WORLD TRADE
ORGANIZATIONG/SG/N/8/USA/7/Suppl.1
25 January 2000
(00-0293)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(b) OF THE
AGREEMENT ON SAFEGUARDS ON FINDING A SERIOUS
INJURY OR THREAT THEREOF CAUSED BY INCREASED IMPORTS
UNITED STATES
Supplement
The following communication, dated 24 January 2000, has been received from the Permanent
Mission of the United States.
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Pursuant to Article 12.1(b) of the WTO Agreement on Safeguards, the United States hereby
submits a supplemental notification regarding the determination of the United States International
Commission (“USITC”) in respect of serious injury, or threat thereof, to the domestic circular welded
carbon quality line pipe (“line pipe”) industry.  The United States is also submitting a copy of the
report from the USITC to the Secretariat.
SUPPLEMENTAL NOTIFICATION UNDER ARTICLE 12.1(b) OF THE
AGREEMENT ON SAFEGUARDS
The United States supplements its notific ation of 8 November  1999 (G/SG/N/8/USA/7)
regarding the determination of the USITC in respec t of serious injury, or threat thereof, to the
domestic line pipe industry caused by increased imports of line pipe.
As previously notified (G/SG/N/8/USA/7), the USITC made an affirmative determination that
line pipe is being imported into the United States in such increased quantities as to be a substantial
cause of serious injury or threat thereof to the domestic line pipe industry.  Three Commissioners,
Vice Chairman Miller and Commissioners Hillman and Koplan, determined that imports are asubstantial cause of serious injury to the domestic line pipe industry.  Two Commissioners, Chairman
Bragg and Commissioner Askey, determined that imports are a substantial cause of the threat of
serious injury to that industry.  Commissioner Crawford made a negative determination.
The USITC forwarded its report to the President on 22 December 1999.  The report contains
the USITC’s findings and reasoned conclusions reached on all pertinent issues of fact and law, and a
summary of the information collected during the in vestigation.  With this notification, the United
States provides a copy of the USITC’s report, ex cluding confidential business information, to the
Committee.  We understand that the Committee will make a copy of the report available to Members
on request.  The views of the Commissioners can also be downloaded from the USITC’s website at
ftp://ftp.usitc.gov/pub/reports/opinions/PUB3261.PDF.G/SG/N/8/USA/7/Suppl.1
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The USITC’s full analysis is set out in the report.  Consistent with Article 12.3 of the
Agreement on Safeguards, the United States is prepared to consult with those Members having a
substantial interest as exporters of the product concerned, with a view to, inter alia , reviewing the
information provided in this notification and th e USITC report, exchanging views on the measure
proposed and reaching an understanding on ways to achieve the objective set out in Article 8.1 of the
Agreement.
1. Evidence of serious injury or threat thereof caused by increased imports Increased Imports
(Chairman Bragg, Vice Chairman Miller and Commissioners Hillman, Koplan, and Askey):  “We find
that this statutory criterion is met.  While imports fell between 1994 and 1995, they increased each
year thereafter, reaching their highest annual level in 1998. Imports were *** tons in 1994 anddeclined to *** tons in 1995; imports then rose to *** tons in 1996, *** tons in 1997, and then rose
sharply to *** tons in 1998.  Although imports declined from *** tons in interim (January-June) 1998
to *** tons in interim 1999, they remained at a very  high level in interim 1999, exceeding in just 6
months the level of full year 1995 and 1996 imports.
The ratio of imports to production also rose during the investigation, and was at its highest
level in January-June 1999. Like actual imports, the ratio declined from 1994 to 1995 and then rose
each year thereafter. The ratio was *** per cent in 1994 and fell to *** per cent in 1995; it then
increased to *** per cent in 1996 and *** per cent in 1997, and then nearly doubled to *** per cent in
1998.  It rose to its highest level, *** per cent, in interim 1999 (as compared to *** per cent in interim1998).”
1
Serious Injury (Vice Chairman Miller and Commissioners Hillman and Koplan):  “In view of
the sharp declines in 1998 and interim 1999 in virtually all domestic industry indicators, includingdomestic industry production, capacity utilization, shipments, sales, market share, financialperformance, employment, hours worked, and wages pa id, and the increase in inventories, we find
that the domestic industry is seriously injured.”
Threat of Serious Injury (Chairman Bragg and Commissioner Askey): “In light of the
foregoing evidence and, in particular, the precarious financial condition of the domestic line pipe
industry in 1998 and interim 1999 as evidenced by the significant and increasing number of domestic
producers that sustained operating losses during these periods as well as the extent of such losses, wefind that the indicia discussed above demonstrate that the domestic line pipe industry is threatened
with serious injury–that is, we find that serious injury is clearly imminent.”
Causation (Vice Chairman Miller and Commissioners Hillman and Koplan): “There are two
principal causes of injury in this case:  (1) the substantial increase in low-priced imports in 1998-99,
and (2) the decrease in line pipe demand in 1998-99 as a consequence of falling oil and natural gas
prices, which, in turn, resulted in decreases in oil and natural gas drilling and production activities in
the United States.  Both factors significantly contributed to the domestic industry’s poor health
beginning in the second half of 1998.  For the reasons discussed below, we conclude that the impact
of increased imports is as great or greater than the effect of the downturn in demand.  Consequently,we find that the statute’s causation criterion is met.”
* * * * *
                                                     
1 The USITC adjusted the import data to exclude imports of certain Arctic-grade and alloy line pipe
that was outside the scope of the investigation.  Publishing the adjusted data would disclose confidentialbusiness information.G/SG/N/8/USA/7/Suppl.1
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In conclusion, the sharp increase in imports in 1998 and interim 1999, and the simultaneous
import-led decline in prices, have caused a significant loss of sales, market share, and revenue on the
part of the domestic industry, as well as a decline in other key indicators of the industry’s health, such
as capacity utilization and employment.  Accordingly, we find that increased imports are an important
cause of serious injury.”
* * * * *
“In sum, while the decline in line pipe demand resulting from reduced oil and natural gas
drilling and production activities undoubtedly played a role in the industry’s poor performance in
1998 and interim 1999, we find that the effect of the imports on the domestic industry was as great or
greater.”
Causation (Chairman Bragg a nd Commissioner Askey): “In conclusion, we find that the
increased imports are an important cause, and a cause no less important than any other cause, of the
threat of serious injury to the domestic line pipe industry.  Our finding is based upon the increase in
imports that has already occurred and which we find likely to continue, the increase in the share of thedomestic market taken by imports, the depression of line pipe prices due in large part to the increase
in imports, and our certainty that the increased imports will have a serious negative effect on the
volume and prices of the domestic industry’s sales of line pipe.  In short, we are satisfied that serious
injury, although not yet existing, is clearly imminent if import trends continue unabated”.
2. Provide information on whether there is an absolute increase in imports or an increase in
imports relative to domestic production
See response to item 1 above.  All six Commissioners found that imports of line pipe have
increased both in actual terms and relative to domestic production.
3. Provide a precise description of the product involved “The imported article covered by
this investigation is welded carbon quality line pipe of circular cross section, of a kind used for oil and
gas pipelines, whether or not stencilled.  For purposes of this investigation, “carbon quality” is
defined to mean: products in which (1) iron predominates, by weight, over each of the other contained
elements, (2) the carbon content is 2 per cent or less, by weight, and (3) none of the elements listed
below exceeds the quantity, by weight, respectively indicated: 1.80 per cent of manganese, or 2.25 percent of silicon, or 1.00 per cent of copper, or 0.50 per cent of aluminum, or 1.25 per cent of
chromium, or 0.30 per cent of cobalt, or 0.40 per cent of lead, or 1.25 per cent of nickel, or 0.30 per
cent of tungsten, or 0.10 per cent of molybdenum, or 0.10 per cent of niobium, or 0.15 per cent of
vanadium, or 0.15 per cent of zirconium.
Such line pipe is currently classified in subheadings 7306.10.10 and 7306.10.50 of the
Harmonized Tariff Schedule of the United States (HTS).  Although the HTS categories are provided
for convenience and Customs purposes, the written description of the merchandise under investigation
is dispositive.  The investigation excludes certain merchandise described as arctic grade line pipe,
defined as welded line pipe that (1) has an outer diameter of 4.5 inches or more and a wall thicknessequal to or less than 0.75 inches; and (2) when subjected to a Charpy V-notch test performed at minus
50 degrees Fahrenheit or below applied to three specimens taken from the well area, has a ft-lbs rating
of no less than 17 ft-lbs for each sample, with an average for all three at no less than 19 ft-lbs; and (3)
using at least three samples, has a minimum average shear area of 85 percent in the base metal and 50
percent in the weld; and (4) when subjected to a hydrogen induced cracking test to be performed asper NACE (National Association of Corrosion Engineers) TM0284 test with solution A, has a crack
length ratio that does not exceed 15 per cent, a crack sensibility ratio that does not exceed 2 percent,
and a crack thickness ratio that does not exceed 5 per cent”.G/SG/N/8/USA/7/Suppl.1
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4. Provide a precise description of the proposed measure
Under US law, those Commissioners who make affi rmative serious injury or threat of injury
determinations also make recommendations to the President on actions that would address the serious
injury, or threat, and be most effective in facilitating the efforts of the domestic industry to make apositive adjustment to import competition.  19 U.S.C. § 2252(e)(1) and (6).  In this case, three of the
five Commissioners who made affirmative determinations, Vice Chairman Miller and Commissioners
Hillman and Koplan, jointly proposed a remedy to the President.  Chairman Bragg and Commissioner
Askey recommended an alternative remedy.  These proposed measures are set out below.
A. Safeguard measure proposed by Vice Chairman Miller and Commissioners Hillman
and Koplan
“1. That the President impose a tariff-rate quota for a 4-year period on imports of
line pipe, with the in-quota amount set at 151,124 short tons in the first year,
and with that amount to be increased by 10 per cent in each of the second,
third, and fourth years, with over-quota imports to be subject to a duty of 30per cent ad valorem  in addition to current US tariffs;
2. That the President, if he determines to allocate the overall quota, recognize
the disproportionate growth and impact of the imports from Korea;
3. That the President initiate internatio nal negotiations with Korea to address
the underlying cause of the import surge and the serious injury to the
domestic industry;
4. Having made negative findings with respect to imports of line pipe from
Canada and Mexico under section 311(a) of the NAFTA Implementation Act,
that such imports be excluded from the tariff-rate quota; and
5. That the tariff-rate quota not apply to imports of line pipe from Israel, or to
any imports of line pipe entered duty-free from beneficiary countries under
the Caribbean Basin Economic Recovery Act or the Andean Trade Preference
Act”.
B. Safeguard Measure Proposed by Chai rman Bragg and Commissioner Askey
“1. That the President impose a duty, in addition to the current rate of duty, for a
4-year period, on imports of line pipe that are within the scope of thisinvestigation as follows: 12.5 per cent ad valorem  in the first year of relief,
11 per cent ad valorem  in the second year of relief, 9.5 per cent ad valorem  in
the third year of relief, and 8 per cent ad valorem  in the fourth year of relief;
2. That the increased rates of duty not apply to imports of line pipe from
Canada, Israel, or to any imports of line pipe that entered duty-free from
beneficiary countries under the Caribbean Basin Economic Recovery Act or
the Andean Trade Preference Act;
3. Commissioner Askey, having made a negative finding with respect to imports
of line pipe from Mexico under section 311(a) of the NAFTA
Implementation Act, recommends that such imports from Mexico be
excluded from the increased duty.  Chairman Bragg, having made an
affirmative finding under section 311(a ) of the NAFTA Implementation Act,G/SG/N/8/USA/7/Suppl.1
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recommends that imports of line pipe from Mexico be subject to the duty
increase”.
5. Provide proposed date of introduction of the measure
Under US law, the President generally has 60 days from receipt of a USITC report containing
an affirmative determination of serious injury, or threat thereof, to determine what safeguard action, if
any, he will take.  Any action proclaimed by the President generally must take effect no later than 15
days after the President proclaims it.
6. Provide expected duration of the measure
As noted in item 4 above, the proposed measures have four-year durations.
7. For a measure with a duration of more than three years, provide the proposed date for the
review (under Article 7.4) to be held not later th an the mid-term of the measure, if such a date
for the review has already been scheduled
If the measure imposed has a duration of four years, a review will be held no later than the
two-year mark, but no date has been scheduled.
8. If the expected duration is over one year, provide expected timetable for progressive
liberalization of the measures
The expected timetables for the progressive liberalization of the proposed measures are set
out in item 4 above.
9. Information relating to the extension of a safeguard measure
Not applicable.
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