"To examine, in the light of the relevant provisions of the covered agreements cited by New Zealand in document WT/DS177/4 and by Australia in document WT/DS178/5 and Corr. 1, the matter referred to the DSB by New Zealand and Australia in those documents, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements".
|Year||Tariff Rate Quota||Country Allocations|
|Australia||New Zealand||Other Countries|
|Year 1||31,851,151 kg||17,139,582 kg||14,481,603 kg||229,966 kg|
|Year 2||32,708,493 kg||17,600,931 kg||14,871,407 kg||236,155 kg|
|Year 3||33,565,835 kg||18,062,279 kg||15,261,210 kg||242,346 kg|
|Year||In‑Quota||Out of Quota|
(1) that the United States acted inconsistently with GATT Article XIX and the Safeguards Agreement because the USITC Report failed to discuss and demonstrate that increased imports of lamb meat were threatening to cause serious injury to the "domestic industry" "... as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions... "14 as required by GATT Article XIX:1;
(2) that the United States acted inconsistently with the requirements of SG Article 5.1 for a determination that the measure is applied only to the extent "necessary to prevent or remedy serious injury and to facilitate adjustment";
(3) that the United States acted inconsistently with SG Article 3.1 by failing to publish a report justifying the measure imposed;
(4) that to the extent the United States carried out any investigation subsequent to the report of the USITC, it was in breach of the requirements of SG Article 3.1 and SG Article 12.2 and 12.6;
(5) that the USITC's determination of threat of serious injury being caused to the domestic industry was inconsistent with the provisions of SG Article 4 in a number of respects, principally that the USITC's determination of the relevant "domestic industry" was inconsistent with the provisions of SG Article 4.1(c) through the inclusion of enterprises that do not produce the like or directly competitive products, and that the United States did not demonstrate that increased imports were threatening to cause serious injury to the "domestic industry", in particular because
· the data were inadequate and did not support the determination as required under SG Article 4.2;
· the USITC did not meet the requirements of SG Article 4.1(b) that for a finding of threat of serious injury the serious injury must be imminent and "[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;
· the determination of threat of serious injury, by attributing to increased imports injury caused by other factors, was contrary to SG Article 4.2(b); and
· the USITC failed to consider all the factors in SG Article 4.2(a);
(6) that the United States acted inconsistently with its obligations under SG Article 8.1 and SG Article 12.3, which require a Member to endeavour to maintain a substantially equivalent level of concessions and other obligations and to enter into consultations in good faith to achieve that objective;
(7) that the United States acted inconsistently with SG Article 2.2 to apply the measure to all imports irrespective of source. In particular, no WTO justification was given for the inclusion of Canada, Mexico, Israel and beneficiary countries under CBERA and ATPA in the injury investigation but their exclusion from the measure, which also was inconsistent with SG Article 4;
(8) that the United States breached its obligations under SG Article 11.1(a) because the measure was not emergency action and did not conform to the provisions of GATT Article XIX and other provisions of the Safeguards Agreement;
(9) that since the United States acted inconsistently with the other provisions of the Safeguards Agreement, in particular SG Article 4, it also is in breach of SG Article 2.1; and
(10) that the United States is in breach of GATT Article II, since the measure is inconsistent with the United States' tariff bindings on lamb meat.
According to Australia, these errors cannot be cured, and the United States can bring the measure into conformity with the Safeguards Agreement and GATT 1994 by revoking the measure without delay.
(a) find that the measure is inconsistent with the Safeguards Agreement and GATT 1994 and that the US has acted inconsistently with its obligations under the Safeguards Agreement and under GATT 1994;
(b) find that therefore the US is in violation of its obligations under the Safeguards Agreement and GATT 1994; and
(c) recommend that the US bring the measure into conformity with the Safeguards Agreement and GATT 1994.
(a) The United States measure is not a response to "unforeseen developments" within the meaning of GATT Article XIX and thus does not comply with SG Article 2.1 and SG Article 11.
(b) The United States has failed to demonstrate that its "domestic industry that produces like or directly competitive products" has been threatened by "serious injury" as required by SG Article 2.1.
(c) The United States has failed to demonstrate that any threat of serious injury to its domestic industry has been caused by increased imports as required by SG Article 2.1
(d) The United States has applied a safeguards measure that is neither necessary to prevent serious injury nor necessary to facilitate adjustment, contrary to SG Article 5.1, and has failed to publish its findings and reasoned conclusions on the necessity of its measure as required by SG Article 3.1.
(e) The United States has failed to apply a safeguard measure to all imports irrespective of source as required by SG Article 2.2 and GATT Article I.
(f) The United States has applied a safeguard measure that places it in violation of its obligations under GATT Article II.
(a) all confidential information in the USITC Report on which its determination and recommendation were based; and
(b) all information, including details of any deliberations and analysis, and documents taken into account by the US Administration or the US President in the course of the taking a decision to apply the measure in dispute.
"Every legal provision cited in both Australia's and New Zealand's panel requests contains multiple obligations, yet neither request identifies the specific obligations at issue. Neither the listing of articles nor any other material in the panel requests clarifies which of the multiple obligations potentially at issue is actually implicated.18 …
The United States does not assert substantial prejudice … with respect to the claims … under Articles I, II and XIX of GATT 1994 and Articles 5, 11 and 12 of the [Safeguards] Agreement, as it was possible for us to discern those sub-provisions that would be implicated on the basis of the context of this proceeding. However, the mere listing of Articles 2, 3 and 4 of the [Safeguards] Agreement, without any elucidation of the actual claims at issue, fails to meet the standards of DSU Article 6.2 and has substantially prejudiced the United States by compromising its ability to respond to the claims of the complaining parties.19 …
… with respect to the obligations listed in Article 4 of the Safeguards Agreement, it was unclear whether Australia and/or New Zealand were stating a claim with respect to (1) [the definition of] threat of serious injury as that term is defined in Article 4.1(b); (2) domestic industry [producing like or directly competitive products] as that term is defined in Article 4.1(c); (3) any or all of the economic factors to be evaluated that are set out in Article 4.2(a); (4) causation (Article 4.2(b)); or (5) the published analysis of the case required by Article 4.2(c)".20
Because of the inadequacy of the panel requests, it was not until Australia and New Zealand filed their first written submissions that the United States was able to know their actual legal claims.21
The insufficiency of the Panel requests has seriously prejudiced the United States in the preparation of its defense. It prevented the United States from knowing the true nature of the claims being made against the U.S. measure and placed the United States in the position of merely guessing which of the many obligations in these several articles might be at issue in this review. This severely limited the ability of the United States to begin the task of preparing its defense. The dispute resolution process is intended to be a relatively speedy process. Central to such a speedy process is the requirement that claims be clearly stated at the required time. The failure of a complaining party to do so prejudices the responding party and undercuts the fairness of the entire process. It effectively stacks the deck against the responding party."22
"The Panel has taken note of the 5 May 2000 request by the United States for preliminary rulings and for an extension of the deadline for its first submission, and the 9 May 2000 letters in response by New Zealand and Australia.
The Panel has also taken note of Australia's request for a preliminary ruling in paragraph 15 of Australia's first submission of 20 April 2000 and of New Zealand's statements in paragraphs 7.22ff of New Zealand's first submission of 20 April 2000.
In accordance with paragraph 13 of the Panel's working procedures, Australia and New Zealand are invited to submit their views on the request by the United States for preliminary rulings in written form by Wednesday, 17 May 2000. Also in accordance with that paragraph, the United States is invited to submit in its first submission any further views on the request by Australia.
The parties to this dispute should be prepared to present their views on the substance of the points raised in the communications mentioned above on the first day of the Panel's first substantive meeting with the parties, i.e., 25 May 2000.
In the meantime, and without prejudice to the Panel's decisions in respect of the preliminary issues, the Panel has decided to extend the deadline for the filing of the first submission by the United States [from Thursday, 11 May 2000] to Monday, 15 May 2000. For this reason, the deadline for third parties to make their written submissions also is extended, to Friday, 19 May 2000. Otherwise, the Panel's previously-announced timetable remains unchanged."
"United States' Request for a Ruling on Alleged Insufficiency of the Panel Requests of Australia and New Zealand
1. The Panel has carefully considered the written submissions, the oral statements and supplementary comments of the United States, Australia and New Zealand concerning the alleged insufficiency of the panel requests of Australia and New Zealand.
2. The Panel has also considered the relevant aspects of the decisions of the Appellate Body in the Korea – Dairy Safeguards case and the United States – Foreign Sales Corporations case concerning Article 6.2 of the DSU.
3. The Panel has also taken into account all the relevant attendant circumstances of this case.
4. In the light of the above, the Panel has decided that it is unable to accept the request which the United States has submitted to it.
5. A more detailed statement of the Panel's decision and reasoning will be provided to the parties in due course."
"The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. …"
We recall that in Korea – Dairy, the Appellate Body separated Article 6.2 into its constituent parts, i.e., that the request must:
(i) be in writing;
(ii) indicate whether consultations were held;
(iii) identify the specific measures at issue; and
(iv) provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly26 (emphasis added).
"Australia considers that the measure, and associated actions and decisions taken by the USA, are inconsistent with the obligations of the USA under the Agreement on Safeguards and GATT 1994, in particular:
Articles 2, 3, 4, 5, 8, 11 and 12 of the Agreement on Safeguards, and Articles I, II and XIX of GATT 1994."
"[t]here may be situations where the simple listing of the articles of the agreement or agreements involved may, in the light of attendant circumstances, suffice to meet the standard of clarity in the statement of the legal basis of the complaint. However, there may also be situations in which the circumstances are such that the mere listing of treaty articles would not satisfy the standard of Article 6.2. This may be the case, for instance, where the articles listed establish not one single, distinct obligation, but rather multiple obligations. In such a situation, the listing of articles of an agreement, in and of itself, may fall short of the standard of Article 6.2."27 (emphasis added).
Discussion in the Committee on Safeguards
Timing of the US request for preliminary ruling concerning the specificity of the panel requests
" responding Members [should] seasonably and promptly bring claimed procedural deficiencies to the attention of the complaining Member, and to the DSB or the Panel, so that corrections, if needed, can be made to resolve disputes. "44 (emphasis added)
"a year passed between the submission of the [EC] request for consultations … and the first mention of the objection by the United States – despite the fact that the United States had numerous opportunities during that time to raise its objections. It seems to us that, by engaging in consultations on three separate occasions, and not even raising its objections in the two DSB meetings at which the request for establishment of a panel was on the agenda, the United States acted as if it had accepted the establishment of the panel in this dispute, as well as the consultations preceding such establishment."45 (emphasis added).
"United States' Request for a Ruling on Exclusion of the US Safeguards Statute from the Panel's Terms of Reference
1. The Panel has given careful consideration to the US request for a preliminary ruling that the consistency of the US safeguard statute with the Safeguards Agreement and WTO law is outside the terms of reference of this Panel.
2. The panel agrees with the US that that issue is outside the Panel's terms of reference.
3. However, the question of "causation" and the more specific question whether the application in this case of the criterion of "substantial cause" is consistent with the Safeguards Agreement and WTO law is clearly within this Panel's terms of reference."
"Australia's Requests Regarding Disclosure of Confidential Information by the US
1. The panel has carefully considered the requests of Australia for preliminary rulings on the disclosure by the US of confidential information excluded from the USITC report and information covering the process after the USITC reported to the President.
2. The Panel does not wish to make such preliminary rulings.
3. Instead, the Panel will consider these issues in the context of particular requests or questions which the parties or the Panel may wish to submit to the United States."
"with respect to its application of the standard of review, we do not believe that the Panel conducted a de novo review of the evidence, or that it substituted its analysis and judgement for that of the Argentine authorities. Rather the Panel examined whether, as required by Article 4 of the Agreement on Safeguards, the Argentine authorities had considered all relevant facts and had adequately explained how the facts supported the determinations that were made. Indeed, far from departing from its responsibility, in our view, the Panel was simply fulfilling its responsibility under Article 11 of the DSU in taking the approach it did. To determine whether the safeguard investigation and the resulting safeguard measure applied by Argentina were consistent with Article 4 of the Agreement on Safeguards, the Panel was obliged, by the very terms of Article 4, to assess whether the Argentine authorities had examined all the relevant facts and had provided a reasoned explanation of how the facts supported their determination."54
"If, as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions, any product is being imported into the territory of that Member 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 Member 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." (emphasis added).
"Article 1 states that the purpose of the Agreement on Safeguards is to establish 'rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994' (emphasis added). The ordinary meaning of the language in Article 11.1(a) – 'unless such action conforms with the provisions of that Article applied in accordance with this Agreement' – is that any safeguard action must conform with the provisions of Article XIX of the GATT 1994 as well as with the provisions of the Agreement on Safeguards. Thus, any safeguard measure56 imposed after the entry into force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994."57
"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 of 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."62
"the dictionary definition of 'unforeseen', particularly as it relates to the word 'developments,' is synonymous with 'unexpected'. 'Unforeseeable', on the other hand, is defined in the dictionaries as meaning 'unpredictable' or 'incapable of being foreseen, foretold or anticipated'. Thus it seems to us that the ordinary meaning of the phrase 'unforeseen developments' requires that the developments which led to a product being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to domestic producers must have been 'unexpected'". (footnotes omitted).63
"... The competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law." (emphasis added).
Thus, the requirement in this provision is phrased in a very broad way. The competent authorities' "findings and reasoned conclusions" must be in respect of all pertinent issues of fact and law, not on some or selected issues of fact and law.68 Given that GATT Article XIX:1 makes clear that the question of unforeseen developments is intertwined with the basic conditions for the application of a safeguard measure, we conclude that GATT Article XIX:1 read in the context of SG Article 3.1 implies that it must be clear from the published report that the investigating authorities examined the existence of unforeseen developments and came to a reasoned conclusion in this regard.
"We find the differences between imported and domestic lamb meat alleged by the respondents, to the extent that they exist, to be limited. While most domestic lamb meat traditionally has been sold as fresh or chilled and imported lamb meat was sold frozen, imported lamb meat increasingly enters as fresh or chilled. Thus, domestic and imported lamb are to a large extent sold in the same form. The majority of respondents (10 of 16) to the Commission's purchasers' questionnaire reported that the grades, cuts, and sizes enumerated in the survey were available from both
importer and domestic sources...."71
"We find that imported and domestic lamb are somewhat substitutable. Although respondents argued that imported lamb meat was distinguishable from domestic lamb meat in size, taste and consistency of quality and supply, the records shows that imported and domestic products in fact became more similar during the period of investigation. Traditionally, virtually all domestic lamb meat sold in the domestic market was fresh or chilled, and most imported lamb meat was frozen. However, much of the increase in imports between 1995 and 1997 was in fresh or chilled lamb meat, which increased by 101 per cent during that period, as compared to 11 per cent for imports of frozen lamb meat. Moreover, foreign exporters estimate that the major portion of their 1999 increase will be in fresh and chilled lamb meat."72
"In addition, there is evidence that imported cuts have become larger in size and more comparable to domestic cuts."73
(b) Finding on "unforeseen developments"
"the domestic producers as a whole of the like or directly competitive Article or those producers whose collective production of the like or directly competitive Article constitutes a major proportion of the total domestic production of such article."
"Most … [safeguard] cases involve firms and workers producing a product at the same stage of production as the imported article. However, in some instances firms and workers at an earlier stage of processing have accounted for a significant part of the value of the product and have been either the primary proponent or a strong supporter of relief. … Over the years, the Commission generally has taken an approach similar to that developed, and later codified, under title VII [antidumping and countervailing duty provisions]. Under that approach, the Commission includes producers of the raw product in the industry producing the processed product, if it finds
(1) there is a continuous line of production from the raw to the processed product; and
(2) there is a substantial coincidence of economic interest between the growers and the processors. (footnotes omitted, emphasis added)."79
"[T]he evidence clearly establishes a continuous line of production from a raw product, live lambs, to the processed product, lamb meat […]
There is also evidence of a coincidence of economic interests between lamb growers and processors. The value added by lamb growers and feeders (i.e., the value of slaughter-ready live lambs) accounts for 88 percent of the wholesale cost of lamb meat. Thus, packers and breakers can be viewed largely as finishers of products for which the vast majority of value [88 per cent] has already been created by growers and feeders. Packers' and breakers' operations are therefore highly affected by the supply and quality of the live lambs produced by growers and feeders."80 (footnote omitted, emphasis added).
"shall be understood to mean the producers as a whole of the like or directly competitiveproducts operating within the territory of a Member, or those whose collective output of the like or directly competitive products constitutes a major proportion of the total domestic production of those products." (emphasis added).
"both the text and the negotiating history of the relevant Code provisions made it impossible to accept Canada's contention that governments intended the concept of 'domestic industry' to be interpreted with sufficient flexibility to permit treating input suppliers as 'producers' of the like product when economic circumstances warranted … The only way such an interpretation could be adopted would be to amend the Code through negotiation." (emphasis added).149
"’threat of serious injury’ shall be understood to mean serious injury that is clearly imminent, in accordance with the provisions of paragraph 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;"
"serious injury" in turn is defined in SG Article 4.1(a) as "… a significant overall impairment in the position of a domestic industry."
"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 utilisation, profits and losses, and employment."
"In view of the declines during the period of investigation in the domestic industry's market share, production, shipments, profitability and prices among other difficulties that the domestic industry is facing, we conclude that it is threatened with imminent serious injury."158
"… a proper examination of whether a threat of material injury was caused by dumped imports necessitated a prospective analysis of a present situation with a view to determining whether a 'change in circumstances' was 'clearly foreseen and imminent'. … [such] determination … required an analysis of relevant future developments with regard to the volume, and price effects of the dumped imports and their consequent impact on the domestic industry."170
The prospective analysis referred to by the Korea - Resins panel concerned the industry's current condition as well as future trends in import volumes and prices.