published in the Uryadovyi Kuryer No. 48 of 14 March 2013
SCM Agreement Agreement on Subsidies and Countervailing Measures
Safeguards Law Ukraine's Law on Application of Safeguard Measures Against Imports to Ukraine, 22 December 1998, No. 332-XIV
The Shorter Oxford Dictionary (1993) New Shorter Oxford English Dictionary, 1993 (4th edition), Volumes 1 and 2
The Shorter Oxford Dictionary (2002) New Shorter Oxford English Dictionary, 2002 (5th edition), Volumes 1 and 2
The Shorter Oxford Dictionary (2007) New Shorter Oxford English Dictionary, 2007 (6th edition), Volumes 1 and 2
WTO World Trade Organization
WTO Agreement Marrakesh Agreement Establishing the WTO

1 INTRODUCTION

1.1 COMPLAINT BY JAPAN

1.1.
On 30 October 2013, Japan requested consultations with Ukraine pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Dispute ("DSU"), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("the GATT 1994") and Article 14 of the Agreement on Safeguards regarding the definitive safeguard measure1 imposed by Ukraine on imports of certain passenger cars and the investigation that led to the imposition of this measure.2 The European Union and the Russian Federation requested on 13 and 14 November 2013, respectively, to join the consultations pursuant to Article 4.11 of the DSU.3 On 29 November 2013, Ukraine informed the DSB that it had accepted the requests of the European Union and the Russian Federation to join the consultations.4
1.2.
Consultations were held on 29 November 2013 and 21 January 2014, but failed to resolve the dispute.

1.2 PANEL ESTABLISHMENT AND COMPOSITION

1.3.
At its meeting on 26 March 2014, the DSB established a panel pursuant to the request of Japan in document WT/DS468/5, in accordance with Article 6 of the DSU.5
1.4.
The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by Japan in document WT/DS468/5 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.6

1.5.
On 10 June 2014, Japan requested the Director-General to determine the composition of the Panel, pursuant to Article 8.7 of the DSU. This paragraph provides:

If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.

1.6.
On 20 June 2014, the Director-General accordingly composed the Panel as follows:

Chairperson: Mr William Davey

Members: Mr Felipe Hees

Mr Chang-fa Lo

1.7.
Australia, the European Union, India, Korea, the Russian Federation, Turkey and the United States have reserved their rights to participate in the Panel proceedings as third parties.

1.3 PANEL PROCEEDINGS

1.3.1 General

1.8.
After consultations with the parties, the Panel adopted its Working Procedures7 and timetable on 29 July 2014.
1.9.
The Panel held a first substantive meeting with the parties on 29 and 30 September 2014. A session with the third parties took place on 30 September 2014. The Panel held a second substantive meeting with the parties on 17 and 18 November 2014. On 5 December 2014, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 12 February 2015. The Panel issued its Final Report to the parties on 18 March 2015.

1.3.2 Working procedures on BCI

1.10.
At Ukraine's request and after consultations with both parties, the Panel adopted, on 8 August 2014, additional procedures for the protection of BCI.8

2 FACTUAL ASPECTS

2.1 THE MEASURE AT ISSUE

2.1.
This dispute concerns the definitive safeguard measure imposed by Ukraine on imports of certain passenger cars to Ukraine and the investigation that led to the imposition of this measure.

2.2 OTHER FACTUAL ASPECTS

2.2.
Further to a complaint lodged by the Association of Ukrainian Vehicle Manufacturers "Ukravtoprom" on behalf of three Ukrainian automobile manufacturers (VO KrASZ LLC, ZAZ CJSC, Eurocar CJSC), Ukraine's Interdepartmental Commission on Foreign Trade adopted, on 30 June 2011, Decision No. SP-259/2011/4402-27 on the initiation and conduct of the safeguard investigation on imports of motor cars to Ukraine, regardless of country of origin and export.
2.3.
The period of investigation covered three years, namely 2008-2010, with an additional assessment of certain factors during the first half of 2011.
2.4.
On 2 July 2011, the safeguard investigation was formally initiated following publication of the Commission's decision of 30 June in the Uryadovyi Kuryer No. 118 of 2 July 2011. The investigation was carried out by the Ministry pursuant to Ukraine's Safeguards Law.
2.5.
On 13 July 2011, the initiation of the safeguard investigation was notified9 to the WTO pursuant to Article 12.1(a) of the Agreement on Safeguards.
2.6.
On 6 March 2012, the Commission approved Decision No. SP-272/2012/4423-08 to extend the safeguard investigation for an additional 60 days in accordance with Article 8 of the Safeguards Law. The notice concerning this decision was published in the official gazette of Ukraine, the Uryadovyi Kuryer, on 7 March 2012.
2.7.
On 11 April 2012, the Ministry circulated to Japan and several other exporting countries its Key Findings based on the results of the safeguard investigation. The Ministry proposed to impose safeguard measure in the form of a safeguard duty at a level of 6.46% for passenger cars with an engine volume of 1000cm3 - 1500cm3 and 15.1% for passenger cars with an engine volume of 1500cm3 - 2200cm3.
2.8.
On 28 April 2012, the Commission took Decision No. SP-275/2012/4423-08 on Imposition of Safeguard Measures on Imports of Motor Cars into Ukraine Regardless of the Country of Origin or Export of 28 April 2012 (hereafter referred to as the "Decision"). A Notice of Imposition of Safeguard Measures on Imports of Motor Cars into Ukraine Regardless of the Country of Origin was published in the Uryadovyi Kuryer No. 48 on 14 March 2013. The safeguard measure in the form of a safeguard duty was imposed with the following rates: 6.46% for passenger cars with an engine volume of 1000cm3 – 1500cm3 and 12.95% for passenger cars with an engine volume of 1500cm3 – 2200 cm3. The measure entered into force 30 days after its official publication for a duration of three years.
2.9.
According to Article 21 of the Safeguards Law, the above-mentioned safeguard measure was not applied to imports into Ukraine of the product concerned originating from the following countries – Members of the WTO: Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Congo, Djibouti, Gambia, Guinea, Guinea-Bissau, Haiti, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Senegal, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda and Zambia.
2.10.
On 21 March 2013, Ukraine submitted to the WTO a notification pursuant to Article 12.1(b) of the Agreement on Safeguards on finding a serious injury or threat thereof caused by increased imports, and pursuant to Article 12.1(c) and footnote 2 of Article 9 of the Agreement on Safeguards.10
2.11.
By Decision No. SP-306/2014/4423-06 of 12 February 2014, the Commission decided to progressively liberalize the safeguard measure in accordance with the following schedule:

a. For cars with a cylinder capacity exceeding 1000 cm3 but not exceeding 1500 cm3, classified under UKTZED11 code of 8703 22 10 00:

i. In 12 months from the day of applying the measure: 4.31%

ii. In 24 months from the day of applying the measure: 2.15%.

b. For cars with a cylinder capacity exceeding 1500 cm3 but not exceeding 2200 cm3, classified under UKTZED code of 8703 23 19 10:

i. In 12 months from the day of applying the measure: 8.63%

ii. In 24 months from the day of applying the measure: 4.32%.

2.12.
A Notice concerning this decision was published in the Uryadovyi Kuryer, No. 57 of 28 March 2014. The decision on liberalization entered into force on the date of its publication.
2.13.
This decision was notified to the Committee on Safeguards on 28 March 2014.12

3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

3.1.
Japan requests that the Panel:

a. find that the safeguard measure adopted by Ukraine is inconsistent with its obligations under the Agreement on Safeguards and the GATT 1994 and, in particular, with:

i. Articles 3.1 and 4.2(c) of the Agreement on Safeguards, because Ukraine failed to publish a report setting forth its findings and reasoned conclusions reached on all pertinent issues of fact and law and a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined;

ii. Article 3.1 of the Agreement on Safeguards, because Ukraine failed to conduct a proper investigation that includes reasonable public notice to all interested parties and the opportunities for them to present evidence and their views;

iii. Article XIX:1(a) of the GATT 1994 and Articles 3.1, 4.2(c) and 11.1(a) of the Agreement on Safeguards, because Ukraine failed to demonstrate the existence of any "unforeseen developments"; failed to demonstrate a logical connection between the increase in imports and an "unforeseen development"; and failed to provide reasoned and adequate findings and conclusions with regard to an "unforeseen development";

iv. Article XIX:1(a) of the GATT 1994 and Articles 3.1, 4.2(c) and 11.1(a) of the Agreement on Safeguards, because Ukraine failed to demonstrate and evaluate the effect of the obligations incurred under the GATT 1994 and how that effect has resulted in the increase in imports; and failed to provide reasoned and adequate findings and conclusions with regard to the alleged effect of obligations incurred under the GATT 1994;

v. Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.2(a), 4.2(c) and 11.1(a) of the Agreement on Safeguards, because Ukraine failed to demonstrate that the increase in imports was the result of unforeseen developments and of the effect of obligations incurred under the GATT 1994; failed to establish an increase in imports in a manner consistent with Article XIX:1(a) of the GATT 1994 and Articles 2.1 and 4.2(a) of the Agreement on Safeguards; and failed to provide reasoned and adequate findings and conclusions with regard to the increase in imports;

vi. Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.2(a), 4.2(b), 4.2(c) and 11.1(a) of the Agreement on Safeguards, because Ukraine failed to examine all relevant injury factors; and failed to provide reasoned and adequate findings and conclusions of how the facts support its determination of serious injury or threat of serious injury;

vii. Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.2(a), 4.2(b), 4.2(c) and 11.1(a) of the Agreement on Safeguards, because Ukraine failed to demonstrate the existence of a causal link between the alleged increased imports and the alleged serious injury or threat thereof; failed to make a proper non-attribution analysis; and failed to provide reasoned and adequate findings and conclusions regarding the existence of a causal link between the increased imports and the alleged serious injury or threat of injury and non-attribution of other factors;

viii. Article XIX:1(a) of the GATT 1994 and Articles 3.1, 4.2(c), 5.1, 7.1, 7.4 and 11.1(a) of the Agreement on Safeguards, because Ukraine failed to apply the safeguard measure "only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment"; failed to progressively liberalize the safeguard measure by submitting a relevant timetable for progressive liberalization; and failed to provide reasoned and adequate findings and conclusions as to why the measure is necessary to prevent or remedy the alleged serious injury;

ix. Article II:1(b) of the GATT 1994, because Ukraine imposes duties which are in excess of those set forth in its schedule through the unlawful safeguard measure at issue;

x. Articles 12.1 and 12.2 of the Agreement on Safeguards, because Ukraine did not notify immediately the Committee on Safeguards upon initiating the safeguard investigation, making a finding of serious injury and taking a decision to apply safeguard measures and because the initial notification made by Ukraine did not include "all pertinent information" as required by Article 12.2 of the Agreement on Safeguards;

xi. Article 12.3 of the Agreement on Safeguards, because Ukraine did not provide adequate opportunities for prior consultations on the proposed safeguard measure and because the consultations held in April 2012 did not fulfil the requirements laid down in Article 12.3 of the Agreement on Safeguards;

xii. Article 12.5 of the Agreement on Safeguards, because Ukraine did not notify immediately to the Council for Trade in Goods the results of any consultations referred to in Article 12 of the Agreement on Safeguards;

xiii. Article 8.1 of the Agreement on Safeguards, because Ukraine did not endeavour to maintain a substantially equivalent level of concessions and other obligations to that existing between Ukraine and Japan under the GATT 1994, in accordance with Article 12.3 of the Agreement;

b. recommend that the DSB, pursuant to Article 19.1 of the DSU, requests Ukraine to bring its measure into conformity with the relevant provisions of the Agreement on Safeguards and the GATT 1994; and

c. suggest, pursuant to the second sentence of Article 19.1 of the DSU, that Ukraine revoke its safeguard measure.

3.2.
Ukraine requests that the Panel reject all of Japan's claims in this dispute in their entirety.

4 ARGUMENTS OF THE PARTIES

4.1.
The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 19 of the Working Procedures adopted by the Panel (see Annexes B-1 and B-2).

5 ARGUMENTS OF THE THIRD PARTIES

5.1.
The arguments of Korea are reflected in its oral statement, while the arguments of Australia, the European Union, Turkey and the United States are reflected in their executive summaries, provided in accordance with paragraph 20 of the Working Procedures adopted by the Panel (see Annexes C-1, C-2, …). India and the Russian Federation did not submit written or oral arguments to the Panel.

6 INTERIM REVIEW

6.1.
On 12 February 2015, the Panel submitted its Interim Report to the parties. On 24 February 2015, Japan and Ukraine each submitted written requests for the review of precise aspects of the Interim Report and comments. Neither party requested an interim review meeting. On 3 March 2015, Japan submitted comments on Ukraine's requests for review and comments. Ukraine submitted no comments on Japan's requests for review and comments.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the Panel's response to the parties' requests made at the interim review stage. The Panel modified aspects of its Report in the light of the parties' comments where it considered it appropriate, as explained below. References in this section to other sections, paragraph numbers and footnotes relate to the Interim Report.
6.3.
In addition to the modifications specified below, the Panel also corrected a number of typographical and other non-substantive errors throughout the Report, including those identified by the parties.
6.4.
In order to facilitate understanding of the interim review comments and changes made, the following section is structured to follow the organization of the findings section of this Report (Section 7), with the review requests of the parties, and their comments, addressed sequentially, according to the paragraph numbers that attracted comments.

6.1 PRELIMINARY MATTERS

6.5.
Regarding paragraph 3.1, Japan notes that the Panel decided to use the term "safeguard measure" in singular form throughout the Interim Report. However, Japan argues that, for the purpose of describing Japan's claim at paragraph 3.1, the term "safeguard measure" should appear in the plural.
6.6.
The Panel recalls that its preference to use the term "safeguard measure" in the singular form is discussed and explained in detail at footnote 18. For simplicity and consistency, we also prefer to use one single form throughout our Report. Nevertheless, in response to Japan's comment we moved footnote 18 to paragraph 1.1, where the term "safeguard measure" appears for the first time in the Report.
6.7.
Regarding paragraph 7.6, Japan requests the Panel to make one change concerning the date of the publication of Decision No. SP-259/2011/4402-27 and another concerning the use of one word in the description of the product concerned.
6.8.
The Panel made appropriate changes to the first sentence and bullet points (a) and (b) of paragraph 7.6.
6.9.
Regarding paragraph 7.15, numeral viii, Japan suggests using the same terms that are used in paragraph 3.1, numeral viii, including the phrase "by submitting a relevant timetable for progressive liberalization", which is missing from paragraph 7.15.
6.10.
The Panel made the requested changes.
6.11.
Regarding Section 7.1.5, and in particular paragraphs 7.29 to 7.37, Ukraine comments that it "maintains" its position regarding whether the Key Findings are a part of the published report of the Ministry. Ukraine submits that there is no reason to think that publication in the official newspaper Uryadovyi Kuryer is the only legally accepted method of publication provided by Ukraine's Safeguards Law. Ukraine adds that the Uryadovyi Kuryer is reserved only for notices about the Commission decisions. Moreover, Ukraine contends that the Key Findings were provided to all interested WTO Members and were therefore a part of the public record of the investigation and could have been made available by the Ministry upon a written request. Ukraine makes no specific request for a change.
6.12.
Japan responds that the Panel has already dismissed Ukraine's arguments with regard to the Key Findings at paragraph 7.36. According to Japan, Ukraine's comments do not call for any modification of the Panel's findings in Section 7.1.5.
6.13.
The Panel notes that paragraph 7.36 addresses this issue in detail. Even if it were correct, as Ukraine now suggests, that under the domestic law of Ukraine the Key Findings could not be published in the Uryadovyi Kuryer, this does not demonstrate that Ukraine met its obligation under the Agreement on Safeguards to publish them. While we therefore do not change our finding in this regard, in view of Ukraine's argument about the Uryadovyi Kuryer we deleted the reference to Ukraine's legal requirements in the fourth sentence of paragraph 7.36.

6.2 CLAIMS RELATING TO UNFORESEEN DEVELOPMENTS AND THE EFFECT OF THE OBLIGATIONS INCURRED UNDER THE GATT 1994

6.14.
Regarding Section 7.2, Ukraine comments that it maintains its position that the unforeseen developments in the present case consisted of the global financial and economic crisis, and not the different multiple factors cited by the Panel in this section. Ukraine makes no specific request for a change.
6.15.
Japan responds by stating that Ukraine's comments should be dismissed since they are essentially a repetition of the arguments already presented by Ukraine throughout the panel proceedings and were dismissed by the Panel.
6.16.
The Panel made no change, since the "different multiple factors" referred to by Ukraine have been identified by Ukraine itself during the course of the proceedings.

6.3 CLAIMS RELATING TO INCREASED IMPORTS

6.17.
Regarding paragraph 7,194, Japan suggests that the Panel insert in the second sentence of the paragraph one of its arguments so as to fully reflect Japan's position.
6.18.
The Panel made the requested change.
6.19.
Regarding Section 7.3.1.1, and in particular paragraphs 7,145 and 7,147 concerning the issue of the "significance" of the relative increase in imports, Ukraine comments that fully addressing the requirement to establish the "significance" of the increase in imports could result in a breach of the confidentiality obligations under Article 3.2 of the Agreement on Safeguards referred to in Ukraine's submissions to the Panel. In particular, Ukraine considers that providing the precise figures of the original ratio between domestic production and imports could make the confidential information concerning domestic production easily accessible. Ukraine makes no specific request for a change.
6.20.
Japan submits that Ukraine's comments should be dismissed. According to Japan, Ukraine does not challenge the numbers provided by the Panel in Section 7.3.1.1, but instead repeats its arguments concerning confidentiality of the data on imports and domestic production. Japan argues that the Panel has already taken into account these arguments, as reflected in footnote 142.
6.21.
The Panel recalls that at paragraphs 7,147-7.148 it determined that the competent authorities have not demonstrated, through reasoned explanations, that the relative increase was significant enough. Indeed, in the Notice of 14 March 2013, the competent authorities did not even characterize the relative increase at issue as "significant". At paragraph 7,147 we further observed that "[w]ithout additional information or relevant explanations" (emphasis added) the reference to the 37.9% increase is not sufficient by itself to demonstrate the required "significance" and we explained our view. Thus, we did not say, and do not wish to imply that Ukraine could only establish the significance of the relative increase by revealing confidential information in the determination. Nevertheless, in view of Ukraine's comment we added some clarification at the end of paragraph 7,147.

6.4 CLAIMS RELATING TO THREAT OF SERIOUS INJURY

6.22.
Regarding Section 7.4.1.1, Ukraine raises a concern that "fully adhering to the Panel's recommendations on the analysis of the increased imports may require violating the regulations of Article 3.2 of the Agreement [on Safeguards]". According to Ukraine, publication of information regarding the level of the market share of increased imports or the rate and amount of the increased imports risks revealing information claimed to be confidential by the domestic industry. However, Ukraine makes no specific request for any change to this section.
6.23.
Japan notes that Section 7.4.1.1 deals with a different issue. Furthermore, Japan notes that the Panel has already taken Ukraine's arguments concerning confidentiality into consideration, in particular at paragraph 7,251.
6.24.
The Panel notes that Ukraine's concern relates to Section 7.4.1.3. In Section 7.4.1.3, we are not suggesting that confidential information must be disclosed in order to make a finding of threat of serious injury consistent with the Agreement on Safeguards. As provided for in Article 3.2 itself, it is usually possible to provide a meaningful summary of confidential information that does not conflict with the confidentiality requirement under Article 3.2. An analysis and determination based on such a non-confidential summary may well be sufficient to demonstrate that the requirements of the Agreement on Safeguards have been satisfied.13
6.25.
As regards the amounts of the increase, Japan correctly points out that this issue is already addressed at paragraph 7,251. As concerns the rate of the increased imports, we fail to see how our findings would or could require a breach of the confidentiality obligation imposed by Article 3.2 on the part of the Ukrainian competent authorities. As we note at paragraph 7,251, the Notice itself refers to the 71% absolute decrease in imports and the 38% relative increase in imports, so Ukraine's competent authorities did not consider this information to be confidential.
6.26.
Concerning the "share of the domestic market taken by the increased imports", we have reviewed paragraph 7,249 in the light of Ukraine's comment and found it appropriate, for greater clarity and completeness, to provide some further elaboration in that paragraph and to insert two additional paragraphs.

6.5 CLAIMS RELATING TO CAUSATION

6.27.
Regarding paragraph 7,291, Japan requests that the word "only" be deleted from the first sentence of the paragraph to avoid suggesting that in Japan's view, the coincidence in time between the increase of imports and the impairment of the domestic industry is not of importance at all. Japan notes that this was not its position.
6.28.
The Panel made the requested change to paragraph 7,291.

6.6 CLAIMS RELATING TO THE APPLICATION, DURATION, AND LIBERALIZATION OF THE SAFEGUARD MEASURE AT ISSUE

6.29.
Regarding paragraphs 7,355 to 7,359, Japan submits that, contrary to what is stated in the Panel's findings, it did not argue that the failure to "notify" a timetable for progressive liberalization under Article 12.2 necessarily results in an inconsistency with Article 7.4.14 Japan maintains that it cannot be excluded that, although a Member does not notify the timetable for progressive liberalization as required by Article 12.2, it nonetheless complies with Article 7.4. Japan notes that what it argued is that Article 12.2 confirms that the requirement included in Article 7.4 to provide for progressive liberalization has to be satisfied when the safeguard measure is applied. For these reasons, Japan requests that the Panel modify paragraphs 7,355 to 7,359 so that they correctly reflect its arguments.
6.30.
The Panel made appropriate changes to paragraphs 7,355 to 7,359 to reflect more clearly that Japan's arguments relate to a failure to provide a timetable for progressive liberalization before the measure was applied rather than more narrowly only to a failure to notify such a timetable before the measure was applied.
6.31.
Regarding paragraph 7,372, Japan submits that it did not argue that "failure to notify a timetable as required by Articles 12.1 and 12.2 establishes, by itself, that a Member has acted inconsistently with Articles 5.1 and 7.1"(emphasis added). Japan thus suggests that this sentence be corrected to accurately reflect its arguments.
6.32.
The Panel made the requested change to more accurately reflect Japan's argument.
6.33.
Regarding paragraphs 7,360 to 7,363, where the Panel addresses "whether Ukraine has acted inconsistently with Article 7.4 because, as of the date of establishment of this panel, it had failed to liberalize the safeguard measures", Japan argues that the Panel does not discuss the argument raised by Japan in paragraphs 56 and 57 of its comments on Ukraine's responses to the questions from the Panel about whether the Panel can review a measure which did not exist at the time of the establishment of the panel. Japan makes no specific request for a change.
6.34.
The Panel recalls that on 12 February 2014, the competent authorities adopted Decision No. SP-306/2014/4423-06 that provided for the progressive liberalization of the safeguard measure at issue. Although that decision was published and entered into force on 28 March 2014, which was two days after the date of establishment of this Panel, the decision was taken before the date of establishment of this Panel. We further note that Japan at paragraphs 56 and 57 of its comments on Ukraine's responses to questions from the Panel also argues that actions by a responding party subsequent to the establishment of a panel can be taken into account as evidence to review the WTO-consistency of the measure at issue. Nevertheless, in view of Japan's comment we deleted the first sentence of paragraph 7,362.
6.35.
Regarding Section 7.6.1, Ukraine recognizes the arguments of the Panel concerning the application and liberalization of its safeguard measure under Articles 5.1, 7.1, and 7.4. Ukraine strongly agrees that the obligations under Articles 7.4 and 12.2 are closely related but not similar. Ukraine further comments, in relation to Section 7.6.2, that Article 7.4, which provides for the obligation to progressively liberalize a safeguard measure, is dissimilar to and independent from the obligations imposed by Articles 5.1 and 7.1, which concern the extent of the safeguard measure. Ukraine makes no specific request for a change.
6.36.
Japan submits that it fails to see what Ukraine is requesting the Panel to review, since Ukraine's comments express its agreement with the Panel's findings.
6.37.
The Panel made no change in response to Ukraine's comment.

6.7 CLAIMS UNDER ARTICLE II:1(B) OF THE GATT 1994

6.38.
Regarding paragraph 7,393, Japan considers that addressing its claim under Article II:1(b) of the GATT 1994 is important since that Article constitutes the fundamental obligation that Ukraine has violated by invoking Article XIX and the Agreement on Safeguards. Japan further argues that any compliance action by Ukraine must be fully consistent with this fundamental obligation. Japan makes no specific request for a change.
6.39.
The Panel did not modify paragraph 7,393. We are not convinced that a finding on the consistency of Ukraine's safeguard measure with Article II:1(b) is necessary to enable the DSB to make sufficiently precise recommendations and rulings. In most panel reports dealing with disputes concerning safeguard measures, the complaining party either did not make a claim under Article II:1(b)15 or made a claim under Article II:1(b) in the alternative to claims under Article XIX and the Agreement on Safeguards.16 On one occasion, the complaining party made a claim under Article II:1(b) and the panel exercised judicial economy in respect of that claim, since a finding was not considered necessary to enable the DSB to make sufficiently precise recommendations and rulings.17

6.8 CLAIMS RELATING TO THE CONDUCT OF THE INVESTIGATION AND THE INVESTIGATION REPORT

6.40.
Regarding paragraph 7,410, Japan requests that the Panel delete the reference to the absence of specific concerns raised by Japan in the last sentence of that paragraph. Japan argues that it did raise specific concerns in its submissions to the Panel. Japan notes that in the course of the proceedings, it pointed out that the competent authorities had provided to Japan only very limited information including in the Notice of Initiation, which led Japan to submit only brief general observations. Furthermore, Japan recalls its statement that neither the Notice of Initiation nor any other document specifies the starting date of the period of investigation.
6.41.
The Panel deleted the reference in question from the last sentence of paragraph 7,410. After reviewing paragraphs 7,404 to 7,412 in response to Japan's comment, we also deleted the third and fourth sentence of paragraph 7,411, since they addressed a broader argument than the one advanced by Japan.
6.42.
Regarding paragraph 7,431, Japan requests that the Panel add a sentence after the third sentence to refer to its response to a question from the Panel.
6.43.
The Panel added the proposed sentence to paragraph 7,431, which summarizes Japan's arguments.
6.44.
Regarding Sections 7.8.1 and 7.8.2, Ukraine recognizes the conclusions of the Panel regarding the procedural obligations under Articles 3.1 and 4.2. Ukraine maintains that its Ministry provided all interested parties, including Japan, with the required information and therefore adhered to the requirement concerning reasonable public notice. Ukraine fully agrees that no information in addition to that provided during the investigation and in the relevant notices and Key Findings needed to be made available to the interested parties. Furthermore, Ukraine observes that the interested parties were given full access to all non-confidential information available to the Ministry (including the arguments and presentations of the other interested parties).
6.45.
Japan submits that, contrary to Ukraine's comments, the Panel did not find that no information in addition to that provided during the investigation and in the relevant notices and Key Findings needed to be made available to the interested parties. Japan further comments that the Panel did not find that the interested parties were given full access to all non-confidential information available to the Ministry.
6.46.
The Panel made no change in response to Ukraine's comment.

6.9 CLAIMS RELATING TO NOTIFICATIONS, PRIOR CONSULTATIONS, AND THE LEVEL OF CONCESSIONS

6.47.
Regarding footnote 506, Japan requests that the Panel add a reference to Japan's response to Panel question No. 106, as the arguments already referenced in footnote 506 were reiterated in that response.
6.48.
The Panel made the appropriate changes in footnote 506.
6.49.
Regarding Section 7.9.1.1.1, Ukraine comments that it did not have all the relevant documents available in one of the WTO official languages and that an additional effort was therefore required of it to translate these documents when making notifications to the Committee on Safeguards. Ukraine points out that this is especially true for a newly-acceded Member with limited resources. Ukraine further comments that this factor has to be taken into proper consideration in the Panel's conclusion regarding the immediacy of the notification under Article 12.1(a). Ukraine makes no specific request for a change.
6.50.
Japan notes that Ukraine merely reiterates the arguments it presented in its submissions. Japan is of the view that there is no need to consider these arguments further, since the Panel has already addressed them.
6.51.
The Panel made no change in response to Ukraine's comment. Section 7.9.1.1.1 already takes appropriate account of the need to translate relevant documents into an official language of the WTO.
6.52.
Regarding Section 7.9.1.1.2, Ukraine comments that the decision on the actual application of the safeguard measure and the finalization of the Commission's conclusions on the threat of injury caused by increased imports occurred on 14 March 2013 and not on 28 April 2012. Ukraine submits that no position could be considered official and could be publicly disseminated before the Notice of Imposition was published on 14 March 2013. Ukraine states that it therefore agrees with the position of the Panel concerning the notification under Article 12.1(c). At the same time, Ukraine maintains its view that its joint notification under Articles 12.1(b) and 12.1(c) was made immediately upon finding a threat of serious injury caused by increased imports and taking a decision to apply the safeguard measure. Ukraine makes no specific request for a change.
6.53.
Japan responds that the Panel has already dismissed the arguments that Ukraine reiterates in its comments and that they should therefore not be taken into account.
6.54.
The Panel made no change in response to Ukraine's comment. Section 7.9.1.1.2 already takes appropriate account of the arguments presented by Ukraine.
6.55.
Regarding Section 7.9.2, Ukraine "maintains" that adequate opportunity for prior consultations was provided to interested Members as the Ukrainian competent authorities provided them with all necessary information. However, Ukraine makes no specific request for a change.
6.56.
Japan notes that Ukraine's comments in this regard relate to Section 7.9.3, not 7.9.2. Furthermore, Japan argues that Ukraine's comments should be dismissed because they are no different from Ukraine's arguments made during the panel proceedings and have been rejected by the Panel.
6.57.
The Panel agrees that Ukraine's comments relate to Section 7.9.3. In the absence of any specific request from Ukraine, we made no change to this section.
6.58.
Regarding paragraph 7,533, Japan submits that the Panel's argument summary does not fully reflect its submissions. Japan requests the Panel to add an additional sentence after the first sentence of this paragraph.
6.59.
The Panel modified paragraph 7,533 to better reflect Japan's position.
6.60.
Regarding Section 7.9.5, Ukraine "maintains" that since the consultations with WTO Members, including Japan, were meaningful and an adequate opportunity for prior consultations was provided to interested Members pursuant to Article 12.3, Ukraine did endeavour to maintain a substantially equivalent level of concessions and other obligations to that existing under the GATT 1994 between it and the exporting Members which would be affected by the safeguard measure. Ukraine makes no specific request for a change to this section.
6.61.
Japan requests the Panel to dismiss these arguments because the Panel has already fully addressed Ukraine's arguments in Sections 7.9.3 and 7.9.4 of the Interim Report.
6.62.
The Panel made no modifications to this section, since Ukraine merely reiterates a position that was considered and rejected by the Panel, for the reasons set out in Section 7.9.5.

6.10 CONCLUSIONS

6.63.
Ukraine in a concluding comment states that the Panel's Interim Report "denies the legal right of Ukraine to apply safeguard measures as a developing country when the underlying conditions are met".18 Ukraine makes no specific request for a change in this respect.
6.64.
The Panel notes that this was the first time in the context of these panel proceedings that Ukraine referred to itself as a developing country. The comment in question relates to the right to apply a safeguard measure. However, neither Article 9, which contains additional provisions concerning developing country Members, nor any other provision of the Agreement on Safeguards provides for special or differential treatment for developing country Members with regard to the conditions and circumstances under which a safeguard measure can be applied – all WTO Members are subject to the same requirements in this regard.

7 FINDINGS

7.1 PRELIMINARY MATTERS

7.1.
Before examining Japan's claims in the present dispute, the Panel will describe in more detail Ukraine's safeguard measure at issue and the underlying investigation. Next, we will go on to provide an overview of Japan's claims and describe the order in which we will carry out our assessment. We will then recall some general principles governing the standard of review applicable to disputes arising under the Agreement on Safeguards and the GATT 1994. Finally, we will consider which is the relevant Ukrainian document setting out supporting findings and conclusions by the Ukrainian competent authorities on the basis of which we will conduct our review.

7.1.1 The safeguard measure at issue

7.2.
The present dispute concerns a safeguard measure that Ukraine's competent authorities imposed in April 2013 for three years on imports of passenger cars from all sources, and the investigation that led to the imposition of the measure. More specifically, Japan's claims concern the following measures, and their amendments, replacements, implementing acts or any other related measure in connection with them:

a. Decision No. SP–259/2011/4402-27 of the Interdepartmental Commission on Foreign Trade of 30 June 2011 on the initiation and conducting of the investigation process as to import into Ukraine of motor cars19 irrespective of the country of origin and export, and the Notice concerning it;20

b. Decision No. SP-272/2012/4423-08 of the Interdepartmental Commission on Foreign Trade of 6 March 2012 whereby the duration of the investigation was extended by 60 days, and the Notice concerning it;21

c. Decision No. SP-275/2012/4423-08 of the Interdepartmental Commission on Foreign Trade of 28 April 2012 on the imposition of safeguard measures on imports of motor cars to Ukraine regardless of country of origin and export, and the Notice concerning it;22

d. Decision No. SP-288/2013/4423-06 of the Interdepartmental Commission on Foreign Trade of 11 April 2013 on the amendments to the Commission's decision No. SP-275/2012/4423-08 of 28 April 2012 on the application of safeguard measures on imports of cars in Ukraine regardless of their country of origin and export, and the Notice concerning it;23

e. Decision No. SP-306/2014/4423-06 of the Interdepartmental Commission on Foreign Trade of 12 February 2014 that provides for progressive liberalization of the measure, and the Notice concerning it.24

7.3.
The safeguard measure at issue applies to imports of the following products:

Motor cars and other motor vehicles principally designed for the transport of persons (category M1 – vehicles with no less than 4 wheels and no more than 8 sitting places except driver sitting place), with spark-ignition internal combustion engine and crank gear of a cylinder capacity exceeding 1000 cm3 but not exceeding 2200 cm3, new, classified under UKTZED25 codes 8703 22 10 00 and 8703 23 19 10.

7.4.
It takes the form of special customs duties imposed at different rates differentiated by engine volumes:

– for cars of a cylinder capacity exceeding 1000 cm3 but not exceeding 1500 cm3: 6.46%

– for cars of a cylinder capacity exceeding 1500 cm3 but not exceeding 2200 cm3: 12.95%.

7.5.
These special duty rates were subsequently liberalized in accordance with the following schedule:

- for cars with a cylinder capacity exceeding 1000 cm3 but not exceeding 1500 cm3, classified under UKTZED code of 8703 22 10 00:

i. In 12 months from the day of applying the measure (i.e. 14 March 2013): 4.31%

ii. In 24 months from the day of applying the measure (i.e. 14 March 2013): 2.15%.

- for cars with a cylinder capacity exceeding 1500 cm3 but not exceeding 2200 cm3, classified under UKTZED code of 8703 23 19 10:

i. In 12 months from the day of applying the measure (i.e. 14 March 2013): 8.63%

ii. In 24 months from the day of applying the measure (i.e. 14 March 2013): 4.32%.

7.1.2 Procedure carried out by the competent authorities26

7.6.
By Decision No. SP–259/2011/4402-27 of 30 June 2011 of the Interdepartmental Commission on Foreign Trade of Ukraine27, published in the official gazette Uryadovyi Kuryer on 2 July 2011, the Ministry of Economic Development and Trade of Ukraine initiated a safeguard investigation into:

a. Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars with spark-ignition internal combustion engine and crank gear of a cylinder capacity exceeding 1000 cm3 but not exceeding 1500 cm3, new, classified under UKTZED code 8703 22 10 00;

b. Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars with spark-ignition internal combustion engine and crank gear of a cylinder capacity exceeding 1500 cm3 but not exceeding 2200 cm3, new, classified under UKTZED code 8703 19 10 00.28

7.7.
The investigation was initiated following an application lodged by the Association of the Ukrainian Carmakers "UkrAvtoprom" on behalf of three Ukrainian automobile manufacturers.29 Ukraine notified this decision to the WTO Committee on Safeguards on 13 July 2011 and the notification was circulated to WTO Members on 15 July 2011.30
7.8.
The investigation period was established as of 1 January 2008 to 31 December 2010. During the course of the investigation, the competent authorities extended the duration of the investigation by 60 days by Decision No. SP-272/2012/4423-08 of 6 March 2012.31
7.9.
On 11 April 2012, Ukraine sent a letter to the Embassy of Japan in Ukraine inviting Japan to consultations.32 Attached to that letter was a document entitled "Key Findings of the Ministry of Economic Development and Trade of Ukraine Based on Special Investigation on Import of Motor Cars to Ukraine Regardless of Country of Origin and Export"33, in which the Ministry of Economic Development and Trade concluded that:

Given the foregoing and results of analysis of information obtained in the course of the safeguard investigation, the Ministry concludes that there is sufficient evidence and grounds for having the Commission to review the proposals concerning application of safeguard measures regarding the import of motor cars to Ukraine regardless of the country of origin and export, for a three-year period.

The safeguard measures shall be applied in the form of a special duty for the import of the above-mentioned products into Ukraine depending on engine volume: for those exceeding 1000 cm3, but not exceeding 1500 cm3– at the rate of 6.46%, and for those exceeding 1500 cm3, but not exceeding 2200 cm3 – at the rate of 15.1%.

Consultations between Ukraine and Japan took place in Kiev on 19 April 2012.

7.10.
On 28 April 2012, by Decision No. SP-275/2012/4423-08 of the Interdepartmental Commission on Foreign Trade, the competent authorities decided to impose a safeguard measure on imports of motor cars to Ukraine regardless of the country of origin or export.34
7.11.
On 14 March 2013, the Notice of Imposition of a safeguard measure was published in the official gazette.35 The Notice of Imposition provides in relevant part:

Taking all of this into account, the Commission has decided that:

- During the period of investigation, import of motor cars to Ukraine regardless of the country of origin and export increased relative to domestic production by the domestic industry, and that such increase took place under conditions and volume which threatened to cause serious injury to the domestic industry;

- The national interests of Ukraine require imposition of safeguard measures against such imports.

Therefore, pursuant to Article 16 of the [Safeguards Law of Ukraine], the Commission approved Decision No. SP-275/2012/4423-08 on 28 April 2012, according to which safeguard measures were imposed against imports of the Product to Ukraine regardless of the country of origin and export, which is defined as follows: Motor cars and other motor vehicles principally designed for the transportation of persons (category M1 – vehicles with no less than 4 wheels used to transport passengers and with no more than 8 sitting places except driver sitting place), with spark-ignition internal combustion engine and crank gear of a cylinder capacity exceeding 1000 cm3 but not exceeding 2200 cm3, new, classified under UKTZED codes 8703 22 10 00 and 8703 23 19 10.

Safeguard measures shall be imposed for 3 years in the form of a special duty applicable to imports into Ukraine of the above-mentioned commodities based on engine volume:

- 1000 cm3- 1500 cm3- 6.46%

- 1500 cm3- 2200 cm3- 12.95%.

According to Article 21 of the [Safeguards Law of Ukraine], the above-mentioned safeguard measures shall not apply to imports to Ukraine of the Product originating from the following countries – members of the WTO: Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Congo, Djibouti, Gambia, Guinea, Guinea-Bissau, Haiti, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Senegal, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda and Zambia.

The Commission's Decision shall enter into force 30 days after the official publication of this Notice.36

The aforementioned safeguard measure thus became effective as of 14 April 201337 for a period of 3 years.

7.12.
On 21 March 2013, Ukraine submitted to the WTO Committee on Safeguards a notification pursuant to Articles 12.1(b) and (c) of the Agreement on Safeguards and footnote 2 of Article 9 of the Agreement on Safeguards. The notification was circulated to WTO Members on 25 March 2013.38
7.13.
On 11 April 2013, the competent authorities, by Decision No. SP-288/2013/4423-06 "On amendments to the decision of the Interdepartmental Commission on International Trade No. SP-275/2012/4423-08 of 28 April 2012 on the application of safeguard measures on imports of cars in Ukraine regardless of their country of origin and export"39, suspended the safeguard measure from 20 April 2013 until 28 February 2014 for certain types of cars with hybrid propulsion, namely:

Motor cars and other motor vehicles principally designed for the transport of persons (category M1 – vehicles with no less than 4 wheels and no more than 8 sitting places except driver sitting place), with spark-ignition internal combustion engine and crank gear of a cylinder capacity exceeding 1000 cm3 but not exceeding 2200 cm3, new, classified under UKTZED codes 8703 22 10 00 and 8703 23 19 10 with hybrid power system (electric motor-driven wheels).

This decision was published on 20 April 2013 and notified to the WTO Committee on Safeguards on 20 May 2013.40

7.14.
On 12 February 2014, the competent authorities adopted Decision No. SP-306/2014/4423-06 that provides for progressive liberalization of the measure.41 This decision became effective on the date of its publication, i.e. on 28 March 2014, and was notified to the WTO Committee on Safeguards on the same day.42

7.1.3 Overview of claims and order of the Panel's analysis

7.15.
Japan set out the following claims in its request for the establishment of a panel:43

i. Ukraine acted inconsistently with Articles 3.1 and 4.2(c) of the Agreement on Safeguards because it failed to publish a report setting forth its findings and reasoned conclusions reached on all pertinent issues of fact and law and a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined;

ii. Ukraine acted inconsistently with Article 3.1 of the Agreement on Safeguards because it failed to conduct a proper investigation that includes reasonable public notice to all interested parties and the opportunities for them to present evidence and their views;

iii. Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994 and Articles 3.1, 4.2(c) and 11.1(a) of the Agreement on Safeguards because it failed to demonstrate the existence of any "unforeseen developments"; failed to demonstrate a logical connection between the increase in imports and the alleged "unforeseen developments"; and failed to provide reasoned and adequate findings and conclusions with regard to such "unforeseen developments";

iv. Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994 and Articles 3.1, 4.2(c) and 11.1(a) of the Agreement on Safeguards because it failed to demonstrate and evaluate the effect of the obligations incurred under the GATT 1994 and how that effect has resulted in the increase in imports; and failed to provide reasoned and adequate findings and conclusions with regard to the alleged effect of obligations incurred under the GATT 1994;

v. Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.2(a), 4.2(c) and 11.1(a) of the Agreement on Safeguards because it failed to demonstrate that the increase in imports was the result of unforeseen developments and of the effect of obligations incurred under the GATT 1994; failed to establish an increase in imports in a manner consistent with Article XIX:1(a) of the GATT 1994 and Articles 2.1 and 4.2(a) of the Agreement on Safeguards; and failed to provide reasoned and adequate findings and conclusions with regard to the increase in imports;

vi. Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.2(a), 4.2(b), 4.2(c) and 11.1(a) of the Agreement on Safeguards because it failed to examine all relevant factors and failed to provide reasoned and adequate findings and conclusions of how the facts support its determination of serious injury or threat of serious injury;

vii. Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.2(a), 4.2(b), 4.2(c) and 11.1(a) of the Agreement on Safeguards because it failed to demonstrate the existence of a causal link between the alleged increased imports and the alleged serious injury or threat thereof; failed to make a proper non-attribution analysis and failed to provide reasoned and adequate findings and conclusions regarding the existence of a causal link between the increased imports and the alleged injury or threat of injury and non-attribution of other factors;

viii. Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994 and Articles 3.1, 4.2(c), 5.1, 7.1, 7.4 and 11.1(a) of the Agreement on Safeguards because it has failed to apply the safeguard measure "only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment"; failed to progressively liberalize the safeguard measure by submitting a relevant timetable for progressive liberalization; and failed to provide reasoned and adequate findings and conclusions as to why the measure is necessary to prevent or remedy the alleged serious injury;

ix. Ukraine acted inconsistently with Article II:1(b) of the GATT 1994 because it imposed duties which are in excess of those set forth in its schedule through the unlawful safeguard measures at issue;

x. Ukraine acted inconsistently with Articles 12.1 and 12.2 of the Agreement on Safeguards because it did not notify immediately the Committee on Safeguards upon initiating the safeguard investigation, making a finding of serious injury and taking a decision to apply safeguard measures and because the initial notification made by Ukraine did not include "all pertinent information" as required by Article 12.2 of the Agreement on Safeguards;

xi. Ukraine acted inconsistently with Article 12.3 of the Agreement on Safeguards because it did not provide adequate opportunities for prior consultations on the proposed safeguard measures and because the consultations held in April 2012 did not fulfil the requirements laid down in Article 12.3 of the Agreement on Safeguards;

xii. Ukraine acted inconsistently with Article 12.5 of the Agreement on Safeguards because it did not notify immediately to the Council for Trade in Goods the results of any consultations referred to in Article 12 of the Agreement on Safeguards; and

xiii. Ukraine acted inconsistently with Article 8.1 of the Agreement on Safeguards because it did not endeavour to maintain a substantially equivalent level of concessions and other obligations to that existing between Ukraine and Japan under the GATT 1994, in accordance with Article 12.3 of the Agreement on Safeguards.

7.16.
Japan also requests the Panel to exercise its authority under the second sentence of Article 19.1 of the DSU to suggest ways in which Ukraine could implement the recommendations of the Panel. In particular, Japan requests the Panel to suggest that Ukraine revoke its definitive safeguard measure.44 Japan considers that in the present dispute, the size and number of errors made by the competent authorities during the safeguard investigation resulted in multiple inconsistencies with the Agreement on Safeguards and the GATT 1994, so that the only way that Ukraine could properly implement possible recommendations of the Panel is the revocation of its definitive safeguard measures.45
7.17.
Ukraine requests that all of Japan's claims be rejected.
7.18.
The Panel notes that under the Agreement on Safeguards and Article XIX of the GATT 1994, a Member wishing to impose a safeguard measure must comply with two main sets of requirements. The first comprises substantive requirements, including the circumstances and conditions46 that must be demonstrated to justify the application of a safeguard measure. Specifically, a Member must demonstrate that, as a result of unforeseen developments and of the effect of the obligations incurred under the GATT 1994, the product to be subjected to a safeguard measure is being imported into the territory of that Member in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry in that territory producing like or directly competitive products. The second comprises procedural requirements, including requirements to allow interested parties to present evidence and views, transparency requirements such as notifications to the WTO Committee on Safeguards, and procedural requirements to provide an opportunity for consultations to other Members.
7.19.
We observe that Japan has advanced claims relating to both substantive and procedural requirements. We will begin our assessment with the claims concerning the substantive requirements. Specifically, we will first examine Japan's claims relating to unforeseen developments and the effect of GATT 1994 obligations. We will then continue with the claims relating to the conditions, namely, increased imports, serious injury or threat thereof and the causal link between these two conditions for imposing a safeguard measure. Next, we will turn to the claims that concern, not the right to apply any safeguard measure, but the particulars of the safeguard measure actually imposed. These are the claims relating to the necessity of the safeguard measure at issue and its liberalization, as well as Article II:1(b) of the GATT 1994. After that, we will address the claims concerning the procedural requirements. This analysis will begin with the claims concerning the investigative process and the resulting investigation report. We will end with the claims concerning, or linked to, the notification and consultation requirements.
7.20.
In addressing these claims, we will make use, as appropriate, of the principle of judicial economy. According to the Appellate Body, this principle:

allows a panel to refrain from making multiple findings that the same measure is inconsistent with various provisions when a single, or a certain number of findings of inconsistency, would suffice to resolve the dispute." Thus, panels need address only those claims "which must be addressed in order to resolve the matter in issue in the dispute", and panels "may refrain from ruling on every claim as long as it does not lead to a 'partial resolution of the matter'." Nonetheless, the Appellate Body has cautioned that "[t]o provide only a partial resolution of the matter at issue would be false judicial economy", and that "[a] panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings 'in order to ensure effective resolution of disputes to the benefit of all Members.'47

7.21.
Accordingly, the Panel will not necessarily make findings on all claims put forward by Japan in this dispute.

7.1.4 Standard of review

7.22.
The Agreement on Safeguards is silent as to the standard of review to be applied by panels in reviewing the WTO-consistency of safeguard measures and the associated investigations. Previous panel and Appellate Body reports have established that the general standard of review contained in Article 11 of the DSU is applicable to disputes involving claims of violation of the Agreement on Safeguards and Article XIX of the GATT 1994.48
7.23.
Article 11 of the DSU requires a panel 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 relevant agreements.49 In US – Cotton Yarn, the Appellate Body examined the scope of this general rule regarding the standard of review applicable to disputes under the Agreement on Safeguards and summarized its views as follows:

panels must examine whether the competent authority has evaluated all relevant factors; they must assess whether the competent authority has examined all the pertinent facts and assessed whether an adequate explanation has been provided as to how those facts support the determination; and they must also consider whether the competent authority's explanation addresses fully the nature and complexities of the data and responds to other plausible interpretations of the data. However, panels must not conduct a de novo review of the evidence nor substitute their judgement for that of the competent authority.50

7.24.
As explained by the Appellate Body, the standard of review applicable to panels' examination of a competent authorities' determination involves neither a de novo review nor "total deference" to the competent authorities' determinations.51 Rather, a panel is required to assess whether the competent authorities have examined all the relevant facts and have provided a reasoned and adequate explanation as to how the facts support their determination.52 In US – Lamb, the Appellate Body stated that:

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.53

7.25.
We note that this standard of review was articulated by the Appellate Body in the context of a claim under Article 4.2(a) of the Agreement on Safeguards. However, the Appellate Body in US – Steel Safeguards made it clear that the same standard should be applied to other obligations under the Agreement on Safeguards as well as to the obligations in Article XIX of the GATT 1994.54
7.26.
A panel's assessment of whether the competent authorities have complied with their obligations under the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 should be based on the relevant report published by the authorities.55 Article 3.1, last sentence, requires the competent authorities to publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law. Moreover, Article 4.2(c) obliges the competent authorities to publish promptly, in accordance with the provisions of Article 3, a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined. The Appellate Body in US – Steel Safeguards stated in this respect that:

[i]t is precisely by 'setting forth findings and reasoned conclusions on all pertinent issues of fact and law', under Article 3.1, and by providing 'a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined', under Article 4.2(c), that competent authorities provide panels with the basis to 'make an objective assessment of the matter before it' in accordance with Article 11.56

The Appellate Body went on to conclude that:

the "reasoned conclusions" and "detailed analysis" as well as "a demonstration of the relevance of the factors examined" that are contained in the report of a competent authority, are the only bases on which a panel may assess whether a competent authority has complied with its obligations under the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994.57

7.27.
Accordingly, our examination of the competent authorities' determinations will be based on the report published by the competent authorities. With respect to the published report, the Appellate Body also observed that panels should not be "left to 'deduce for themselves' from the report of the competent authority the 'rationale for the determinations from the facts and data contained in the report of the competent authority'".58 Thus, the explanations contained in the report must be "explicit", "clear and unambiguous", and must not "merely imply or suggest an explanation".59 In case there is no reasoned and adequate explanation in the published report to support the competent authorities' determinations, "the panel has no option but to find that the competent authority has not performed the analysis correctly".60 This notably implies that reasoning, analysis and demonstrations provided after publication of the report – i.e. ex post explanations – are irrelevant and cannot be relied upon to remedy any deficiencies of the competent authorities' determinations.
7.28.
The Appellate Body further stated, in US – Tyres, that "a panel should examine whether the conclusions reached by the investigating authority are reasoned and adequate in the light of the evidence on the record and other plausible alternative explanations".61 Thus, for purposes of assessing whether the explanations provided in the published report are adequate, we will also take into account relevant evidence submitted to us from the record of the investigation and plausible alternative explanations for the developments relied upon by the competent authorities in making their determination.

7.1.5 Relevant Ukrainian documents

7.29.
The Panel now turns to the question of which documents comprise the competent authorities' "published report" within the meaning of Articles 3.1, last sentence, and 4.2(c). The last sentence of Article 3.1 provides:

The competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law.

Article 4.2(c) provides that:

The competent authorities shall publish promptly, in accordance with the provisions of Article 3, a detailed analysis of the case under investigation as well as a demonstration of the relevant of the factors examined.

7.30.
The verb "publish" is defined as "make generally known; declare or report openly; announce; disseminate (a creed or system)".62 We further note that the panel in Chile – Price Band System ascertained the meaning of the verb "publish" in Article 3.1, last sentence, by considering it in context and determined that in this particular context it "must be interpreted as meaning 'to make generally available through an appropriate medium', rather than simply 'making publicly available'".63 We see no reason not to follow this interpretation also in the present dispute.
7.31.
The parties to this dispute do not agree as to which of two principal documents, the Notice of 14 March 2013 and the Key Findings, sent to certain interested parties on 11 April 2012, we should, or may, take into account in our analysis of Ukraine's safeguard measure. In addition, Ukraine also views as relevant its Notification to the WTO Committee on Safeguards under Articles 12.1(b) and (c), dated 21 March 2013.
7.32.
According to Japan, in this dispute, the "published report" within the meaning of Articles 3.1 and 4.2(c) is the Notice of 14 March 2013, and Japan submits that the Panel should limit its examination to that document. Japan contends that Ukraine itself, in the letter dated 17 June 2013 sent to Japan by its competent authorities64, confirmed that the Notice of 14 March 2013 is the report containing the findings and reasoned conclusions. Japan argues that the "published report" must be "made generally available through an appropriate medium"65, and that the "Key Findings" were not made "generally available" and consequently were not "published". Japan also notes that this document was not explicitly referred to in the Notice of 14 March 2013.66
7.33.
Ukraine submits that the Key Findings, the Notice of 14 March 2013 and the Notification contained a non-confidential summary of findings and reasoned conclusions reached on all pertinent issues of fact and law, as required by Articles 3.1 and 4.2(c). In Ukraine's view, these documents can serve as a basis for the Panel's analysis of Japan's claims. Ukraine argues that while the Key Findings were not published in the newspaper Uryadovyi Kuryer in the same way that the Notice of 14 March 2013 was, it is up to the competent authorities to decide the appropriate medium of publication, as long as the information is made publicly available. According to Ukraine, the Key Findings were sent directly to the representatives of the affected exporting countries in April 2012 in order to comply with Articles 3, 4, and 12 and Article XIX:2. Moreover, Ukraine argues that the Key Findings, as well as any other non-confidential information on the investigation, were also available to the interested parties, as any of the interested parties could access any relevant non-confidential information upon a written request under Article 9.6 of Ukraine's Safeguards Law.67
7.34.
The Panel agrees that the Notice of 14 March 2013 constitutes a "published report" within the meaning of Article 3.1, last sentence, and also an "analysis" and "demonstration" within the meaning of Article 4.2(c). The Notice was published in Ukraine's official gazette on 14 March 201368, and it sets forth the Commission's findings and reasoned conclusions, as well as detailed analysis and a demonstration of the relevance of the factors examined.
7.35.
Ukraine's notification to the WTO Committee on Safeguards under Articles 12.1(b) and (c) is dated 21 March 2013. Since it contains no analysis, findings or reasoning in addition to those included in the Notice of 14 March 2013, we do not consider it necessary to decide whether this document was published by Ukraine within the meaning of Articles 3.1 and 4.2(c). Generally speaking, the parties in their submissions have not referred to this document, but rather to the Notice of 14 March 2013 or the Key Findings.
7.36.
Turning, finally, to the Key Findings, we note that they contain analysis and recommended findings and conclusions of the Ministry addressed to the Commission. However, the Key Findings are not specifically referred to in the Commission's Notice of 14 March 2013, which was published later, nor have they been appended thereto. As regards publication, the Key Findings were sent out to certain interested parties on 11 April 2012. But they were not "published" by Ukraine, in the way the Notice of 14 March 2013 was. Although Ukraine argues that the Key Findings were sent directly to some affected exporting countries, and were available on request to the interested parties under Article 9.6 of Ukraine's Safeguards Law, we cannot conclude that this constitutes publication for purposes of Articles 3.1 and 4.2(c). Nothing in either Article 3.1 or Article 4.2(c) suggests that publication may be limited to certain, or even all, interested parties. Moreover, we fail to see how the Key Findings could be considered as having been "published" when, except for those interested parties sent a copy by the competent authorities, interested parties needed to make a specific written request to see the document.69 Finally, we question whether interested parties could, in fact, have seen the document, given that the relevant provision of Ukraine's Safeguards Law allows interested parties to see information submitted by other interested parties, but not "official documents of the Ministry...".70 Therefore, in our view, as the Key Findings were not "made generally available through an appropriate medium", we consider that they were not "published" within the meaning of Articles 3.1 and 4.2(c). In the light of the foregoing, we conclude that the Key Findings do not constitute the kind of published report required by Articles 3.1 and 4.2(c). Indeed, as noted by Japan, Ukraine itself in a letter to Japan referred to the Notice of 14 March 2013, but not the Key Findings, as the report within the meaning of Articles 3.1 and 4.2(c).71
7.37.
Therefore, as stated previously, our examination of the competent authorities' determinations in this case will be based on the published report, that is to say, the Notice of 14 March 2013. Nevertheless, the Key Findings unquestionably form part of the record of the safeguard investigation at issue. That being the case, we will take them into account, as appropriate, for purposes of understanding the explanations provided in the Notice of 14 March 2013 and assessing their adequacy.

7.2 CLAIMS RELATING TO UNFORESEEN DEVELOPMENTS AND THE EFFECT OF THE OBLIGATIONS INCURRED UNDER THE GATT 1994

7.38.
The Panel now turns to examine Japan's claim of violation of Article XIX:1(a) and Articles 3.1, 4.2(c) and 11.1(a) concerning the competent authorities' determination regarding unforeseen developments and the effect of the obligations incurred under the GATT 1994.
7.39.
Japan claims that Ukraine has failed to demonstrate the existence of and evaluate unforeseen developments as required by Article XIX:1(a), Articles 3.1, 4.2(c) and 11.1(a), and as a consequence, has acted inconsistently with these provisions.72 In particular, Japan claims that Ukraine has (i) failed to demonstrate the existence of unforeseen developments; (ii) failed to demonstrate the existence of a logical connection between the alleged unforeseen developments and the increased imports; and (iii) as a consequence failed to give reasoned and adequate explanations on these issues thus acting inconsistently with Articles 3.1 and 4.2(c).73
7.40.
Japan also claims that Ukraine has acted inconsistently with Article XIX:1(a) and Article 11.1(a) because it failed to demonstrate in its published report that it incurred obligations concerning the imported products involved in the dispute under the GATT 1994 and how the increase in imports was an effect of these obligations. Japan further argues that since the published report does not contain any findings and reasoned conclusion on this issue, Ukraine has also acted inconsistently with Articles 3.1 and 4.2(c) of the Agreement on Safeguards.74
7.41.
Ukraine responds that all of Japan's claims under Article XIX:1(a) and Articles 3.1, 4.2(c) and 11.1(a) must be rejected since Japan (i) did not establish that the existence of unforeseen developments and the effect of the obligations incurred under the GATT 1994 are each a "prerequisite" for the imposition of a safeguard measure; (ii) did not show that the circumstances that Ukraine demonstrated to exist as a matter of fact were anything other than "unexpected" and thus "unforeseen" in the sense of Article XIX:1(a); (iii) did not show that Ukraine failed to provide in the Key Findings or the Notice of 14 March 2013 sufficiently reasoned and adequate explanations regarding unforeseen developments;75 and (iv) did not show that Ukraine had not made tariff concessions applicable to the imported products involved in the dispute and that Ukraine had not demonstrated the existence of such concessions as a matter of fact.76
7.42.
The Panel will begin its analysis with Japan's claim under Article XIX:1(a). We will first consider Ukraine's argument regarding the legal nature of the two textual elements at issue – "unforeseen developments" and the "effect of the obligations incurred under [the GATT 1994]" (hereafter "effect of GATT 1994 obligations"). Then, we will consider Ukraine's identification and demonstration of unforeseen developments and the logical connection between the unforeseen developments and the increased imports. Finally, we will consider Ukraine's identification of the obligations incurred under the GATT 1994 and the logical connection with the increased imports. After completing our analysis of the claims under Article XIX:1(a), we will proceed to consider the claims under Articles 11.1(a), 3.1 and 4.2(c).

7.2.1 Claims under Article XIX:1(a) of the GATT 1994

7.43.
Article XIX:1(a) provides as follows:

If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.

7.44.
As indicated, the Panel will begin its assessment of Japan's claim under Article XIX:1(a) by considering the issue raised by Ukraine regarding the legal nature of "unforeseen developments" and the effect of GATT 1994 obligations.

7.2.1.1 Unforeseen developments and the effect of GATT 1994 obligations

7.45.
Ukraine submits that the term "unforeseen developments" is not a prerequisite or"prior condition" for imposing a safeguard measure since it does not appear in the text of Article 2. According to Ukraine, Article 2 establishes only three conditions for the imposition of a safeguard measure, namely (i) that a product must be imported in increased quantities, (ii) so as to cause, (iii) serious injuryto the domestic industry. In Ukraine's view, a determination regarding unforeseen developments is therefore not a "prerequisite", that is to say, "a thing required as a prior condition"77, for the adoption of a safeguard measure. As a consequence, Ukraine submits that Japan's claim must fail since it has not established that the existence of unforeseen developments is a condition that must be met before a safeguard measure may be adopted.78
7.46.
Ukraine recalls that in the context of Article XIX, the Appellate Body in Argentina – Footwear (EC) determined with regard to unforeseen developments that they are not a "condition" for imposing safeguard measures, but rather "a circumstance which must be demonstrated as a matter of fact" and that an important distinction is to be drawn between a "condition" and a "circumstance which must be demonstrated as a matter of fact".79 As regards the effect of GATT 1994 obligations, Ukraine observes that according to the Appellate Body this element likewise is not a "condition" listed in Article 2 and thus not a "prerequisite" but only a circumstance which must be demonstrated as a matter of fact.80 Ukraine therefore submits that Japan's claim in respect of this element suffers from the same flaw as the claim concerning unforeseen developments.81
7.47.
Japan counters that the existence of unforeseen developments and of the effect of GATT 1994 obligations does constitute a "prerequisite" or "legal requirement" that must be demonstrated to apply a safeguard measure consistently with Article XIX.82 According to Japan, Ukraine ignores that the Appellate Body has stated that the Agreement on Safeguards and Article XIX are to be considered in conjunction and that any safeguard measure must be in conformity with both agreements.83
7.48.
Japan submits that regardless of the actual term used - a "circumstance" or a "prerequisite" – unforeseen developments and the effect of GATT 1994 obligations constitute "legal requirement[s]" that must be satisfied in order for a safeguard measure to be applied in accordance with the WTO disciplines.84 Japan argues that "unforeseen developments" and the effect of GATT 1994 obligations are not simply circumstances that must "exist as a matter of fact" given that the demonstration of the existence of these elements must be made before a safeguard measure is applied.85
7.49.
Japan also submits that, contrary to what Ukraine asserts regarding the effect of GATT 1994 obligations, the importing Member must not only have incurred obligations under the GATT 1994 as a matter of fact, the importing Member must also identify those obligations.86
7.50.
The Panel begins its analysis by noting that Ukraine's arguments raise three issues: first, whether unforeseen developments and the effect of GATT 1994 obligations should be characterized as circumstances, conditions or prerequisites; second, what legal consequences flow from this characterization; and third, whether Japan misunderstood the nature of these two elements and thus Japan's claims should fail for this reason.
7.51.
Regarding the first issue, the Appellate Body has clarified in several reports the legal nature of the elements contained in the first clause of Article XIX:1(a) and their relationship with the conditions established in the second clause of Article XIX:1(a):

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.87 (Emphasis added; original emphasis omitted)

7.52.
Thus, the two elements of the first clause of Article XIX:1(a) constitute circumstances that must be demonstrated as a matter of fact, distinct from the conditions established under the second clause. We also observe that on one occasion, the Appellate Body also referred to the existence of one of these two elements as a "prerequisite" to be demonstrated in order for a safeguard measure to be applied.88 Therefore, to us it is clear that (i) the two elements in the first clause of Article XIX:1(a) are circumstances that have to be demonstrated as a matter of fact, (ii) that they are legally different from the conditions in the second clause of the same provision, and (iii) that the Appellate Body has also used the term "prerequisite" to refer to them.
7.53.
Regarding the second issue, the Appellate Body in US – Lamb elaborated on the legal consequences of the interpretation given in Korea – Dairy and Argentina – Footwear (EC) and discussed when and where the demonstration of these circumstances should occur. It stated that the demonstration must occur before a safeguard measured is applied, and that this demonstration must feature in the same report of the competent authorities in which the conditions are demonstrated:

[A]s 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.89 (Emphasis added; original emphasis omitted)

7.54.
As mentioned by the Appellate Body, the demonstration of the existence of the circumstances in question must be provided in the competent authorities' published report required under Articles 3.1 and 4.2(c). Accordingly, to meet the Appellate Body's conclusion, as quoted above at paragraph 7.51, that these circumstances must be demonstrated as a matter of fact, we understand that this means that competent authorities must explain in their published report how the factual evidence before them demonstrates the existence of these circumstances. Therefore, it is not sufficient for competent authorities to satisfy themselves that these circumstances exist as a factual matter; they must also provide a demonstration of their existence in their published report.
7.55.
Another element of the above statements of the Appellate Body is worth highlighting. The Appellate Body concluded that the circumstances in question must be demonstrated before a safeguard measure is imposed. In our view, this implies that any demonstration of the existence of these circumstances that is provided after imposition of a safeguard measure will not be sufficient to comply with the requirements of Article XIX:1(a). In this context, we observe that the Appellate Body has already had occasion to address this issue and concluded that the analysis of the pertinent issues of fact and law referred to in Article 3.1, and to be set out in the competent authorities' published report, cannot be supplemented by the Member concerned during the course of WTO dispute settlement procedures or in a document other than the competent authorities' report (e.g. an unpublished report).90 Therefore, it is clear to us that any ex post facto91 explanation purporting to demonstrate the existence of the circumstances required by the first clause of Article XIX:1(a) cannot cure the lack of such demonstration in the competent authorities' published report.
7.58.
Regarding the third issue presented by Ukraine's arguments, we do not interpret Japan's argument to be that unforeseen developments and the effect of GATT 1994 obligations are "conditions" similar to the ones contained in the second clause of Article XIX:1(a) or Article 2. Throughout its submissions, Japan has used the terms "circumstances", "prerequisite" or "legal requirement" to refer to these elements and not the term "condition".94 Therefore, we disagree with Ukraine's argument that Japan has erroneously referred to the elements of the first clause of Article XIX:1(a) as "conditions". Regarding the terms "prerequisite" or "legal requirement", we recall that they were also used in previous Appellate Body and panel reports when addressing the same matter and therefore Japan has not erred by using them. We thus reject Ukraine's argument that Japan erroneously characterized the two elements in the first clause of Article XIX:1(a) as conditions.
7.59.
Consequently, we proceed with our analysis of Japan's claims on the basis that "unforeseen developments" and the effect of GATT 1994 obligations are "circumstances" that the competent authorities are legally required to demonstrate as a matter of fact, and that such demonstration is to be conducted (i) before a safeguard measure is applied, (ii) through reasoned and adequate explanations, and (iii) in the competent authorities' published report.

7.2.1.2 Unforeseen developments

7.60.
The Panel now turns to examine Japan's claim as it relates to unforeseen developments. Japan's claim is based on two main arguments. Japan asserts that Ukraine's competent authorities have not properly demonstrated the existence of unforeseen developments and that Ukraine has not explained how the alleged unforeseen developments resulted in increased imports.

7.2.1.2.1 The unforeseen developments alleged in this case

7.61.
The Panel begins by considering Japan's argument that Ukraine's competent authorities have failed to properly demonstrate the existence of unforeseen developments. We recall in this respect that the term "unforeseen developments" has been interpreted to mean developments that are "unexpected".95
7.62.
Japan argues that the sole reference to unforeseen developments in either the Notice of 14 March 2013 or the Key Findings is the increase in imports and that it therefore appears that the competent authorities identified the increase in imports as the unforeseen development. Japan submits that this is improper because the increase in imports must be a result of unforeseen developments and, therefore, the unforeseen developments must necessarily be something other than the increase in imports themselves. Referring to the panel report in Argentina – Preserved Peaches, Japan contends that the text of Article XIX:1(a) does not permit an interpretation that would equate increased imports with unforeseen developments.96 Japan concludes that, to the extent that Ukraine considered the increased imports as an unforeseen development, it failed to demonstrate this circumstance and thus acted inconsistently with Articles XIX:1(a).97
7.63.
Ukraine submits that the unforeseen developments in the present case are explained by the "perfect storm" caused by the confluence of the serious contraction in demand and the dramatic increase in imports in relative terms against the backdrop of the global financial and economic crisis in the second half of 2008 and Ukraine's significant reduction of tariffs on passenger cars pursuant to its accession to the WTO in May 2008. Ukraine further argues that although it expected that some sectors in which it had made significant WTO tariff commitments could face increased competition from imports, it was unexpected that as a result of the global financial and economic crisis soon after its accession to the WTO, consumer demand would contract as much as it did, and that this would coincide with such an increase in imports that displaced domestic products. Ukraine submits that the Notice of 14 March 2013 and the Key Findings contained an analysis of the impact of the global financial and economic crisis.98
7.64.
Ukraine argues that in the Notice of 14 March 2013 and the Key Findings, the Ministry explained that it was unforeseen that imports into Ukraine would increase by 37.9% relative to domestic automobile production in 2010 compared to 2008, despite the decrease in import volumes in absolute terms. Ukraine alleges that the significant increase in market share came on the heels of the global financial and economic crisis, which had a significant impact on the Ukrainian passenger car industry.99
7.65.
In Ukraine's view, the existence of the global financial and economic crisis is a matter of fact that does not require much demonstration. Ukraine submits that since the 2008 global financial and economic crisis is a widely accepted and probably even an uncontested fact, no additional evidence is required to prove its existence. Moreover, Ukraine contends that as this circumstance was not questioned by the interested parties, it was concluded by the Ministry that it existed and did not need any confirmation. Ukraine considers that Japan cannot seriously claim not to be aware of this global crisis during the period of investigation.100
7.66.
Japan responds that it is only in Ukraine's first written submission that the global financial and economic crisis is identified as the unforeseen development. According to Japan, nowhere in the Notice of 14 March 2013 or the Key Findings was the crisis identified as the unforeseen development, nor is there any discussion or explanation as to why it constituted an unforeseen development in the sense of Article XIX.101 Japan recalls that according to the Appellate Body, the demonstration of unforeseen developments must be made before the application of a safeguard measure, in the published report.102 Japan submits that any identification of the unforeseen developments after the imposition of a safeguard measure cannot, therefore, render a safeguard measure consistent with Article XIX:1(a). Japan further argues that, as the panel found in Chile – Price Band System, an ex post facto explanation cannot cure the importing Member's failure to meet the requirement of demonstrating unforeseen developments in the published report.103
7.67.
The Panel observes that the issue to be examined is whether Ukraine identified and demonstrated the existence of unforeseen developments as required by Article XIX:1(a). As explained above, this requires us to determine whether the competent authorities identified the relevant unforeseen developments in their published report. At the outset, we recall our view that the Notice of 14 March 2013 constitutes the published report within the meaning of Article 3.1, as discussed in Section 7.1.5 above.
7.68.
The Notice of 14 March 2013 contains the following succinct passage on unforeseen developments:

The occurrence of "unforeseen developments" is explained by a 37.9% increase of the share of imported motor cars relative to domestic production during 2010 when compared to 2008, despite decreased import volumes in absolute terms and an overall contraction in consumption of motor cars within the domestic market of Ukraine during this period.104

7.69.
Apart from this reference, we do not find any other mention of unforeseen developments in the Notice of 14 March 2013.105
7.70.
The Key Findings and Ukraine's notification to the WTO Committee on Safeguards under Articles 12.1(b) and (c) also refer to unforeseen developments, using language almost identical to that contained in the Notice of 14 March 2013. The relevant passages in the Key Findings and notification to the WTO are the following:

The occurrence of "unforeseen developments" is explained by a 37.9% increase of the share of imported products relative to domestic automobile production in Ukraine in 2010 compared to 2008, despite decreased import volumes in absolute terms and an overall contraction in consumption of automobiles within the domestic market of Ukraine during this period.106 (emphasis added)

The fact of "unforeseen developments" is present in increase of import share by 37.9% relative to applicant's production of motor cars in 2010 compared with 2008 despite of the general decrease of import in quantitative equivalent and general decrease of consumption of motor cars at the domestic market in this period.107 (emphasis added)

7.71.
Japan submits that these statements suggest that the increase in imports is the unforeseen development. Ukraine did not respond directly to this argument. It argues instead that the occurrence of unforeseen developments is explained by the "perfect storm" formed by a confluence of several factors in the context of the 2008 global financial and economic crisis, and that it was unforeseen that imports would increase by 37.9% relative to domestic automobile production in Ukraine in 2010, compared to 2008.
7.72.
In examining the passage provided in the Notice of 14 March 2013, we note the statement that the occurrence of unforeseen developments "is explained by" the relative increase in imports. For us, this means that the occurrence of unforeseen developments is "made clear or intelligible"108, or "made plainly visible"109 by the relative increase in imports. Thus, the most natural reading of this translated phrase, in the context of the cited reference of the Notice of 14 March 2013, is that the competent authorities considered that the occurrence of unforeseen developments was demonstrated by the relative increase in imports, in spite of an absolute decrease in imports and an overall contraction in the consumption of automobiles. It is also noteworthy that Ukraine itself has described the conclusions of the competent authorities in the Notice of 14 March 2013 along very similar lines in its first written submission:

In its findings, the Ministry explained that it was unforeseen that imports would increase by 37.9 percent relative to domestic automobile production in Ukraine in 2010 compared to 2008, despite the decrease in import volumes in absolute terms.110 (emphasis added)

7.73.
Therefore, we find that the Notice of 14 March 2013 identifies the relative increase in imports as the unforeseen development. We recognize that the Notice of 14 March 2013 also refers to an absolute decrease in imports and a contraction in demand that occurred during the same period. But nothing in the Notice of 14 March 2013 suggests that either of these was considered an unforeseen development by the competent authorities. Consequently, it is clear to us that the development that the Notice of 14 March 2013 identifies as unforeseen is the relative increase in imports.
7.74.
We consider, next, Ukraine's arguments regarding what were the unforeseen developments in this case, as there is a difference between Ukraine's submissions to this Panel and the actual content of the Notice of 14 March 2013.
7.75.
In its first written submission, Ukraine not only describes the content of the Notice of 14 March 2013 reproduced above, but also identified as the unforeseen development a "perfect storm" involving a "confluence of factors" in the context of the 2008 global financial and economic crisis:

[I]t was unexpected that, as a result of the global crisis soon after its accession, consumption demand would contract to the extent it did, and this would coincide with such an increase in imports completely displacing domestic producers. That unfortunate "perfect storm" is essentially what the Ministry highlighted in the section on unforeseen development in the Key Findings.111

The confluence of the serious contraction in demand and the dramatic increase in imports in relative terms against the backdrop of the global financial crisis in the second half of 2008, at the same time that Ukraine significantly lowered tariffs on passenger cars pursuant to WTO obligations, was unexpected and thus unforeseen.112

7.76.
In response to a request from the Panel, Ukraine elaborated as follows:

While it is obvious that the global financial crisis led both to the significant increase in imports in relative terms and the decrease in consumption, the latter was a different factor that cannot be associated with the increase in imports and was referred to in the non-attribution section of the Key Findings.113

7.77.
In its second written submission, Ukraine stated:

[I]t was unexpected that, as a result of the global crisis immediately after its accession, the increase in imports would be so significant as to completely displace domestic production.114

The facts confirm the unforeseen combination of a global economic crisis affecting in particular this industry right at the time of tariff liberalization and major changes in the Ukrainian economy as a result of the WTO accession.115

7.78.
Thus, it seems Ukraine has put forward multiple versions of what the unforeseen developments were in the present case: (i) the simultaneous contraction in demand and increase in imports; (ii) the confluence of a contraction in demand, tariff liberalization, and a relative increase in imports; (iii) the global financial and economic crisis; (iv) the increase in imports; and (v) the combination of a global financial and economic crisis and tariff liberalization. There is a stark contrast between Ukraine's submissions to the Panel, which for the most part suggest that the unforeseen developments were events either caused by, coinciding with, or including, the global financial and economic crisis, and the actual text of the Notice of 14 March 2013, which identifies only the relative increase in imports as an unforeseen development.
7.79.
The Panel asked Ukraine to clarify whether the Notice of 14 March 2013 contains any reference to the global financial and economic crisis in the section of the Notice of 14 March 2013 dealing with unforeseen developments. In its response, Ukraine stated that the competent authorities considered the effects of the global financial and economic crisis in the non-attribution section of the Key Findings.116 For our part, we see nothing in the Notice of 14 March 2013 that could be understood to identify the global financial and economic crisis as being the unforeseen development or an integral part thereof.
7.80.
In this regard, we disagree with Ukraine's suggestion that explicit identification of the 2008 global financial and economic crisis was in any event not required, as its existence is a widely known and accepted fact. Even if the events that are alleged to be unforeseen are widely known and accepted, this does not relieve the competent authorities of their obligation to explicitly identify in the published report the unforeseen developments that have been determined to exist.
7.81.
As concerns the Key Findings, which are in any event not a published report within the meaning of Article 3.1, it is of no avail that the effects of the global financial and economic crisis are mentioned in the non-attribution section of the Key Findings. The issue of non-attribution relates to one of the conditions to be demonstrated – causation – and not the circumstance here in question. Also, the relevant passage in the Key Findings that deals with unforeseen developments does not refer to the non-attribution section. Furthermore, we recall that according to the Appellate Body, it is not for panels to read into the report of the competent authorities linkages that they failed to make.117 Consequently, even if the Panel were to accept the Key Findings as part of the published report under Article 3.1, the general reference to the global financial and economic crisis in a different section of the Key Findings is in our view not sufficient to clearly identify it as an unforeseen development in this case.
7.82.
In the light of the foregoing, we find that owing to the absence of any reference in the Notice of 14 March 2013 to developments other than the relative increase in imports, the additional developments, or combinations of developments, identified by Ukraine before the Panel constitute ex postfacto explanations regarding what the unforeseen developments were. As such, and for purposes of our review, they need not be taken into account.
7.84.
Therefore, we find that Ukraine has failed to make a proper determination on unforeseen developments, because the competent authorities in their published report identified the relative increase in imports as the unforeseen development rather than identifying and explaining any unforeseen developments that resulted in that relative increase in imports. Having failed to make a proper determination in respect of one of the relevant circumstances, we conclude that Ukraine has, to that extent, acted inconsistently with Article XIX:1(a).

7.2.1.2.2 Logical connection between the unforeseen developments and the relative increase in imports

7.85.
The Panel will now address Japan's arguments regarding the demonstration of the logical connection between the unforeseen developments and the relative increase in imports. We recall that Japan argues that according to the Appellate Body the competent authorities are required by Article XIX:1(a) specifically to demonstrate that the identified unforeseen developments have resulted in increased imports.119
7.86.
Japan argues that neither the Notice of 14 March 2013 nor the Key Findings provide any explanation with regard to how the alleged unforeseen developments resulted in the increase in imports.120 Referring to the Appellate Body report in US – Steel Safeguards, Japan observes that it is for the competent authorities to demonstrate the logical connection between the alleged unforeseen developments and the increase in imports, and that the Panel may not read into the report linkages that the competent authorities failed to make.121
7.87.
Japan further argues that, even assuming that the global financial and economic crisis had been recognized by the competent authorities as the unforeseen development, Ukraine does not provide any explanation as to how these unforeseen developments actually resulted in the increase in imports. In Japan's view, it is not sufficient that the global financial and economic crisis merely coincided in time with the increase in imports. According to Japan, it must also be demonstrated that the unforeseen developments causeda change in the competitive relationship between imported and domestic products to the detriment of the latter.122
7.88.
Ukraine disagrees with Japan's position that the unforeseen developments must cause a change in the competitive relationship. In Ukraine's view, the unforeseen developments and the obligation incurred under GATT 1994 need not modify the competitive relationship between the imports and domestic products, but cause the increase in imports directly. Ukraine further submits that its analysis of the issue of unforeseen developments was conducted by the competent authorities during the investigation, and that much of their analysis is confidential, such that only the results have been included in the Key Findings.123
7.89.
Japan counters that regardless of whether Ukraine properly treated the analysis as confidential or not, the competent authorities were still required to provide a reasoned and adequate explanation on how the facts support their determination.124
7.90.
The Panel recalls its findings above that Ukraine failed to make a proper determination on unforeseen developments under Article XIX:1(a). In the light of this, there is no need for us to make findings regarding whether the competent authorities examined the "logical connection" between the unforeseen developments and the relative increase in imports. In the absence of a sufficient determination of unforeseen developments, there is no occasion to consider whether there is a sufficient connection between such developments and increased imports.

7.2.1.3 Effect of GATT 1994 obligations

7.91.
The Panel now turns to Japan's claim regarding the effect of GATT 1994 obligations. As with the parallel claim concerning unforeseen development, this claim rests on two main arguments. Japan argues first that Ukraine's competent authorities have failed to properly demonstrate the effect of GATT 1994 obligations, and second, that Ukraine has not explained how the effect of any such obligations resulted in increased imports.

7.2.1.3.1 Identification of the effect of relevant GATT 1994 obligations

7.92.
The Panel begins by examining Japan's argument that Ukraine's competent authorities have failed to properly demonstrate the existence of the effect of relevant GATT 1994 obligations.
7.93.
Japan argues that a Member wishing to impose a safeguard measure must not only have incurred obligations under the GATT 1994, but must identify those obligations and demonstrate them in its published report. Japan submits that Ukraine failed to do so since neither the Notice of 14 March 2013 nor the Key Findings identify or analyse the effect of the obligations incurred by Ukraine under the GATT 1994. Japan therefore submits that Ukraine failed to demonstrate as a matter of fact that it incurred obligations under the GATT 1994, and that this is a violation of Article XIX:1(a).125
7.94.
Ukraine argues that there can be no debate about the existence of the effect of the obligations incurred under the GATT 1994. According to Ukraine, it is as an obvious fact that it made tariff concessions on passenger cars when it joined the WTO in 2008 and reduced the import duty on passenger cars from 25% to 10%. Ukraine submits that Japan cannot deny this fact given its active involvement in the negotiations on Ukraine's WTO accession. Ukraine further alleges that the existence of WTO commitments is a fact mentioned in the Key Findings.126
7.95.
Japan responds that the fact that Ukraine made tariff commitments with regard to the product concerned does not cure the competent authorities' failure to identify such commitments in their published report.127
7.97.
Turning to Ukraine's published report, the Notice of 14 March 2013, we note that it contains no mention or analysis of the effect of the GATT 1994 obligations. The only reference to Ukraine's commitments under the GATT 1994 is contained in the Key Findings, which are not a published report. However, that reference appears in the context of the causation analysis:

At the same time, WTO accession of Ukraine and its commitments to reduce the import duty from 25% to 10% as well as the abolition of government support could have negatively impacted the domestic car industry's financial condition, rather than this being a consequence of growing import of cars to Ukraine.128

7.98.
To us, it is clear that Ukraine was analysing the tariff reduction as a possible factor causing injury to the domestic industry and did not refer to it as one of the circumstances that must be demonstrated under Article XIX:1(a). We also recall that as we mentioned in paragraph 7.81 above, the Appellate Body in US – Steel Safeguards has clarified that it is not for the Panel to read into the report linkages that the competent authority failed to make.129 Therefore, even if we were to take into account the Key Findings, this reference in a section dealing with one of the conditions – causation – is not sufficient to identify the circumstance here at issue, that is to say, the relevant GATT 1994 obligations and their effect.
7.99.
We therefore find that Ukraine has failed to make a proper determination on the effect of GATT 1994 obligations, because it has not identified in its published report the effect of GATT 1994 obligations. Having failed to make a proper determination also in respect of this circumstance, we conclude that Ukraine has, to that extent, acted inconsistently with Article XIX:1(a).

7.2.1.3.2 Logical connection between the effect of GATT 1994 obligations and the relative increase in imports

7.100.
The Panel now addresses Japan's arguments regarding the demonstration of the logical connection between the effect of GATT 1994 obligations and the relative increase in imports.
7.101.
Japan argues that since the text of Article XIX:1(a) establishes that the increase in imports must occur "as a result" of the effect of GATT 1994 obligations, it follows that a Member must not only identify the specific obligations it incurred under the GATT 1994, but must also explain how the effect of these obligations resulted in the product being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to its domestic industry. Japan further contends that it must be explained how these obligations had the effect of preventing the Member concerned from taking WTO-consistent measures in order to prevent or remedy the change generated by the unforeseen developments in the competitive relationship between imports and the domestic product.130
7.102.
Japan notes that the Notice of 14 March 2013 and the Key Findings are silent on this issue and that it is only in its first written submission that Ukraine makes a reference to this analysis by stating that its market access commitments "pulled imports of passenger cars into the Ukraine market".131 Japan argues that in making this statement, Ukraine confuses unforeseen developments with the effect of GATT 1994 obligations. The former must have resulted in the increase in imports, while the latter must prevent the importing Member from taking appropriate measures to limit the increased imports that resulted from unforeseen developments.132
7.103.
Ukraine argues that after it had reduced its tariffs as a result of its accession to the WTO, imports of passenger cars into Ukraine increased relatively to domestic production. Ukraine recognizes that although other factors may have existed to drive imports of passenger cars into Ukraine, the reduction of the tariff rate by ten percentage points pulled imports of passenger cars into its market, despite the decrease in demand as a result of the effect of the global financial crisis on Ukraine consumers.133
7.104.
The Panel recalls its findings above that Ukraine failed to make a proper determination on the effect of GATT 1994 obligations under Article XIX:1(a). In the light of this, there is no need for us to make findings regarding whether the competent authorities examined the "logical connection" between the effect of GATT 1994 obligations and the relative increase in imports. In the absence of a sufficient determination of the effect of GATT 1994 obligations, there is no occasion to consider whether there is a sufficient connection between such element and increased imports.

7.2.1.4 Overall conclusion

7.105.
Having found that Ukraine in its published report has failed to make a proper demonstration on unforeseen developments and the effect of GATT 1994 obligations, we conclude that Ukraine has acted inconsistently with Article XIX:1(a).

7.2.2 Claim under Article 11.1(a)

7.106.
The Panel now turns to Japan's claim regarding Article 11.1(a), which provides as follows:

A Member shall not take or seek any emergency action on imports of particular products as set forth in Article XIX of GATT 1994 unless such action conforms with the provisions of that Article applied in accordance with this Agreement.

7.107.
Japan submits that as a consequence of Ukraine's failure to demonstrate unforeseen developments and in the effect of GATT 1994 obligations, Ukraine has acted inconsistently with Article 11.1(a).134
7.108.
Ukraine submits that Japan's claim under Article 11.1(a) must be rejected for the reasons set out in paragraphs 7.41 and 7.94 above.

7.2.3 Claims under Articles 3.1 and 4.2(c)

7.110.
The Panel turns, finally, to Japan's claims under Articles 3.1, last sentence, and Article 4.2(c). Article 3.1, last sentence, provides:

The competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law.

In turn, Article 4.2(c) provides:

The competent authorities shall publish promptly, in accordance with the provisions of Article 3, a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined.

7.111.
Japan argues that the existence of unforeseen developments and the effect of GATT 1994 obligations are a "pertinent issue … of fact and law" within the meaning of Article 3.1 and, consequently, the published report of the competent authorities must contain a "finding" or a "reasoned conclusion" on these circumstances.135 Japan further argues that the Appellate Body in US – Steel Safeguards established that Article 4.2(c) also applies to the competent authorities' demonstration of unforeseen developments under Article XIX:1(a).136 Japan therefore contends that, with respect to the circumstances identified in Article XIX:1(a), "the competent authorities are required by Article 3.1, last sentence, to 'give an account of' a 'judgement [sic] or statement which is reached in a connected or logical manner or expressed in a logical form'", on the existence of these circumstances, "'distinctly', or in detail".137
7.112.
With regard to unforeseen developments, Japan submits that the Notice of 14 March 2013 only contains a brief reference and that such reference cannot be considered a "reasoned and adequate explanation" since this statement does not "give an account of a judgment or statement".138 Japan also notes that both the Notice of 14 March 2013 and the Key Findings fail to identify any unforeseen developments, apart from the increase in imports, and a fortiori fail to provide any discussion or explanation as to why such events should be considered as unforeseen and why they resulted in the increase in imports. With regard to the effect of GATT 1994 obligations, Japan argues that neither the Notice of 14 March 2013 nor the Key Findings contain any analysis of the effect of the GATT 1994 obligations and, therefore, Ukraine has violated Articles 3.1 and 4.2(c) of the Agreement on Safeguards.139
7.113.
Ukraine responds that, as far as unforeseen developments are concerned, Japan simply takes issue with the competent authorities' conclusion and arguments on unforeseen developments but cannot claim that it does not understand the reasoning supporting this conclusion. Ukraine also argues that Japan's claim is not supported by the record.140 With regard to the effect of GATT 1994 obligations, Ukraine argues that there is no need for any reasoned conclusion and other explanation when, as a matter of fact, it is uncontested that Ukraine made significant tariff commitments in respect of passenger cars when it joined the WTO in 2008. Ukraine submits that Japan cannot seriously deny that as a matter of fact this is the case given its active involvement in Ukraine's accession negotiations.141
7.114.
The Panel has concluded in Section 7.2.1.4 above that Ukraine has failed to make a proper determination on unforeseen developments and the effect of GATT 1994 obligations and, consequently, acted inconsistently with Article XIX:1(a). In the light of this, we see no need, for the purposes of resolving this dispute, to make additional findings regarding whether Ukraine has also acted inconsistently with Articles 3.1 and 4.2(c) in relation to the account it gave of the aforementioned determination in its published report. We therefore exercise judicial economy and decline to make findings with respect to these claims.

7.3 CLAIMS RELATING TO INCREASED IMPORTS

7.115.
The Panel next addresses Japan's claims relating to Ukraine's determination of increased imports based on Articles 2.1, 3.1, 4.2(a), 4.2(c) and 11.1(a) and Article XIX:1(a). Since Article 2.1 sets forth the fundamental legal requirements – i.e. the conditions – for application of a safeguard measure, we will first address Japan's claims under Article 2.1.

7.3.1 Claims under Article 2.1

7.116.
The Panel recalls that Article 2.1 provides as follows:

A Member may apply a safeguard measure to a product only if that Member has determined, pursuant to the provisions set out below, that such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products.

7.117.
Japan claims that Ukraine acted inconsistently with Article 2.1 in making its determination of increased imports. In particular, Japan contends that Ukraine failed to (i) demonstrate a "recent" increase in imports; (ii) demonstrate that the increase in imports was sudden, sharp and significant enough; (iii) conduct a complete qualitative analysis, including an analysis of the intervening trends and the amounts142 of imports; and (iv) examine the "conditions" under which the imports occurred.143
7.118.
Ukraine submits that Japan's claim under Article 2.1 regarding the determination of increased imports is not well-founded. Ukraine argues that it met its obligations by examining all aspects of the increase in imports. In Ukraine's view, the data used during the investigation and presented to Japan in consultations demonstrates that the relative increase in imports was sufficiently recent, sudden, sharp, and significant, both quantitatively and qualitatively.144
7.119.
The Panel recalls that an increase in imports is the defining prerequisite for the application of a safeguard measure. Article 2.1 does not merely refer to an "increase" in imports, but requires that "the product is being imported … in such increased quantities, absolute or relative to domestic production" (emphasis added) as to cause or threaten to cause serious injury. Thus, not any increase in imports is sufficient to satisfy this condition. As found by the Appellate Body in Argentina – Footwear (EC),Article 2.1 "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'".145 Furthermore, Article 2.1 refers to increased quantities, "absolute or relative to domestic production". The word "or" indicates that a safeguard measure may be applied, subject to other conditions and circumstances being met, in either of these two factual scenarios. Finally, Article 2.1 also stipulates that the product concerned must be imported "under such conditions" as to cause or threaten to cause serious injury. As we explain below146, in our view this is relevant to the requirement that there be a causal link between increased imports and serious injury or threat thereof to the domestic industry, which is itself another condition for applying a safeguard measure.
7.120.
We thus consider based on the text of Article 2.1 as interpreted by the Appellate Body that for Japan's claim to succeed, Japan must establish that Ukraine did not properly demonstrate that:

a. there was either an absolute increase in imports or an increase relative to domestic production (hereafter, "relative increase");

b. the increase in imports was sudden enough, sharp enough, and significant enough, quantitatively and qualitatively; and

c. the increase in imports was recent enough.

We will address these issues in the order listed.

7.3.1.1 Increased imports

7.121.
The Panel turns first to the competent authorities' determination that there was a relative increase in imports during the period of investigation, 2008-2010. Specifically, Ukraine's competent authorities determined in the Notice of 14 March 2013 that during the period of investigation, imports of passenger cars increased by 37.9% relative to domestic production. Japan did not contest that there was a relative increase between 2008 and 2010, but questioned other aspects of the competent authorities' determination of increased imports to which we turn below.
7.122.
We therefore do not need to address this aspect further, except to note that evidence provided by Ukraine during the course of these proceedings suggests that there was an absolute and relative decrease in imports from 2008 to 2009, followed by an absolute and relative increase in imports from 2009 to 2010.147 The impact of the relative increase by 37.9% on the respective market shares of imports and domestic production is not ascertainable from the Notice of 14 March 2013, because it contains no data on import and domestic production volumes.148

7.3.1.2 "[I]n such increased quantities"

7.123.
Turning to the requirement in Article 2.1 that a product must be imported "in such increased quantities" (emphasis added), the Panel notes that the parties to this dispute disagree over whether Ukraine's competent authorities demonstrated that the relative increase in imports was sudden enough, sharp enough, and significant enough, and whether they conducted a proper qualitative analysis of the data on imports, specifically with regard to trends in imports and the amounts of imports. Thus, we now proceed to consider, in turn, the following issues:

a. whether the competent authorities in this case provided an adequate explanation concerning the trends in imports that occurred during the period of investigation;

b. whether the competent authorities demonstrated that the relative increase in imports was sudden enough, sharp enough, and significant enough; and

c. whether the competent authorities should have provided the amounts of imports.

7.3.1.2.1 Analysis of intervening trends in imports

7.124.
The Panel first examines whether the competent authorities have analysed intervening trends in imports.
7.125.
Japan, referring to the statement of the Appellate Body in Argentina – Footwear(EC), submits that to make a proper qualitative analysis and evaluation of increased imports, the competent authorities must not only examine the end-points of the data, but also intervening trends. According to Japan, the panel report in Argentina – Preserved Peaches and the Appellate Body report in US – Steel Safeguards indicate that the analysis under Articles XIX and 2.1 requires an examination of the trends in imports over the entire period of investigation. Japan maintains that it is the explanation concerning the trends in imports "that allows a competent authority to demonstrate that 'a product is being imported in such increased quantities'".149
7.126.
Japan argues, in addition, that the use of the phrase "such increased quantities" makes it clear that a comparison of end points will not suffice to demonstrate that a product "is being imported in such increased quantities" within the meaning of Article 2.1, and that "in cases where an examination does not demonstrate […] a clear and uninterrupted upward trend in imports 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".150 Japan thus submits that it is evident from the text of Article 2.1 and the jurisprudence that the condition of "increased imports" is not simply that imports have increased based on comparing data for the beginning and end of the period of investigation. Rather, Article 2.1 requires an analysis of the intervening trends.151
7.127.
Japan argues that in this case, Ukraine's competent authorities failed to examine the intervening trends with regard to imports, as they did not analyse what happened between 2008 and 2009 and between 2009 and 2010. According to Japan, in both the Notice of 14 March 2013 and the Key Findings, Ukraine provided only an end-to-end-point comparison when it found that imports increased between 2008 and 2010 by 37.9% relative to domestic production and by 37.1% relative to domestic consumption, and did not provide data for, or analyse what occurred in, 2009.152 According to Japan, Ukraine's simple end-point-to-end-point analysis "could easily be manipulated to lead to different results, depending on the choice of end points".153 In Japan's view, this is because the data does not demonstrate "a clear and uninterrupted upward trend".154 Japan notes that not only did the absolute volume of imports decrease significantly over the entire period of investigation, but imports also decreased relative to domestic production from 2008 to 2009. Japan considers that a clear upward trend in imports over an entire period of investigation could not have existed, if during half of the period of investigation the imports were actually decreasing in both absolute and relative terms. Japan also notes that the data concerning intervening trends and the ex post analysis of these data provided by Ukraine in its first written submission cannot be found in the Notice of 14 March 2013 or the Key Findings and thus are not relevant for the Panel's examination. Japan therefore considers that the competent authorities failed to examine the trends over the period of investigation and to include their conclusions in the published report, and they have consequently not satisfied the requirements of Article 2.1.155
7.128.
Ukraine responds that a qualitative analysis involving consideration of intervening trends is not pertinent to the issue of increased imports, but rather concerns the question of causation. Regarding the analysis of its competent authorities in the present case, Ukraine submits that imports trended upward over the course of the period of investigation, as is evidenced by the fact, stated in the Key Findings, that imports increased between 2008 and 2010 by 37.9% and 37.1% relative to domestic production and domestic consumption, respectively. Ukraine further states that in terms of domestic production, from 2008 to 2009, imports decreased by 8.9%, whereas in 2010, imports increased by 37.9% over 2008 levels relative to domestic production. Regarding Japan's argument about manipulation, Ukraine points out that its competent authorities were strictly bound by Ukraine's domestic law in determining the years to be included in the period of investigation, and that no manipulation was therefore possible. Finally, regarding its published report, Ukraine contends that a more detailed analysis was conducted by its Ministry during the investigation and that the results were presented to the Commission and formed the basis for the imposition of the safeguard measure. According to Ukraine, that analysis is confidential, however, and was therefore not disclosed to Japan.156
7.129.
The Panel begins by recalling the views of the Appellate Body in Argentina – Footwear (EC), which are relevant to the issue raised by Japan. In that dispute, the Appellate Body observed that:

[T]he 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.157

7.130.
The Appellate Body in the same dispute also identified an additional element that competent authorities must consider when determining whether a product has been imported "in such increased quantities". Agreeing with the panel in that dispute, it stated 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)".158 (emphasis original)
7.131.
While this statement does not specifically refer to Article 2.1, in the immediately following paragraph the Appellate Body referred to the phrase "is being imported" in Article 2.1 in support of its view that the competent authorities must also examine recent imports, "and not simply trends in imports" during a period of several years.159 Moreover, in US – Steel Safeguards, the Appellate Body reiterated its view that an examination of trends is required and stated that the importing Member in that dispute could not properly have found that imports had "increased" as required by Article 2.1, without having addressed an "intervening trend" showing a decrease in imports at the end of the period of investigation.160 In the same dispute, the Appellate Body also stated that:

The use of the phrase "such increased quantities" in Articles XIX:1(a) and 2.1, and the requirement in Article 4.2 to assess the "rate and amount" of the increase, make it abundantly clear, however, that such a comparison of end points will not suffice to demonstrate that a product "is being imported in such increased quantities" within the meaning of Article 2.1. Thus, 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.161 (emphasis original)

Finally, the Appellate Body emphasized that:

[W]hat 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".162 (emphasis original)

7.132.
To us, these statements make it clear that, for an affirmative determination of increased imports to be consistent with Article 2.1, it is not sufficient for the competent authorities to establish an increase in imports through a simple mathematical comparison of data for the two end points marking the beginning and end of the period of investigation. It is necessary, though still not sufficient by itself163, that the competent authorities also set out in their published report a reasoned and adequate explanation concerning the development of imports between the end points, i.e. concerning the intervening trends in imports that occurred during the period of investigation.
7.133.
We note that the Notice of 14 March 2013 explains the competent authorities' determination "[r]egarding increased imports to Ukraine and degree of such increase" in one short sentence:

During the investigation period in 2010, compared to 2008, imports of motor cars to Ukraine increased by 37.9% compared to domestic industry output and 37.1% relative to domestic demand.164

7.134.
The Key Findings make the same point and clarify that the percentage figures given in the Notice of 14 March 2013 refer to import volumes in relative terms.165 Both the Notice of 14 March 2013 and the Key Findings also indicate, albeit in sections not addressing the competent authorities' determination of increased imports, that "the volume of imports of motor cars to Ukraine in absolute terms in 2010 compared to 2008 decreased by 71%".166
7.135.
We recall that we must base our review in this dispute on the published report, which we have concluded is contained in the Notice of 14 March 2013. As is apparent from the above-quoted statement, the Notice of 14 March 2013 compares imports relative to domestic production in 2010 – the end point of the period of investigation in this case – to imports relative to domestic production in 2008 – the starting point of the period of investigation. The Notice of 14 March 2013 does not set out the import volume in relative terms for 2009, and neither do the Key Findings. There is, accordingly, no corresponding data regarding the volume of imports relative to domestic production during the two periods 2008-2009 and 2009-2010.
7.136.
Thus, the published report of the competent authorities contains only an end-point-to-end-point comparison and analysis, finding that the import volume relative to domestic production was 37.9% higher in 2010 than in 2008. The published report provides neither data nor an explanation concerning intervening trends in relative imports, and specifically, makes no reference to import volume relative to domestic production in 2009.
7.137.
Ukraine has provided relevant data and analysis of intervening trends in imports in relative terms in its first written submission. However, as we have pointed out above167, such an ex post explanation cannot remedy the deficiency in the competent authorities' determination as set out in the Notice of 14 March 2013. Nevertheless, it is instructive to consider briefly the data that Ukraine has provided to us, but did not set out or examine in the Notice of 14 March 2013. We set out this data in Table 1 and represent it graphically in Graph 1 below. The data suggests that there was an overall relative increase in imports over the three-year period of investigation. The data also appears to show that the relative increase in imports that was determined to have occurred, based on the end-point-to-end-point comparison, is the result of an initial relative decrease from 2008 to 2009 that was followed by a more substantial relative increase in imports from 2009 to 2010. More particularly, the data suggests that in the investigation at issue, a relative increase in imports did not occur until the second half of the period of investigation. A brief look at intervening trends thus reveals that the competent authorities' end-point-to-end-point analysis is not sufficient on its own to explain adequately why and how the facts of this case supported the conclusion of the competent authorities that passenger cars "[were] being imported in such increased quantities" (emphasis added) relative to domestic production.

Table 1: Changes of imports in relative terms

Indicator200820092010
Ratio of imports to domestic production, % [ ] [ ] [ ]
Change since 2008, %--8.9+37.9

Source of data: Exhibit UKR–3.

Graph 1: Trends in imports of passenger cars into Ukraine in relative terms

(2008–2010)168

[SEE IMAGE IN SOURCE DOCUMENT]

7.138.
Ukraine has asserted that a more detailed analysis was performed regarding increased imports and that its results were the basis for the imposition of the safeguard measure. Ukraine further submits, however, that that analysis is confidential. Ukraine did not explain how or why an analysis of intervening trends (as opposed to the actual import volumes) could be confidential. But even assuming that Ukraine could justifiably withhold certain analysis or data, we note that the competent authorities in this case published data concerning the relative increase for 2010 compared to 2008. In the light of this, we are not persuaded that the competent authorities could not similarly have published data concerning the relative increase or decrease for 2009 compared to 2008, and for 2010 compared to 2009. In our view, such additional data would have permitted the competent authorities to provide at least some explanation concerning intervening trends. We recall that the Notice of 14 March 2013 contains no explanation at all regarding intervening trends.
7.139.
For all the above reasons, the Panel finds that Ukraine has acted inconsistently with Article 2.1 by failing to provide an explanation in its published report regarding how intervening trends in imports relative to domestic production supported the competent authorities' determination that there was a relative increase for the period of investigation 2008-2010.

7.3.1.2.2 Sudden, sharp, and significant increase

7.140.
The next issue the Panel turns to is whether, as Japan contends, Ukraine has failed to demonstrate that the increase in imports was sudden enough, sharp enough, and significant enough.
7.141.
We recall at the outset that both parties have referred to the Appellate Body report in Argentina – Footwear (EC). According to the Appellate Body, the phrase "in such increased quantities" in Article 2.1 indicates that an increase in imports must have been sudden enough, sharp enough, and significant enough, both quantitatively and qualitatively, to cause or threaten to cause "serious injury".169 This viewwas followed by the panels in US – Wheat Gluten and Argentina – Preserved Peaches and subsequently confirmed by the Appellate Body in US – Steel Safeguards.170 The Appellate Body in US – Steel Safeguards upheld the panel's conclusion thatthere are no absolute standards in judging how sudden and significant the increase must be in order to qualify as an "increase" within the meaning of Article 2.1.171 Rather, this assessment is to be made by the competent authorities on a case-by-case basis.172
7.142.
Japan argues that the Notice of 14 March 2013 and the Key Findings do not contain any determination by the competent authorities that the alleged increase in imports was sudden, sharp, and significant enough. Japan contends that the increase in imports identified by Ukraine was not "sudden" because the competent authorities focused mainly on an increase in imports which took place between 2008 and 2010 and ignored the fact that in 2005, 2006 and 2007 imports of the product concerned were steadily increasing at a significant rate. According to Japan, in reaching its conclusion regarding the increase in imports, Ukraine should also have taken into account the data from 2005-2007.173 In supporting its arguments, Japan provided the following graph.

Graph 2: Trends in imports of passenger cars into Ukraine in absolute terms

(2005–2014)174

[SEE IMAGE IN SOURCE DOCUMENT]

7.143.
Ukraine contends that a closer examination of the data considered during the investigation demonstrates that the relative increase in imports was sufficiently sudden, sharp, and significant. Ukraine argues that although the volume of imports into Ukraine decreased by 71%, there was a significant increase in imports in relative terms. According to Ukraine, relative to domestic production, imports decreased modestly in 2009 over 2008 by 8.9%, whereas in 2010, imports relative to domestic production increased sharply, significantly, and suddenly, by 37.9% compared to 2008. Ukraine further submits that its Ministry undertook such an analysis during the investigation and that it is summarized in the Key Findings. According to Ukraine, the more detailed analysis and its results, which were presented to the Commission, were the basis for the imposition of the safeguard measure, but were confidential and were therefore not disclosed to Japan.175
7.144.
Japan responds that the data and the analysis in Ukraine's written submission are entirely ex post and are not included in the Notice of 14 March 2013 or in the Key Findings and are therefore irrelevant. In Japan's view, such ex post analysis cannot cure the absence of any such analysis in the published report of the competent authorities. Japan therefore considers that Ukraine failed to provide a reasoned and adequate explanation as to why the alleged increase in imports was sudden enough, sharp enough, and significant enough.176
7.145.
The Panel notes that in the Notice of 14 March 2013, and also in the Key Findings, it is stated that in 2010 imports increased by 37.9% relative to domestic production, compared to 2008. Neither document characterizes this increase as "sudden", "sharp" or "significant" or uses any similar language. Accordingly, the lack of analysis on this issue in the Notice of 14 March 2013 and Key Findings is similar to the lack of analysis with respect to the intervening trends discussed above. Ukraine submits that its relevant analysis is confidential. However, Ukraine offered no explanation as to why an analysis of the "suddenness", "sharpness" and "significance" of the relative increase in imports (as opposed to the actual import volumes) should be confidential.
7.146.
We first consider the requirement that the increase in imports be "sudden" and "sharp". The dictionary meaning of "sharp" is "involving sudden change of direction; abrupt, steep"177 while "sudden" is defined as "happening or coming without warning; unexpected", or "abrupt, sharp".178 Without information about the intervening trends, the reference in the Notice of 14 March 2013 to a relative increase by 37.9% in 2010 compared to 2008 is consistent with very different factual scenarios, including, for example, (i) a relative increase in imports between 2008 and 2009 followed by a smaller relative decrease between 2009 and 2010; (ii) a relative decrease in imports between 2008 and 2009 and then a larger relative increase between 2009 and 2010; and (iii) a steady or gradual relative increase over three years (2008-2010). It appears to us that certainly under the third possible scenario, the relative increase in imports could not properly be described as "sharp" or "sudden". Therefore, by itself, the reference to a relative increase of 37.9% in 2010 compared to 2008 does not demonstrate that the relative increase in imports was either "sharp" or "sudden".
7.147.
As regards the required "significance" of the increase, we note that the Notice of 14 March 2013 provides neither the volumes of imports and domestic production nor the ratios of import volumes to domestic production volumes in any year of the period of investigation. Neither do the Key Findings. However, if for example the ratio of import volume to domestic production volume was quite large at the beginning of the period of investigation, a 37.9% relative increase in imports at the end of the period might, in our view, not be sufficient to qualify as "significant". Without additional information or relevant explanations in the Notice of 14 March 2013, we are therefore unable to accept that a reference to a 37.9% relative increase in imports alone is sufficient to demonstrate that the increase was "significant".179 The ex post explanations provided by Ukraine in the context of the present proceedings cannot cure this defect. We must note here that we do not wish to imply that Ukraine could only establish the significance of the relative increase by revealing confidential information in the determination. If no additional information could be provided for reasons of confidentiality, the competent authorities must nevertheless provide, to the fullest extent possible, a reasoned and adequate explanation in support of a determination that the increase was significant.180 Moreover, there may be ways of presenting sensitive data in the report itself, but in a form that avoids improper disclosure. For instance, with regard to the ratio of import volume to domestic production volume, it may be possible, in the case of confidential information, to specify a range of values that includes but does not reveal the actual value, which would facilitate review of the competent authorities' evaluation.
7.148.
Based on the foregoing considerations, we find that Ukraine has acted inconsistently with Article 2.1 by failing to demonstrate in its published report, through reasoned explanations, that there was an increase in imports during the period of investigation 2008-2010 that was sudden enough, sharp enough, and significant enough.

7.3.1.2.3 Amounts of imports

7.149.
The Panel now turns to Japan's argument that Ukraine's competent authorities failed to provide and examine the "amounts" of imports and thereby acted inconsistently with Article 2.1. By "amounts" of imports, Japan means the quantities of imports.
7.150.
Japan claims that Ukraine failed to provide and examine the amounts of imports throughout the period of investigation, since both the Notice of 14 March 2013 and the Key Findings only indicate a rate of decrease in the absolute volume of imports and a rate of increase in the relative imports. Japan argues that the evaluation of the amount of the increase in imports, expressly required under Article 4.2(a), is necessarily relevant to the competent authorities' determination concerning increased imports. Relying on the panel's finding in Argentina – Footwear (EC), which was affirmed by the Appellate Body, Japan argues that to determine whether imports have entered in "such increased quantities", Articles 2.1 and 4.2(a) require an analysis of the rate and amount of the increase in imports, in absolute terms and as a percentage of domestic production. Japan contends that without providing the amounts of imports, a full qualitative analysis would not be possible. Japan further argues that the amounts of imports are particularly relevant in the situation of this case, where imports decreased substantially in absolute terms. According to Japan, the fact that imports decreased at a lower rate than did domestic production, but were still decreasing in substantial amounts, is a factor that creates serious doubt as to whether the products could be considered to be imported "in such increased quantities".181
7.151.
In response, Ukraine argues that the requirement of Article 4.2(a) to evaluate the rate and amount of the increase in imports is relevant in the context of causation analysis. In Ukraine's view, Japan is seeking to add to the obligations of Ukraine by requiring under Article 4.2(a) what would amount to a breach of Article 3.2, which provides that information which is by nature confidential or which is provided to the competent authorities on a confidential basis "shall not be disclosed without permission of the party submitting it". In Ukraine's view, by providing the amounts of the imports, Ukraine would act inconsistently with Article 3.2 and invalidate all the efforts it took to protect the domestic industry's confidential data, because a simple numerical analysis of the indexed import data provided by the competent authorities would suffice to derive the confidential information. Ukraine refers to the panel report in US – Steel Safeguards and argues that the non-disclosure requirement prevails, provided the competent authorities are able to resort to "ways of presenting data in a modified form (e.g. aggregation or indexing), which protects confidentiality".182 Ukraine further submits that its demonstration of the import increase on the basis of relative data makes the need to analyse imports in absolute terms less important. Finally, Ukraine asserts that the rates of the increase in imports it provided in the Notice of 14 March 2013 and Key Findings were in fact based on absolute amounts.183
7.152.
Japan responds that an analysis of the absolute and relative amounts of imports would not lead to a breach of Ukraine's obligation of confidential treatment of information submitted to its competent authorities. According to Japan, the amounts of imports cannot be considered confidential, noting that the total annual amount of imports is publicly available information that can be obtained, by product code, from the Ukrainian Statistical Service. Japan also disagrees that in a relative increase scenario, the rate and amount of the increase in imports need not be evaluated in absolute terms. According to Japan, the need for analysis of the import increase in absolute terms is not left to the discretion of the competent authorities, as Article 4.2(a) requires such an analysis.184
7.153.
The Panel recalls its findings above that Ukraine has acted inconsistently with Article 2.1 by failing to provide an explanation in its published report regarding how intervening trends in imports relative to domestic production supported the competent authorities' determination that there was a relative increase for the period of investigation 2008-2010. In the light of this, there is no need for us to consider or make any additional finding regarding whether the competent authorities should also have provided an analysis of the amounts of imports, as Japan contends. We therefore exercise judicial economy and decline to make findings on this issue.

7.3.1.3 "[I]s being imported"

7.154.
As noted above, Article 2.1 provides that a Member may apply a safeguard only if a product "is being imported" in increased quantities. The Appellate Body has interpreted this requirement to mean that the increase in imports must be "recent" enough to cause or threaten to cause serious injury.185 The Panel now turns to whether, as claimed by Japan, Ukraine failed to demonstrate a "recent" increase in imports.
7.155.
Japan submits that Ukraine must establish that the increase in imports is recent, current and ongoing. Referring to the Appellate Body report in Argentina – Footwear (EC), Japan contends that the period of investigation should be the recent past.186 Japan further argues that the determination regarding whether the conditions for the application of the safeguard measures are fulfilled must be based on the "recent past".187 In Japan's view, if the competent authorities fail to seek out pertinent information about the recent past, they will be unable to determine whether imports have increased in "such quantities" within the meaning of Article 2.1.188
7.156.
Ukraine accepts the Appellate Body's approach to the determination of increased imports as set out in Argentina – Footwear (EC).189 However, relying on the Appellate Body Report in US – Steel Safeguards, Ukraine contends that there is no requirement that imports must be increasing at the time of the determination or thereafter.190 Furthermore, according to Ukraine, the relevant point in time for determining whether the data is recent is the time when the investigation is conducted.191
7.157.
Japan responds that the use of the present tense in Article 2.1 indicates that it is necessary to examine "recent imports". In Japan's view, whether imports are "recent" needs to be assessed by reference to the time when a safeguard measure is applied.192 According to Japan, the increase in imports should be recent enough at the time of the application of a safeguard measure to cause or threaten to cause serious injury or threat thereof. Japan argues that, if at the time a safeguard measure is applied the product is no longer being imported in such increased quantities or the imports are not causing or threatening to cause serious injury, there is nothing that a safeguard measure needs to prevent or remedy.193 Japan further considers that Ukraine's position would lead to absurd consequences because it would imply that WTO Members could take emergency action even ten years after the end of an investigation period.194 Japan submits that a significant delay between the end of the period of investigation and the actual application of a safeguard measure requires an update of the data.195 According to Japan, if there is a significant time gap, the presumption that the conditions for application of a safeguard measure are still fulfilled is no longer reasonable.196
7.158.
Ukraine counters that the Agreement on Safeguards does not require that the application of the measure must follow the termination of the investigation immediately or within a certain period of time.197 In Ukraine's view, a delay between the end of the investigation and the imposition of the safeguard measure is not determined by the Agreement on Safeguards and therefore it is for a Member to decide upon the time gap.198 Furthermore, Ukraine contends that there is no requirement under the Agreement on Safeguards to continue to update the information following the end of the period of investigation and certainly not following the end of the investigation.199
7.159.
With regard to the present dispute, Japan argues that the increase in imports found by the competent authorities over the period 2008–2010 can hardly be regarded as "recent" considering that the safeguard measure was only applied as of April 2013.200 In Japan's view, judging by reference to the time when the safeguard measure was applied, the "period of investigation" was certainly not the "recent past".201
7.160.
Ukraine responds that the data its competent authorities used in their analysis was the most recent data available at the time of investigation. Ukraine recalls that it initiated its investigation in July 2011, covering the three most recent complete years before the initiation of the investigation (2008-2010). Ukraine also points out that the investigation included import data from the beginning of 2011, effectively up to the date of initiation.202 Ukraine further asserts that the time gap after the completion of the investigation was not based on an arbitrary decision of the competent authorities, but is explained by the need to exchange views with exporting countries, particularly the European Union, Japan, the Russian Federation, and the Republic of Korea.203 Ukraine points out in this regard that Ukrainian officials and representatives of exporting Members held a number of consultations and meetings to discuss the possible imposition of safeguard measure before the application of the safeguard measure at issue.204
7.161.
In Japan's view, the two-year gap in the present case between the end of the period of investigation and the actual imposition of the safeguard measure is manifestly excessive. Japan maintains that a one-year gap between the conclusion of the investigation and the actual imposition of the safeguard measure is also too long. Japan submits that the increase in imports relied upon by the competent authorities was therefore not recent enough.205 According to Japan, the measure at issue applied as of April 2013 can hardly be justified to be an "emergency action" within the meaning of Article XIX:1(a) and Article 11.1(a) when the increase in imports which must be demonstrated before such measures may be imposed relates to imports before 2011.206 Furthermore, Japan contends that even if a significant delay could in principle be justified by good-faith efforts on the part of a WTO Member to conduct negotiations subsequent to the investigation, no such efforts were made in the present case. Japan argues that after providing the Key Findings to certain interested parties, including Japan, the competent authorities did not contact them again, nor did they make any other good faith efforts to settle the case before resorting to the application of a safeguard measure.207
7.162.
The Panel begins by clarifying certain relevant facts regarding the chronology of events in this case. As will be explained in the section below concerning the requirement to notify the WTO Committee on Safeguards208, the evidence on record supports the conclusion that the competent authorities in this case made their finding and determination that imports in 2010 had increased relative to domestic production compared to 2008 long before they decided to apply a safeguard measure. Specifically, we explain below that in our view the competent authorities made a determination of threat of serious injury caused by increased imports on 28 April 2012 (which was not published), but only decided to apply a safeguard measure on 14 March 2013.209 The measure entered into force one month later. There was thus a time gap between the end of the period of investigation in 2010 and the date of the substantive determination in April 2012, and an even longer time gap between the end of the period of investigation and the decision to apply the safeguard measure in March 2013. Japan questions the appropriateness of both time gaps under Article 2.1.
7.163.
Under Article 2.1, if a Member has determined that the relevant requirements, which include increased imports, are satisfied, it may apply a safeguard measure. Neither Article 2.1 nor any other provision of the Agreement on Safeguards specifies any maximum permissible time gap between, on the one hand, the end of the period of investigation, and, on the other hand, (i) the date on which the enabling substantive determination is made and (ii) the date of the decision to apply a safeguard measure based on that determination. Nonetheless, Article 2.1 requires that the product concerned "is being imported" in increased quantities. The Appellate Body made the following observation regarding this phrase:

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.130 In our view, the phrase "is being imported" implies that the increase in imports must have been sudden and recent.

Footnote 130 reads:

The Panel... recognizes that the present tense is being used, which it states "would seem to indicate that, whatever the starting-point of an investigation period, it has to end no later than the very recent past." (emphasis added) Here, we disagree with the Panel. We believe that the relevant investigation period should not only end in the very recent past, the investigation period should be the recent past.210

7.164.
The dispute before us presents the issue whether the increase in imports must have been recent (i) in relation to the date on which the Member concerned determines that all requirements for applying a safeguard measure are met (date of the determination); (ii) in relation to the date on which that Member decides to apply a safeguard measure (date of the decision on application); or (iii) in relation to both these dates.
7.165.
It is clear to us from the above-quoted statement by the Appellate Body that the increase in imports must be recent in relation to the date of determination. The Appellate Body refers to the competent authorities' "examination" and "investigation". The present continuous form in the phrase "is being imported" indicates that at the time of determination the increase in imports must have been recent. It is understood, however, that the determination comes at the end of an investigation211, which in itself requires time, and that this investigation must be based on available import data. There thus will ordinarily be some time gap between the end of the period of investigation and the date of determination. As noted, that gap is explained by the time required to conduct the investigation and the availability of necessary data. In our view, in assessing whether an increase in imports was recent in relation to the date of determination, we must take account of the time required to conduct and complete a proper investigation.
7.166.
We now consider whether the increase in imports must also be recent in relation to the date of the decision to apply a safeguard measure. As a contextual matter, we note that the notification requirements in Article 12.1 indicate that the date of determination and the date of the decision on application need not necessarily coincide. They may in the legal systems of some Members, but not in others. Article 12.1 accordingly requires that the importing Member notify the WTO Committee on Safeguards immediately upon (i) making a finding on serious injury or threat thereof caused by increased imports – which is the date of the determination, as we use that term here – and (ii) taking a decision to apply a safeguard measure. To us, Article 12.1 suggests that, depending on the institutional context of a particular Member, the decision to apply a safeguard measure can come after the determination. In those cases, some delay between the date of the determination and the decision on application may, therefore, be justified.212
7.167.
Ukraine referred to consultations with other Members as a reason for the time gap in this case. According to Article 12.3, Members "proposing to apply a... safeguard measure" must provide adequate opportunity for "prior consultations". The phrase "proposing to apply" suggests that the requirement to give adequate opportunity for consultations arises once a Member has taken a "decision to apply" a safeguard measure, which may in some Members, be after the date of determination.213 If a Member chooses to provide an additional opportunity for consultations already after the date of determination, some limited delay may, in our view, be justifiable, if the Member concerned engages in these consultations in good faith and they could still influence the decision to apply a safeguard measure.
7.168.
Ukraine's position, however, appears to be that if the relevant conditions and circumstances are met on the date of determination, the relevant Member has the right pursuant to Article 2.1 to apply an appropriate safeguard measure whenever it sees fit thereafter. In its view, apparently, the only question that may arise from a delay in application is whether a measure that is applied following some delay is being applied, as required by Articles 5 and 7 of the Agreement on Safeguards, only to the extent necessary, and for such period as may be necessary, to prevent or remedy serious injury and to facilitate adjustment.214
7.169.
Ukraine's interpretation of Article 2.1 raises serious concerns, in our view. Under Ukraine's interpretation, a Member could apply a safeguard measure based on data that is not the most recent data available at the time of the application of the measure. Ukraine's interpretation thus raises the possibility that a few years after the end of an investigation and the making of a determination, a Member would proceed to apply a safeguard measure that would not be justified if the Member's substantive determination had been based on more recent available data.
7.170.
To us, this is a troubling prospect. The Agreement on Safeguards "permits Members to impose measures against 'fair trade'"215 and, to that end, gives Members the exceptional right, subject to certain conditions, to withdraw or modify a tariff concession or suspend another obligation under the GATT 1994 in order to take "emergency action on imports" of a particular product.216 However, the right to apply a safeguard measure, once established, cannot be saved for future use. We therefore consider that the "extraordinary nature of safeguard measures"217 militates against an interpretation of Article 2.1 under which a safeguard measure could be applied in situations that are not (or are no longer) emergencies.
7.171.
Ukraine suggests that the Panel should address these concerns, if at all, under Articles 5 and 7. However, Japan has brought relevant claims under Article 2.1.218 Even assuming that Articles 5 and 7 could be invoked as bases for similar claims, we must address Japan's claims under Article 2.1.
7.174.
Turning to the dispute before us, we begin by summarizing the relevant facts. First, there was a time gap of almost 16 months between the end of the period of investigation (2010) and the date of the substantive determination of threat of serious injury caused by increased imports (28 April 2012), and a time gap of more than two years between the end of the period of investigation and the date of the decision to apply the safeguard measure (14 March 2013). Second, the competent authorities initiated their investigation on 2 July 2011 and completed on 28 April 2012.220 Thus, the investigation, which was extended once through a public notice, took less than ten months, which, we note, is less than the 11-month maximum duration permitted under Ukraine's Safeguards Law.221 Finally, there was a time gap of ten and a half months between the substantive determination and the decision to apply the measure. Ukraine's Safeguards Law does not appear to require such a delay between the date of determination and the date of a decision to apply a safeguard measure.222 Indeed, Ukraine does not argue that its Safeguards Law mandated this particular delay. Rather, Ukraine argues that the delay resulted from the need to complete consultations with certain Members exporting passenger cars to Ukraine. We also note that no effort appears to have been made to update the data after the date of the determination and revisit the determination in that light.223
7.175.
We commence our analysis with the time gap between the end of the period of investigation and the date of determination, which amounted to a little less than 16 months. The initial six months of this time gap resulted from the fact that the competent authorities only initiated the investigation in July 2011 with a period of investigation covering data for the three most recent years for which such data was available at the time of initiation.224 Japan has not demonstrated that the competent authorities at that time or soon thereafter had access to, and could have evaluated, more recent data, not just for imports, but also for relevant injury and causal factors to be investigated at the same time. Nor has Japan established that using annual data is in itself a questionable practice.225 In the light of this, we see no reason to question the six-month time gap.
7.177.
For these reasons, we consider that in the particular circumstances of this case the 16-month time gap following the end of the period of investigation did not remove the date of the determination so far from the underlying facts as to call into question the conclusion that there was a "recent" increase in imports as of that date. We therefore find that Japan has not established that the relative increase in imports determined to have existed in this case on the basis of data covering the period 2008-2010 was not recent enough in relation to the date of determination, 28 April 2012.
7.178.
We proceed to analyse the time gap of more than two years between the end of the period of investigation in 2010 and the date of the decision to apply the safeguard measure, 14 March 2013. We have already considered the first 16 months of this time gap. All that remains for us to examine, therefore, is whether the additional ten and a half months that followed the substantive determination removed the date of the decision to apply the safeguard measure too far from the facts underlying that determination. In our view, an important consideration in this respect is whether, if the competent authorities had proceeded differently, they could have taken the decision to apply the safeguard measure on or around 14 March 2013 taking into account more recent data, although this might have entailed a new investigation. Data for the full year 2012 would probably not have been available in time to allow its consideration in the context of a decision taken in March 2013. But it is clear to us that data for the year 2011 would have been available. Thus, the competent authorities could have updated the data to take into account data for the year 2011, whether by extending the period of investigation or some other mechanism, and taken a decision to apply a safeguard measure on the basis of that more recent information in March 2013. This alternative scenario suggests that if the competent authorities had proceeded differently after they made their determination in 2012, they could have made a decision on whether to apply a safeguard measure on or around 14 March 2013, but based on more recent data that would have included the year 2011.228
7.179.
It is reasonable to assume that a change in the data being evaluated by the competent authorities could possibly have resulted in a different substantive determination in this case.229 Indeed, the jurisprudence indicates in this regard that particular importance attaches to developments in the most recent portion of a period of investigation, especially in a threat of serious injury case such as the present one.230
7.180.
Ukraine contends that the time gap between the date of the determination and the date of the decision to apply the safeguard measure was justified because it engaged in consultations on the measure with various Members. The evidence on record does not permit us to confirm whether various meetings identified by Ukraine with trade representatives of other countries concerned exclusively, or even mainly, the proposed safeguard measure, or whether meaningful efforts were in fact undertaken towards adjusting the proposed measure in response to the representations of other countries. However, Ukraine does not argue that these meetings led to any change in the proposed measure.231
7.181.
In any event, as mentioned above, we accept that consultations undertaken in good faith with other Members may, in principle, justify some delay in the application of a safeguard measure. We have also explained, however, that a delay, even an otherwise legitimate one, may remove the date of the decision to apply a safeguard measure so far from the facts underlying the substantive determination that it is no longer possible to maintain, on that date, that a product "is being imported" in increased quantities and that justifiable misgivings arise regarding the continued relevance of the existing substantive determination. For the reasons we have just explained, the dispute before us in our view fits within this latter category.
7.182.
In our assessment, the time gap between the competent authorities' determination and the decision to apply the safeguard measure was such that, on 14 March 2013, the competent authorities could no longer maintain, based on data from 2008 to 2010 alone, that passenger cars were "being imported" in increased quantities within the meaning of Article 2.1 and that the determination of, inter alia, increased imports that they made on 28 April 2012 continued to rest on a sufficient factual basis. We also note that Article 2.1 admits of no exception with regard to the requirement to ensure that a safeguard measure be applied only if a product "is being imported... in such increased quantities". Thus, even ongoing, good faith consultations would not justify a departure from the requirements of Article 2.1.
7.183.
This interpretation in our view does not hamper legitimate efforts that an importing Member might undertake with a view to crafting a safeguard measure that takes into account the concerns and interests of affected exporting countries.232 We recall that before applying a safeguard measure, the importing Member must, pursuant to Article 12.3, provide an opportunity for consultations with Members having a substantial export interest. If an importing Member wishes to engage in additional bilateral discussions with exporting countries following its substantive determination, there would appear to be ways to accomplish this. But we see no provision in the Agreement on Safeguards under which the holding of such additional bilateral discussions would excuse an inconsistency with an express obligation set out in the Agreement.
7.184.
For these reasons, we consider that in the particular circumstances of this case the time gap of more than two years following the end of the period of investigation removed the date of the decision to apply the safeguard measure at issue too far from the underlying facts for the competent authorities to be justified in concluding that there was a "recent" increase in imports as of that date. We therefore find that the relative increase in imports, which the competent authorities determined to have existed in this case on the basis of data covering the period 2008-2010, was not recent enough in relation to the date of the decision to apply a safeguard measure, 14 March 2013.
7.185.
Having regard to all of the above, we therefore conclude that Ukraine acted inconsistently with Article 2.1, and specifically its requirement that a product "is being imported" in increased quantities, by applying a safeguard measure that was not based on a "recent" increase in imports.

7.3.1.4 "[U]nder such conditions"

7.186.
The Panel turns, finally, to Japan's additional contention that Ukraine did not make a proper determination of "increased imports", because it failed to examine the "conditions" under which the increase in imports occurred.
7.187.
Japan argues that, pursuant to Article 2.1, the competent authorities must examine the "conditions" under which the imports occur. Relying on a statement of the Appellate Body in US – Steel Safeguards, Japan contends that the question whether "increased quantities" of imports will suffice to justify the application of a safeguard measure can be answered only in the light of the "conditions" under which those imports occur. Japan further refers to the panel report in Argentina – Footwear (EC), arguing that the phrase "under such conditions" indicates the need to analyse the conditions of competition between the imported product and the domestic like or directly competitive products in the importing country's market. Thus, Japan considers that the analysis of the conditions under which the imports occur is important in order to properly evaluate whether the increased quantities of imports are such as to qualify as "increased imports" under Article 2.1.233
7.188.
Regarding the dispute at hand, Japan submits that Ukraine failed to examine the "conditions" under which the increased imports occurred. In Japan's view, it is highly relevant that while imports increased in relative terms, the volume of imports in absolute terms decreased substantially. Japan argues that without an analysis of the relevant "conditions", Ukraine was not in a position to properly evaluate whether the imposition of a safeguard measure was warranted. According to Japan, the Notice of 14 March 2013 identifies the drop in domestic consumption and the decrease of the market share of the domestic producers, but does not identify the "conditions" under which the imports occurred. Japan argues that even if one were to assume that these developments are meant to be "conditions", the Notice of 14 March 2013 does not offer any "reasoned and adequate explanation" as to how these developments constituted "such conditions as to cause or threaten serious injury to domestic producers".234
7.189.
In response, Ukraine argues that the lack of examination of the "conditions" of the increase in imports is not pertinent to the question whether increased imports were found to exist and concerns the different question of causation.235
7.190.
The Panel recalls that Article 2.1 contains the phrase "such 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 the domestic industry…". In our view, this phrase identifies two distinct elements. The first element refers to increased quantities of imports, while the second refers to the conditions under which they occur, which must be such as to make it possible for those increased quantities to cause serious injury or threat thereof. The "conditions" under which imports occur in our view have no bearing on whether or not there have been increased quantities of imports. Consequently, we do not consider that an analysis of the "conditions" under which imports occur forms an integral part of the analysis of the quantities in which imports occur. This view is consistent with the finding of the panel in Argentina – Footwear (EC), which stated that "the phrase 'under such conditions' in fact refers to the substance of the causation analysis that must be performed under Article 4.2(a) and (b)".236 The Appellate Body in US – Wheat Gluten agreed with the panel's analysis and linked the phrase "under such conditions" to the analysis of causation under Article 4.2(b).237 We thus agree with Ukraine that the examination of the conditions under which the imports occur is relevant to the question of causation. Accordingly, we will consider whether Ukraine analysed the conditions under which the imports occurred when we address Ukraine's determination of the causal link between increased imports and serious injury or threat thereof to the domestic industry later in our report.238

7.3.1.5 Overall conclusion

7.191.
In sum, the Panel has found above that:

a. Ukraine has failed to provide an explanation in its published report regarding how intervening trends in imports relative to domestic production supported the competent authorities' determination that there was a relative increase for the period of investigation 2008-2010;

b. Ukraine has failed to demonstrate that the increase in imports was sudden enough, sharp enough, and significant enough;

c. there is no need to make findings regarding whether Ukraine should have provided the amounts of imports;

d. Ukraine has failed to demonstrate that the increase in imports was recent enough; and

e. the issue whether Ukraine analysed the conditions under which the imports occurred is to be addressed in the context of the Panel's analysis of causation.

7.192.
Based on these findings, we therefore conclude that the competent authorities' determination of increased imports in this case is inconsistent with Article 2.1.

7.3.2 Claims under Articles 3.1, 4.2(a), 4.2(c), and 11.1(a), and Article XIX:1(a)

7.193.
The Panel now turns to address the remainder of the group of claims relating to Ukraine's determination of increased imports. We first address, jointly, Japan's claims under Articles 4.2(a)239, and 11.1(a)240, and Article XIX:1(a).241

7.3.2.1 Claims under Articles 4.2(a) and 11.1(a), and Article XIX:1(a)

7.194.
Japan claims that in making its determination on increased imports, Ukraine acted inconsistently also with Articles 4.2(a), and 11.1(a), and Article XIX:1(a). Specifically, Japan argues that: (i) Ukraine failed to demonstrate that the increase in imports was recent enough, sudden enough, sharp enough, and significant enough; (ii) Ukraine failed to make a qualitative analysis of the data on imports taking into account the intervening trends; (iii) Ukraine failed to demonstrate that the increased imports were "unforeseen" or "unexpected"; and (iv) Ukraine failed to examine the "conditions" under which the increase in imports occurred.242
7.195.
Ukraine considers that Japan's claims are without merit. Ukraine submits that it has clearly established the sudden, recent, and sharp increase in imported products relative to domestic production. Ukraine contends that it has met its obligations under the Agreement on Safeguards by examining all elements related to the increase in imports.243
7.196.
The Panel has concluded above that the competent authorities' determination of increased imports is inconsistent with Article 2.1. In the light of this, we do not consider it necessary, for the purposes of resolving this dispute, to make additional findings on whether Ukraine, in respect of the same determination, has also acted inconsistently with its obligations under Articles 4.2(a), and 11.1(a), and Article XIX:1(a). We consequently exercise judicial economy and make no findings with regard to these claims.

7.3.2.2 Claims under Article 3.1, last sentence, and Article 4.2(c)

7.197.
We turn, finally, to Japan's claim that Ukraine acted inconsistently with Article 3.1, last sentence, and Article 4.2(c) in respect of its determination of the increase in imports.
7.198.
Japan submits that, contrary to what is required by Articles 3.1 and 4.2(c), Ukraine failed to provide a "reasoned and adequate explanation" for the determination of "increased imports". Japan, referring to the Appellate Body Report in US – Steel Safeguards, argues that both Articles 3.1 and 4.2(c) apply to the determination of increased imports. Japan points out that according to the Appellate Body the condition that there must be "increased imports" constitutes a pertinent issue of fact and law within the meaning of Article 3.1.244 Japan contends that the published report in this case, i.e. the Notice of 14 March 2013, does not set forth any findings and reasoned conclusions regarding the determination of "increased imports". According to Japan, the Notice merely states that imports of the product concerned increased in 2010 as compared to 2008 relative to domestic production by 37.9% without giving further reasoned explanations and conclusions. Japan notes that, in particular, the Notice does not give any explanation of how the fact that imports decreased in absolute terms by 71% in 2010 compared to 2008, but increased by 38% relative to domestic production, supports the determination that a safeguard measure was warranted.245
7.199.
In response, Ukraine insists that the Notice of 14 March 2013 and the Key Findings contain a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined. Ukraine further argues that a more detailed analysis and its results were presented to the Commission and were the basis for the imposition of the safeguard measure. Ukraine notes, however, that they were confidential and were therefore not disclosed to Japan.246
7.200.
The Panel has concluded above that the competent authorities' determination of increased imports is inconsistent with Article 2.1. In the light of this, we see no need to make findings on whether, in respect of the same determination, Ukraine has also acted inconsistently with Articles 3.1 and 4.2(c). We consequently exercise judicial economy and make no findings with regard to these claims.

7.4 CLAIMS RELATING TO THREAT OF SERIOUS INJURY

7.201.
The Panel now turns to Japan's claims related to the manner in which the competent authorities made their findings regarding the serious injury or threat thereof, under Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.2(a), 4.2 (b), 4.2(c) and 11.1(a), and Article XIX:1(a). We will begin our consideration with the claim under Article 4.2(a), which in our view contains the most specific rules on the injury determination Members must make in a safeguard investigation, that is to say, a determination of whether increased imports cause or threaten to cause serious injury to the domestic industry.

7.4.1 Claim under Article 4.2(a)

7.202.
Article 4.2(a) provides as follows:

In the investigation to determine whether increased imports have caused or are threatening to cause serious injury to a domestic industry under the terms of this Agreement, the competent authorities shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the product concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilization, profits and losses, and employment.

7.203.
Japan claims that Ukraine acted inconsistently with, inter alia, Article 4.2(a) in making its serious injury and/or threat of serious injury determination on a number of bases. Japan argues that the competent authorities failed to evaluate all relevant factors. Japan notes that Article 4.2(a) sets out a non-exhaustive list of injury factors that must be evaluated by the competent authorities during a safeguard investigation. According to Japan, however, the Notice of 14 March 2013 does not even refer to one of these factors, the "share of the domestic market taken by the increased imports". Japan further asserts that, while the competent authorities referred to the rate of the increase in imports, they did not refer to, much less evaluate the "amounts" of such increase.247 In Japan's view, evaluation is a process of analysis which requires an examination of the data pertaining to each factor individually and of each factor in relation to the other factors examined.248 Japan submits that, in the Notice, the competent authorities merely listed the rate of increase or decrease for the injury factors without properly evaluating them.249
7.204.
Japan contends that it is not clear from the Notice whether the competent authorities made a finding of serious injury and/or threat of serious injury.250 Japan considers that this failure constitutes in itself a violation of the relevant provisions of the Agreement on Safeguards, because Ukraine cannot have provided an adequate and reasoned explanation as to why the facts on the record supported the conclusion it made.251
7.205.
With regard to the competent authorities' determination of threat of serious injury, Japan argues that the determination failed to demonstrate a "significant overall impairment" that is "clearly imminent". Japan argues that the very limited reasoning in the Notice does not show that serious injury was on the very verge of occurring, nor that there was a high degree of likelihood that the anticipated serious injury will materialize in the very near future.252
7.206.
Finally, Japan argues that the competent authorities failed to make a determination based on the recent past by relying on data for the period between 2008 and 2010 while adopting the safeguard measure in 2012 and applying it in April 2013.253 Japan refers to the Appellate Body's statement in US – Lamb that in making a determination of a threat of serious injury the competent authorities should pay particular attention to the data from the most recent past in this regard.
7.207.
Ukraine submits that its competent authorities conducted a proper analysis of the relevant injury factors in making the threat of injury determination.254 Referring to a chart containing a "public summary" of the injury factors analysed by its competent authorities, Ukraine maintains that it did not exclusively rely on end-point-to-end-point comparisons, but analysed the trend over the entire investigation period as well, including the data for the intervening year of 2009.255 According to Ukraine, the deterioration of each of the factors from 2008 to 2010 shows a potential for significant injury, with certain factors such as market share providing the factual basis for a finding that serious injury is "clearly imminent".256 Ukraine adds that, in addition to the worsening condition of the domestic industry, its competent authorities also analysed the capacity for future exports by exporting countries.257
7.208.
With regard to the amounts of the increase, Ukraine argues that further to a request from the domestic industry, this information was treated as confidential under Article 3.2 of the Agreement on Safeguards and Article 12 of its Safeguard Law.258
7.209.
According to Ukraine, Japan also fails to give full consideration to the documentation issued by Ukraine. Ukraine maintains that the competent authorities clearly analysed the market share data and stated in the Notice that "the share of domestic production in the domestic market of Ukraine also decreased by 35%".259
7.210.
In response to Japan's argument that Ukraine failed to make an injury determination on the basis of data from the recent past by applying the measure in 2013 on the basis of data from 2008 to 2010, Ukraine submits that Japan should have brought a claim under Articles 5 or 7 of the Agreement on Safeguards dealing with the application of the safeguard measure. According to Ukraine, there can be no doubt that the right to apply a safeguard measure existed at the time the determination was made.260
7.211.
Ukraine also argues that there is no need to make a discrete finding of serious injury or threat of serious injury under the Agreement on Safeguards.261 Ukraine clarifies in this respect that its competent authorities considered that the standards of serious injury were not met incontestably in the present case despite the fact that all relevant factors confirmed the worsening condition of the domestic industry. However, the competent authorities took the view that the standards concerning the threat of serious injury are "remarkably" lower if such threat is shown to be imminent262, and concluded that the worsening of all the relevant injury factors combined with the significant export potential of the notable exporters of motor cars to Ukraine constituted a threat of serious injury.263
7.212.
Japan responds that its claim is not that the competent authorities should have made a finding of serious injury only or threat of serious injury only. Rather, Japan claims that the requirement to give an adequate and reasoned explanation as to why the facts on the record support a determination of serious injury and/or threat thereof necessarily implies that the type of determination made must be clearly identified in the published report.264

7.4.1.1 The competent authorities' determination

7.213.
The Panel will first examine Japan's contention that Ukraine failed to clearly identify in the published report whether the determination was one of serious injury and/or threat of serious injury.
7.214.
As before, we base our evaluation on the Notice of 14 March 2013, which we consider is the published report within the meaning of Articles 3.1 and 4.2(c). So far as the injury analysis is concerned, that document contains two sections. Section 2 is headed "Research on existing or likely future export potential of countries of origin or exporting countries, as well as the possibility that such potential will be used for exports of the Product to Ukraine". As indicated by the heading of this section, the competent authorities analysed in this section the existing or likely future export potential of certain key exporting countries of passenger cars, namely Turkey, Korea, Romania, Germany, Japan, and Russia. The conclusion of that section reads as follows:

Given this, the noted trends in the development of the world automotive industry within the sense of Article 13 § 3(2) of the Law (on Safeguards of Ukraine) confirm that existing or near-future export potential in countries of origin or export countries may be used for exporting automobiles to Ukraine.265

7.215.
The other section on the injury analysis, Section 3, is headed "Examination of trends of Product import to Ukraine affecting the domestic industry and existence of causal link between increased imports of Products to Ukraine and threat of serious injury to the domestic industry".266 In this section, the competent authorities set out an analysis of the relevant injury factors during the period of investigation, i.e. from 2008 to 2010, including the production volume of the domestic industry, capacity utilisation, sales volumes within the domestic market, operating profit, employment, productivity, the volume of imports, and the share of domestic production in the domestic market. The conclusion of that section reads as follows:

In light of the increased import volume of the Product to Ukraine and conditions of such import, the domestic industry was driven out of the domestic market within Ukraine, resulting in a worsening of the poor state of the national industry and a threat of serious injury to the domestic industry.

According to the findings of the investigation carried out by the Ministry, the increase of motor cars imports into Ukraine regardless of country of origin and export, relative to domestic production and demand, was occurring under such conditions and volumes that the imports threatened to cause serious injury to the domestic industry, which were not caused by other factors.267

7.216.
The heading and conclusion of Section 3 explicitly refer to a finding of "threat of serious injury". Similarly, the analysis of the future export potential of certain exporting countries under Section 2 reflects a forward-looking perspective that is characteristic of a threat of injury analysis. By contrast, nowhere in the injury analysis did the competent authorities make any finding of actual serious injury. In the light of these elements in the Notice, we consider that the competent authorities made a determination of threat of serious injury only. There is no indication in the Notice that they found serious injury, or serious injury and/or a threat of serious injury.
7.217.
This is further confirmed by the unpublished Key Findings.268 Section 3 of the Key Findings is headed "Determination of serious injury or threat thereof". In this section, the competent authorities first analyse the development of the injury factors from 2008 to 2010. The Key Findings then state that:

Taking into account the unique position of the interested parties to the investigation, namely that the worsening financial and economic condition of the domestic producer in 2010 compared to 2008 was connected with the decrease of consumption level of the Product in the Ukrainian market, the Ministry has estimated the possibility of injury caused to the domestic industry in the future, in particular the existing or potential future export potential of the countries of origin or export countries, as well as the possibility of the said potential being used for the export of this product to Ukraine.

In the context of the threat of serious injury in the future, it must be noted that data furnished by the International Organization of Motor Vehicle Manufacturers (OICA) show that in 2008 and in 2010 no vehicle producing country reduced its production of motor cars to the extent that Ukraine did (by 79%). Taking into account that certain countries decreased their production, they consequently have considerable spare capacities which can be re-directed to export markets including that of Ukraine.269

7.218.
This is followed by further detailed analysis of the export potential of certain key exporting countries including Turkey, Korea, Romania, Germany, Japan, and Russia. On this basis, the competent authorities concluded that:

An analysis of trends in the global development of the automobile industry within the meaning of clause Article 13 § 3(2) of the Law, conducted by the Ministry, showed that the existing or likely future export potential of the countries of origin and export countries, may be possibly utilized for the export of motor cars subject to investigation to Ukraine.

Research results led to the conclusions that the factors defined in Article 13 § 3 of the Law and Article 4 § 1 of the Agreement with regard to the threat of serious injury to the domestic industry, were present."270

7.219.
In our view, such references as "the possibility of injury caused to the domestic industry in the future", and "in the context of the threat of serious injury in the future" indicate that the competent authorities sought to establish a finding of threat of serious injury. Moreover, we note that the last sentence of the Key Findings cited above states that "[r]esearch results led to the conclusions that the factors … with regard to the threat of serious injury to the domestic industry, were present". It is thus clear to us that the conclusion reached is one of threat of serious injury.
7.220.
In the light of the above, and in spite of the fact that there might have been some initial ambiguities in this respect resulting from the Notice of Initiation, we find that in the Notice of 14 March 2013 the competent authorities identified sufficiently clearly that they made an affirmative determination of a threat of serious injury. Consequently, we reject Japan's argument that Ukraine acted inconsistently with its obligations under the Agreement on Safeguards because it failed to clearly identify in the published report whether the determination made was one of serious injury and/or threat of serious injury.
7.221.
We note that Japan makes arguments concerning both the competent authorities' analysis of serious injury and their analysis of threat of serious injury. As we have found above that the competent authorities made only a finding of a threat of serious injury in the Notice of 14 March 2013, we will address Japan's claim only insofar as it concerns the threat of serious injury determination.

7.4.1.2 Analysis of threat of serious injury

7.222.
Article 4.1(b), which defines "threat of serious injury" and sets out certain requirements for a determination of such threat, reads:

"threat of serious injury" shall be understood to mean serious injury that is clearly imminent, in accordance with the provisions of [Article 4.2]. A determination of the existence of a threat of serious injury shall be based on facts and not merely on allegation, conjecture or remote possibility.

This definition refers to "serious injury" which is defined, in turn, in Article 4.1(a) as follows:

"serious injury" shall be understood to mean a significant overall impairment in the position of a domestic industry.

Thus, a competent authority making a determination of threat of injury must establish (i) the clear imminence of (ii) significant overall impairment in the position of a domestic industry.

7.4.1.2.1 "Significant overall impairment"

7.223.
We begin our examination with the second element, "significant overall impairment". The parties disagree on whether the standard of injury for a finding of threat of serious injury is lower than or the same as for a finding of actual serious injury. Ukraine considers that it is widely recognized that the standard for a finding of threat of serious injury" is remarkably lower than for a finding of "serious injury", provided that such threat is shown to be imminent.271 Japan argues that the Appellate Body in US – Lamb when addressing the concept of "serious injury" referred to a "very high standard of injury". According to Japan, this very high standard applies equally to serious injury and the threat thereof.272
7.225.
Regarding the concept of "serious injury", the Appellate Body has on several occasions underscored the very high standard of injury embodied by the concept of serious injury. In US – Wheat Gluten, the Appellate Body referred to that standard as "exacting".273 In US – Lamb, the Appellate Body reaffirmed this high standard in the context of "threat of serious injury", observing that:

[T]he 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 ….274

The Appellate Body in the same dispute further stated that:

[I]n making a determination on either the existence of "serious injury" or on a "threat" thereof, panels must always be mindful of the very high standard of injury implied by these terms.275

7.226.
Having clarified that in common with the concept of "serious injury" the concept of "threat of serious injury" reflects a very high level of injury to be established, it is necessary to look in more detail at the difference between these two concepts. In US – Line Pipe, the Appellate Body underscored that the respective definitions of "serious injury" and "threat of serious injury" must be given independent meaning and stated that:

[T]hese two definitions reflect the reality of how injury occurs to a domestic industry. 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".

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.276 (Emphasis added; original emphasis omitted)

7.227.
In our view, the Appellate Body's reference to a "lower threshold for establishing the right to apply a safeguard measure" is in respect of the fact that, by definition, a finding of a "threat" of serious injury allows a Member to apply a safeguard measure even though there is not yet any observable serious injury, although such serious injury is clearly imminent, or "just around the corner", as it were. The Agreement on Safeguards reserves this right to Members so that they may take protective action to prevent imminent serious injury rather than wait for serious injury to materialize and then remedy it afterwards. It is in this sense of enabling such preventative action even though there is no actual serious injury that we understand the Appellate Body to have referred to the Agreement setting a lower threshold.
7.228.
Significantly, however, neither the Agreement nor logic suggests that merely because the Agreement allows application of a safeguard measure even before serious injury has actually occurred, the relevant degree of injury should be easier to demonstrate in such cases. Indeed, this would have the perverse consequence of maki