WORLD TRADE
ORGANIZATIONWT/DS98/AB/R
14 December 1999
(99-5420)
Original: English
KOREA – DEFINITIVE SAFEGUARD MEASURE ON
IMPORTS OF CERTAIN DAIRY PRODUCTS
AB-1999-8
Report of the Appellate BodyWT/DS98/AB/R
Page i
I. Introduc tion................................................................................................................. ................1
II. Arguments of the Participan ts and Third Pa rticipan t..................................................................3
A. Claims of Error by Korea – Appellant ........................................................................... 3
1. Article 6.2 of the DSU ....................................................................................3
2. The OAI Report ..............................................................................................4
3. Burden of Proof ..............................................................................................5
4. Article 5.1 of the Agreement on Safeguards ...................................................6
B. Arguments of the European Communities – Appellee.................................................... 7
1. Article 6.2 of the DSU ....................................................................................7
2. The OAI Report ..............................................................................................8
3. Burden of Proof ..............................................................................................9
4. Article 5.1 of the Agreement on Safeguards ...................................................9
C. Claims of Error by the European Communities – Appellant ....................................... 10
1. Article XIX of the GATT 1994 ....................................................................10
2. Article 12.2 of the Agreement on Safeguards ...............................................13
D. Arguments of Korea – Appellee ................................................................................... 14
1. Article XIX of the GATT 1994 ....................................................................14
2. Article 12.2 of the Agreement on Safeguards ...............................................16
E. Arguments of the United States – Third Participant .................................................... 17
1. Article XIX of the GATT 1994 ....................................................................17
III. Issues Raised in this Appeal ............................................................................................... ......18
IV. Claims Under Article XIX of the GATT 1994 .........................................................................19
V. Article 5.1 of the  Agreement on Safeguards ............................................................................29
VI. Article 12.2 of the  Agreement on Safeguards ..........................................................................32
VII. Article 6.2 of the DSU ..................................................................................................... .........36
VIII. The OAI  Report ............................................................................................................ ............41
IX. Burden of Proof ............................................................................................................. ...........44
X. Findings and Conclusions..................................................................................................... ....48WT/DS98/AB/R
Page 1
WORLD TRADE ORGANIZATION
APPELLATE BODY
Korea – Definitive Safeguard Measure on
Imports of Certain Dairy Products
Korea,  Appellant/Appellee
European Communities,  Appellant/Appellee
United States,  Third ParticipantAB-1999-8
Present:
El-Naggar, Presiding Member
Ehlermann, MemberFeliciano, Member
I. Introduction
1. Korea and the European Communities appeal from certain issues of law and legal
interpretations developed in the Panel Report,  Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products  ("the Panel Report").1  The Panel was established to consider a complaint by
the European Communities relating to a definitive safeguard measure imposed by Korea on imports ofcertain dairy products.
2. On 17 May 1996, the Korean Trade Commission initiated an investigation of injury to the
domestic industry by imports of skimmed milk powder preparations.  The results of this investigation
were published by the Korean Trade Commission in the  Investigation Report on Industrial Injury by
the Office of Administration and Investigation  (the "OAI Report").  On 7 March 1997, Korea
published in its Government Gazette its decision to apply a definitive safeguard measure in the formof a quantitative restriction on imports of the dairy products at issue.  Korea notified the initiation andresults of its investigation, as well as its decision to apply a safeguard measure, to the Committee onSafeguards.  On 12 August 1997, following consultations in the Committee on Safeguards, theEuropean Communities requested consultations with Korea under the Understanding on Rules and
Procedures Governing the Settlement of Disputes  (the "DSU") regarding the consistency of Korea's
safeguard measure with its WTO obligations.  The European Communities subsequently requested the
establishment of a panel to examine the consistency of Korea's safeguard measure with its obligationsunder Articles 2, 4, 5 and 12 of the  Agreement on Safeguards  and Article XIX of the GATT 1994.
The United States participated as a third party in the proceedings before the Panel.  The factualaspects of this dispute are set out in greater detail in the Panel Report.
2
                                                     
1WT/DS98/R, 21 June 1999.
2Panel Report, paras. 1.1-2.8.WT/DS98/AB/R
Page 2
3. In its Report circulated to Members of the World Trade Organization ("the WTO") on
21 June 1999, the Panel concluded that Korea's definitive safeguard measure was imposedinconsistently with its WTO obligations in that:
(a) Korea's serious injury determination is not consistent with the
provisions of Article 4.2(a) of the Agreement on Safeguards;
(b) Korea's determination of the appropriate safeguard measure is
not consistent with the provisions of Article 5 of theAgreement on Safeguards;  and
(c) Korea's notifications to the Committee on Safeguards
(G/SG/N/6/KOR/2, G/SG/N/8/KOR/1, G/SG/N/10/KOR/1,
G/SG/N/10/KOR/1. Suppl) were not timely and therefore are
not consistent with the provisions of Article 12.1 of theAgreement on Safeguards.
3
The Panel rejected:
(a) the European Communities' claim that Korea violated the
provisions of Article XIX:1 of GATT by failing to examine
the "unforeseen developments";
(b) the European Communities' claim that Korea violated the
provisions of Article 2.1 of the Agreement on Safeguards by
failing to examine, as a separate and additional requirement,the "conditions" under which increased imports caused
serious injury to the relevant domestic industry;  and
(c) the European Communities' claims that the content of Korea's
notifications to the Committee on Safeguards
(G/SG/N/6/KOR/2, G/SG/N/8/KOR/1, G/SG/N/10/KOR/1,G/SG/N/10/KOR/1. Suppl) did not meet the requirements of
Article 12.1, 12.2 and 12.3 of the  Agreement on Safeguards .
4
The Panel recommended that the Dispute Settlement Body (the "DSB") request Korea to bring the
measures at issue into conformity with its obligations under the Marrakesh Agreement Establishing
the World Trade Organisation  ("the WTO Agreement ").5
4. On 15 September 1999, Korea notified the DSB of its decision to appeal certain issues of law
covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant toArticle 16.4 of the DSU, and filed a Notice of Appeal with the Appellate Body pursuant to Rule 20 of
the  Working Procedures for Appellate Review  (the " Working Procedures ").
6  On 27 September 1999,
                                                     
3Panel Report, para. 8.1.
4Ibid., para. 8.2.
5Ibid., para. 8.4.
6WT/DS98/7, 16 September 1999.WT/DS98/AB/R
Page 3
Korea filed an appellant's submission.7  The European Communities filed its own appellant's
submission on 30 September 1999.8  Both Korea and the European Communities filed appellee's
submissions on 11 October 1999.9  On the same day, the United States filed a third participant's
submission.10
5. The oral hearing in the appeal was held on 3 November 1999.11  The participants and the third
participant presented oral arguments and responded to questions put to them by Members of theAppellate Body Division hearing the appeal.
II. Arguments of the Participants and Third Participant
A. Claims of Error by Korea – Appellant
1. Article 6.2 of the DSU
6. Korea requests that the Appellate Body find that the Panel erred in its interpretation of
Article 6.2 of the DSU and erred in finding that the European Communities' request for establishment
of a panel satisfied the requirements of Article 6.2 of the DSU.  According to Korea, the Panel erredas a matter of law in finding that, by merely listing four articles of the  Agreement on Safeguards  and
Article XIX of the GATT 1994, the European Communities' request for establishment of a panelsatisfied its obligations under Article 6.2 of the DSU.  The mere listing of articles allegedly breacheddoes not provide a brief summary of the legal basis of the complaint sufficient to present the problemclearly.  By limiting the requirement under Article 6.2 of the DSU to a mere description of the claims,the Panel reduces the clause "sufficient to present th e problem clearly" to inutility, contrary to the
injunction given by the Appellate Body.
12
7. In Korea's view, the failure of the European  Communities to comply with its obligations
under Article 6.2 of the DSU led to the adoption of imprecise terms of reference and failed to providenotice to Korea.  This is contrary to the universally accepted principle in civil litigation, alsoapplicable to the DSU, that the defendant must be able to understand, and be in a position to respondto, the claims brought by the applicant.  The inadequacy of the request for the establishment of a panel
                                                     
7Pursuant to Rule 21 (1) of the Working Procedures .
8Pursuant to Rule 23 (1) of the Working Procedures .
9Pursuant to Rule 22 (1) and Rule 23(3) of the Working Procedures .
10Pursuant to Rule 24 of the Working Procedures .
11Pursuant to Rule 27 of the  Working Procedures .
12Appellate Body Report,  United States – Standards for Reformulated and Conventional Gasoline
("United States – Gasoline "), WT/DS2/AB/R, adopted 20 May 1996, p. 23.WT/DS98/AB/R
Page 4
also meant that third parties were prejudiced because they could not exercise fully their rights under
the DSU.
8. Korea considers that it is self-evident that if the standard of "sufficient precision" can be
satisfied in every case by the mere listing of the articles of the relevant agreements, a panel would
never be required, as directed by the Appellate B ody, to examine the request for the establishment of
the panel "very carefully to ensure its compliance with  the letter and the spirit of Article 6.2 of the
DSU".13  The Panel made its finding in only two sentences, which cannot be considered a "very
careful" examination of the European Communities' request.  Further, the Panel Report lacks anydiscussion of the rationale for these findings, contrary to the requirements of Article 12.7 of the DSU.
9. Korea notes that the European Communities took a different approach in requesting the
establishment of a panel challenging safeguard measures imposed by Argentina. On 10 June 1998, theEuropean Communities submitted a request for establishment of a panel in the Argentina case, whichincluded a more detailed description of the claims at issue.
14  Korea views this difference as evidence
that the European Communities was fully aware of its obligations under Article 6.2 of the DSU, but,
for its own reasons, failed to meet those obligations in the present case.
2. The OAI Report
10. Korea argues that the Panel erred in its characterization of the submission of the OAI Report.
Korea submitted the OAI Report at the request of the Panel as background information, and did notrely on this Report in its defence.  The submissi on of the OAI Report to the Panel should not have
been viewed as a desire to place that report before the Panel either as the subject of dispute betweenthe parties, or as evidence of Korea's compliance or noncompliance with the Agreement on
Safeguards .
11. Korea notes that the Appellate Body has found that Members are under a duty and an
obligation to respond promptly and fully to requests made by panels for information underArticle 13.1 of the DSU, and that this duty is a specific manifestation of Members' engagement indispute settlement proceedings in good faith as required by Article 3.10 of the DSU.
15  The Panel's
                                                     
13Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution
of Bananas  ("European Communities – Bananas "), WT/DS27/AB/R, adopted 25 September 1997, para. 142.
14Request for the establishment of a panel by the European Communities, Argentina – Safeguard
Measures on Imports of Footwear , WT/DS121/3, 11 June 1998.
15Appellate Body Report, Canada - Measures Affecting th e Export of Civilian Aircraft  ("Canada –
Aircraft "),  WT/DS70/AB/R, adopted 20 August 1999.WT/DS98/AB/R
Page 5
reliance on the OAI Report can only discourage parties to future disputes from providing information
to panels that might be useful in explaining the context of and background to disputes, and can only
encourage parties to refuse to cooperate in the fact-finding process of panels.
12. Korea argues that the Panel erred in assessing Korea's actions solely on the basis of the OAI
Report.  Each of the claims of the European Communities was based on Korea's notifications to theCommittee on Safeguards, and the Panel confirmed that the European Communities "initially reliedon the notifications to the Committee on Safeguards to establish its claims".
16  The European
Communities raised the issue of the OAI Report only in its rebuttal submissions.  Followingquestioning from the Panel as to the precise nature  of the European Communities' case, the European
Communities made claims alleging violations of Article 4 based on the OAI Report in its RebuttalSubmission and at the Second Meeting with the Panel.  Since it had obtained an English translation of
the OAI Report 17 months prior to the establishment of the Panel, the European Communities could
have raised claims with respect to the OAI Report in its First Submission.
13. The Panel also erred by failing to consider Korea's argument that parties to a dispute
settlement procedure cannot introduce new claims at, or subsequent to, the rebuttal stage.  While
arguments can be made at any stage of the proceedings, the fundamental claims of the complainantmust be raised in the request for establishment of a panel or, at the latest, in the complaining
Member's First Submission.  To permit claims to be raised after that point denies both the respondentand third parties any effective right to address or rebut those claims.  As the OAI Report was neverraised by the European Communities until the rebuttal stage, any claim by the European Communities
based on that Report was raised too late in the proceedings to allow Korea to fully defend itself, or to
allow the United States as a third party to present any response to such claims.
14. In the view of Korea, the Panel also erred in establishing the claims, arguments and evidence
that the European Communities itself should have established.  The Panel's "inquisitorial" approachdenied Korea and the United States their rights under the DSU, and established an inappropriateprecedent on how complaining Members can manipulate panel proceedings to avoid full evaluationand response to their claims.
3. Burden of Proof
15. Korea submits that as a threshold matter, a panel must make a finding regarding whether the
Member with the burden of proof has established a  prima facie  case of violation.  As the Panel
admitted, the requirement that the panel first make this threshold determination is supported by past
                                                     
16Panel Report, para. 7.30.WT/DS98/AB/R
Page 6
Appellate Body practice.17  The Panel, however, ignored this step and stated only that it would simply
weigh the evidence at the end of the proceedings.
16. Korea argues that as a matter of law, the Panel erred in presuming that the European
Communities satisfied its burden of proof, and in proceeding to find that Korea violated Article 4 of
the  Agreement on Safeguards  based solely on the OAI Report.  Had the Panel properly applied the
requisite burden of proof, it could not, as a matter of law, have found that the European Communitiesmade a prima facie  case.  The Panel based all of its findings regarding Article 4 of the  Agreement on
Safeguards  exclusively on the OAI Report.  However, as noted earlier, the European Communities
conceded that this Report was not at issue between the parties.  Therefore, the European Communities
did not properly establish claims of violation of Article 4 of the  Agreement on Safeguards  based on
the OAI Report, and, as a result, failed to establish a  prima facie  case.
17. The interpretation that the Panel cannot make claims for the parties finds support in the
conclusions of the Appellate Body.
18  The Appellate Body has reaffirmed its view that a panel does
not have the authority to take over the complainant’s role in presenting its case.19  The present case
presents an even more compelling example of a panel improperly relieving a complaining Member of
the task of presenting its case.
4. Article 5.1 of the Agreement on Safeguards
18. Korea argues that the Panel erred in interpreting Article 5.1 of the Agreement on Safeguards
as imposing an obligation to apply a measure which in its totality is no more restrictive than isnecessary to prevent or remedy serious injury and facilitate adjustment.  Article 5.1 does not impose aclearly defined obligation on an importing Member a pplying a safeguard measure.  The first sentence
simply articulates a principle or objective, and imposes no binding obligation.  If preventing or
remedying serious injury and facilitating adjustment are merely goals or objectives, as the Panel
concedes, then they are not requirements to be met by a Member applying a particular safeguardmeasure.  A reasonable interpretation of the second sentence of Article 5.1 is that an importingMember may apply a safeguard measure consisting of a quantitative restriction at the level specifiedin that provision and need only provide clear justif ication if it deviates from such level.  As to the
third sentence of Article 5.1, the term "should" in that sentence is an exhortation to Members to meetthe objectives in the first sentence.
                                                     
17Appellate Body Report, Japan – Measures Affecting Agricultural Products  ("Japan – Agricultural
Products "), WT/DS76/AB/R, adopted 19 March 1999, pa ras. 136-138;  Appellate Body Report,  Korea – Taxes
on Alcoholic Beverages , WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, paras. 155-157.
18Appellate Body Report, Japan – Agricultural Products , supra , footnote 17.
19Appellate Body Report,  Canada – Aircraft , supra , footnote 15.WT/DS98/AB/R
Page 7
19. Korea argues that the object and purpose of Article 5.1 of the  Agreement on Safeguards
similarly support Korea's interpretation that the first sentence of Article 5.1 simply articulates an
objective.  Article 5 is triggered after an importing Member has found that increased imports are
causing serious injury or threat thereof to its domestic industry.  If the requisite findings are properlymade under Article 4 of the  Agreement of Safeguards , Article 5 is not intended to unduly restrict the
right of a Member to redress the emergency situation.
20. Korea submits that the Panel also erred in imposing on Korea an additional obligation to
provide a detailed explanation of its decision relating to the application of a particular safeguardmeasure.  There is no reference in Article 5 of the  Agreement on Safeguards  to any requirement for a
detailed discussion of the decision to apply a safeguard measure, and no requirement to set forthanalysis and reasoning regarding the factors considered.  Article 4.2(c) states that the competent
authority must publish, 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.  Article 5,however, contains no similar provision.  The drafters must have intended to exclude the requirementto give a reasoned explanation, and such intention must be given effect.
B. Arguments of the European Communities – Appellee
1. Article 6.2 of the DSU
21. The European Communities argues that the Appellate Body in  European Communities –
Bananas  illustrated what can be sufficient to satisfy the requirements of Article 6.2 of the DSU.20  The
request for establishment of the Panel in the present dispute does not differ from that in  European
Communities - Bananas  and should,  a fortiori , meet the "sufficiency" standard.
22. Korea's contention that if the "sufficient precision" standard in Article 6.2 of the DSU can be
satisfied in every case by listing the provisions re lied upon, panels would never need to "examine the
request for the establishment of the panel very caref ully to ensure its compliance with both the letter
and the spirit of Article 6.2 of the DSU" as required by the Appellate Body assumes an inherentconflict between the listing of articles and the careful examination of compliance with Article 6.2 ofthe DSU.  The Appellate Body simply said that the listing of articles is one way to achieve theobjectives of Article 6.2 with respect to the Panel's terms of reference and the opportunity for partiesto effectively defend their interests.  The standard set by the Appellate Body means that the listing of
the provisions relied upon is sufficient, although it does not rule out that other means may be chosen
to accomplish the objectives of Article 6.2 of the DSU.  This standard is aimed at attaining theobjectives of Article 6.2, which are the definition of the Panel’s jurisdiction and the effective exercise
                                                     
20Appellate Body Report, European Communities – Bananas , supra , footnote 13, paras. 142-143.WT/DS98/AB/R
Page 8
of procedural rights by the parties.  In the present case, the European Communities' request for the
establishment of a Panel did not prevent Korea from effectively defending itself.
2. The OAI Report
23. The European Communities argues that Korea's appeal relating to the OAI Report should be
rejected.  The Panel did not consider the OAI Report as the sole relevant basis for its review of
compliance with Article 4 of the  Agreement on Safeguards .  In addition, although it mostly relied on
Korea's notifications to the Committee on Safeguards, the European Communities also addressed theOAI Report and showed that Korea's investigation was defective on any basis.
24. The European Communities argues that it did not rely only on Korea's notification to assert its
claim under Article 4 of the  Agreement on Safeguards.   Even in its First Written Submission, the
European Communities referred to the OAI Report.  The European Communities initially referred to
the best and latest evidence available, which was primarily that summarized in Korea's notification of24 March 1997.  The OAI Report was not the latest statement of what Korea actually did.
25. Korea confuses the notions of "claim" or "mat ter" within the meaning of Article 11 of the
DSU, and that of "argument" and "evidence" in support of a claim.  The Appellate Body has clarifiedthe different meaning of all these terms and the different stages of the dispute settlement procedurewhen they may be invoked.
21  As the European Communities' request for the establishment of a panel
included a claim under Article 4 of the  Agreement on Safeguards , it is irrelevant that the supporting
evidence considered by the Panel in reviewing th e European Communities' claim was mentioned only
at the rebuttal stage of the proceedings.
26. The European Communities disagrees with Korea's argument that the OAI Report was not
mentioned by the European Communities in its First Written Submission so that no claim concerning
inconsistency with Article 4.2 based on the Report could have been raised at that stage.  This
argument is flawed because a claim can never be established or even inferred from evidence suppliedin the course of proceedings.  Further, Korea's position implies that the Panel could have consideredthe OAI Report in its assessment of Korea's defending arguments, but not in assessing the claim of theEuropean Communities under Article 4.2 of the  Agreement on Safeguards .  This is contrary to the
duty of a panel under Article 11 of the DSU to make an objective assessment of the matter before it.
                                                     
21Appellate Body Report,  Brazil – Measures Affecting Desiccated Coconut  ("Brazil – Desiccated
Coconut "), WT/DS22/AB/R, adopted 20 March 1997;  Appellate Body Report,  Guatemala – Anti-Dumping
Investigation Regarding Portland Cement from Mexico  ("Guatemala – Cement "), WT/DS60/AB/R, adopted
25 November 1998;  Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural
Chemical Products  ("India – Patents "), WT/DS50/AB/R, adopted 16 January 1998, para. 88.WT/DS98/AB/R
Page 9
3. Burden of Proof
27. The European Communities accepts that it had the burden of proof to establish its claims
under Article 4 of the  Agreement on Safeguards .  Korea's argument that the European Communities
should have used different sources for its evidence instead of Korea's notification to the Committee onSafeguards should be dismissed.  There is, in the view of the European Communities, no burden ofproof issue in this case.
28. The European Communities considers that there is no basis for Korea's argument that the
European Communities did not make a  prima facie case in its First Written Submission, even if this
were necessary.  Korea's argument assumes that the OAI Report constitutes the only correct basis forestablishing claims under Article 4 of the  Agreement on Safeguards .
29. According to the European Communities, the DSU requires a panel to make an objective
assessment of the matter before it.  A panel must weigh up all facts regardless of where they came
from.  The question of burden of proof only arises where there is insufficient evidence for a panel toconclude that a claim or affirmative defence is well-founded.  In such a case, a panel needs to applythe rules concerning burden of proof in order to be able to decide on what basis it should proceed toconsider any remaining questions before it.  A panel does not have to make a finding that acomplaining party has itself produced evidence sufficient to establish a prima facie  case before
considering evidence produced by the other party.
30. The European Communities argues that Korea misunderstands  Japan – Agricultural
Products .  In that case, the complaining party had not even claimed  that the alternative measure
approved by the panel satisfied the relevant requirements under Article 5.6 of the  Agreement on the
Application of Sanitary and Phytosanitary Measures .  This is a case of a panel "deciding extra
petitum ", and not a case of a party failing to satisfy the burden of proof.
4. Article 5.1 of the Agreement on Safeguards
31. The European Communities requests that the Appe llate Body reject Korea's attempt to reverse
the ordinary meaning of the terms used in Article 5.1 of the  Agreement on Safeguards  and designate
clear obligations as "not mandatory".  The words "a Member shall apply safeguard measures only tothe extent necessary to prevent or remedy serious injury and to facilitate adjustment" clearly create amandatory obligation.
32. The European Communities disagrees with Korea's view that a "reasonable interpretation" of
the second sentence is that a Member need only provide a "clear justification" if it deviates from theaverage level of imports in the last three respresentative years;  otherwise the importing Member isWT/DS98/AB/R
Page 10
under no obligation to give a reasoned explanation.  The plain and ordinary meaning of the words in
the first sentence is that a Member applying a safeguard measure must in all cases provide anexplanation that the measure at issue is not more restrictive than necessary.
33. With respect to Korea's argument that the use of the words "should" and "objectives" in the
third sentence of Article 5.1 suggest that both the first and third sentences are setting out objectives
and not "requirements", the European Communities notes that the word "should" has a number ofordinary meanings, including the expression of an obligation.  The Appellate Body has itself come to
this conclusion.
22
34. The European Communities contends that, even  assuming that an obligation which is not
accompanied by criteria is not "mandatory", Article 5.1 does contain criteria for deciding what isnecessary.  The first sentence contains two express criteria which are:  the extent necessary to preventor remedy serious injury, and the extent necessary to facilitate adjustment. Further guidance on theapplication of Article 5.1 can be found in the context of that provision, in particular the other
provisions of the  Agreement on Safeguards  and Article XIX of the GATT 1994, and in the object and
purpose of safeguard measures.
35. The European Communities submits that, even if a Member is not required to explain why it
concluded that the measure it takes is necessary to remedy the serious injury and facilitate theadjustment at the time the decision to apply a safeguard measure is taken, such Member must at theleast be able to give an explanation when its measure is challenged in dispute settlement proceedings.As the Panel has demonstrated, Korea has not been able to, or even attempted to, justify its measureaccording to the criteria set out in the first sentence of Article 5.1 of the  Agreement on Safeguards .
C. Claims of Error by the European Communities – Appellant
1. Article XIX of the GATT 1994
36. The European Communities requests that the Appellate Body reverse the Panel's conclusion
that the phrase "unforeseen developments" does not add conditions for any measure to be appliedpursuant to Article XIX of the GATT 1994.  The European Communities also requests that theAppellate Body complete the Panel's reasoning and find that, by applying a safeguard measure in asituation where increased imports were not the resu lt of "unforeseen developments", Korea did not
comply with the requirement contained in Article XIX:1(a) of the GATT 1994.
                                                     
22Appellate Body Report, Canada – Aircraft , supra , footnote 15.WT/DS98/AB/R
Page 11
37. The European Communities considers that the Panel erred in law in interpreting
Article XIX:1(a) contrary to the clear wording of  that provision, and according to the Panel's own
speculation about the intent of the Contracting Pa rties to the GATT 1947.  The effect of the Panel's
interpretation is to effectively write the "as a result of unforeseen developments" requirement out ofArticle XIX.  As confirmed by Article 3.2 of the DSU, panels cannot diminish the rights of theEuropean Communities by deleting one of the requirements which should be fulfilled before asafeguard action can be taken.  As previously stated by the Appellate Body, "an interpreter is not freeto adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancyor inutility".
 23
38. The European Communities argues that the Pa nel interprets "unforeseen developments"
contrary to the ordinary meaning of that term.  The Panel ignores the fact that the word "if" in
Article XIX:1(a) introduces a list of conditions under which safeguard measures may be imposed.
The ordinary meaning of the term "as a result of unforeseen developments" is "as a consequence of asudden change in a course of action or events or in conditions that has not been foreseen".
39. The European Communities considers that in addi tion to the ordinary meaning, the terms of a
treaty should be read in their context.  The context which sheds light on the interpretation of the "as aresult of unforeseen developments" requirement is the rest of Article XIX:1(a) of the GATT 1994.The opening phrase of Article XIX:1(a) of the GATT 1994 is relevant context as it makes clear that,in fact, there are two pre-conditions which need to be present before a safeguard action can be taken.Imports should increase both as a result of unforeseen developments and the effect of tariff
concessions or any other obligations under the GATT 1994.
40. The European Communities submits that the Appellate Body has confirmed that provisions of
the GATT 1994 and the relevant Agreements in Annex 1A of the  WTO Agreement  represent a
package of rights and obligations that must be considered in conjunction.
24  Article XIX:1(a) of the
GATT 1994 explains what safeguard measures are and lays down basic principles, while the Agreement on Safeguards  lays down rules for applying them.  The requirement that increased imports
must result from "unforeseen developments" and the other fundamental requirements of safeguardmeasures were not expressly repeated in the  Agreement on Safeguards  because they did not need to
be clarified, added to or modified.
                                                     
23Appellate Body Report, United States – Gasoline , supra , footnote 12, p. 23.
24Appellate Body Report, Brazil – Desiccated Coconut , supra , footnote 21;  and Appellate Body
Report,  Guatemala – Cement , supra , footnote 21.WT/DS98/AB/R
Page 12
41. The European Communities requests that the Appellate Body find that the "as a result of
unforeseen developments" requirement should be applied cumulatively with the requirements set outin the  Agreement on Safeguards .  The  Agreement on Safeguards  does not supersede or replace
Article XIX:1(a) of the GATT 1994.  Since there is no formal conflict between the provisions of
Article 2.1 of the  Agreement on Safeguards  and Article XIX:1(a) of the GATT 1994, Members must
comply with all obligations set out in Article XIX:1(a) of the GATT 1994 and the  Agreement on
Safeguards .  The omission of "unforeseen developments" in the  Agreement on Safeguards  does not
support the "logic" of the interpretation advanced by the Panel.
42. The European Communities considers that the term "unforeseen developments" should be
interpreted in light of the object and purpose of both the  Agreement on Safeguards  and Article XIX
of the GATT 1994.  In the view of the European Communities, the object and purpose of theAgreement on Safeguards  is inherently linked with Article XIX of the GATT 1994, which is entitled
"Emergency Action  on Imports of Particular Products".  Safeguard measures are by definition a
mechanism based on "emergencies".  The aim of the safeguard mechanism lies in the unpredictability
of an event and the possibility to take swift measures which safeguard the relevant domestic industry.The term "unforeseen developments" is meant to prevent the safeguard mechanism from being used towithdraw from liberalization obligations due to developments which were foreseeable and to avoid itbeing used to restrict trade in the case of developments that had no connection at all with tradeliberalization.
43. The European Communities considers that the Pane l incorrectly asserted that its interpretation
of "unforeseen developments" is confirmed by the subsequent practice of the parties to the GATT.The Hatters' Fur  case contradicts the Panel's thesis that the "unforeseen developments" condition is
mere explanatory verbiage.
 25  The European Communities submits that the members of the Working
Party in the Hatters'  Fur case found that the United States could not have reasonably been expected to
foresee, at the time when it negotiated tariff reduct ions in 1947, that a style change of hats would take
place on such a massive scale as to cause serious injury.
44. The argument that the "as a result of unforeseen developments" requirement is still valid as a
requirement for the safeguard mechanism is supported by recent texts of national legislation whichhave been notified by a number of WTO Members under Article 12.6 of the  Agreement on
Safeguards . Korea, Costa Rica, Norway, Panama and Japan have all incorporated the phrase in their
safeguards legislation.
                                                     
25Report of the Intersessional Working Party on the Complaint of Czechoslovakia Concerning the
Withdrawal by the United St ates of a Tariff Concession under Article XIX of the GATT  ("Hatters' Fur "),
GATT/CP/106, adopted 22 October 1951.WT/DS98/AB/R
Page 13
2. Article 12.2 of the Agreement on Safeguards
45. The European Communities submits that the Panel erred in its interpretation of the phrase "all
pertinent information."  In finding that Korea’s notifications under Article 12.1(b)-(c) of the
 Agreement on Safeguards  satisfied the requirement of  "all pertinent information", the Panel set a
new standard unsupported by the relevant provisions.  The European Communities also requests thatthe Appellate Body complete the Panel's reasoning and find that Korea did not comply with therequirement to provide "all pertinent info rmation" laid down in Article 12.2 of the Agreement on
Safeguards .
46. The European Communities argues that the Panel developed and applied a new and less
stringent standard of information, contrary to the wording, context and the object and purpose ofArticle 12.2.  The requirement to provide "all pertinent information" in Article 12.2 cannot be
replaced by a requirement to submit "the amount of information . . . sufficient to be useful to
Members with a substantial interest in the proposed measure".  Had the Panel applied the correct test,it would have found that the evidence provided was not complete and, therefore, that Korea’snotifications were inconsistent with that provision.
47. According to the European Communities, Article 12.2 sets a generally defined but broad
standard of notification of "all pertinent information".  That general and overall standard isimmediately clarified by the express mention of a series of elements forming part of "all pertinentinformation".  The expression "which  shall  include" makes it clear that, although the elements listed
may not exhaust the notion of "all pertinent information", all of them must be provided in order to
meet the "all pertinent information" standard.
48. In light of the context of Article 12.2, the "evidence of serious injury" to which that provision
refers is the evidence concerning the matters mentioned in Article 4 of the  Agreement on Safeguards
which is the provision in that Agreement specifying the elements of "serious injury".  As seriousinjury determination in a domestic safeguard procedure must rely on "evidence", it is clear that theinformation which must be notified pursuant to Article 12.2 includes evidence on the injury factors setout in Article 4.2(a). Furthermore, to enable review of whether the serious injury was caused byimports, evidence of a casual link, as required by Article 4.2(b), must also be included in thenotification as part of the "pertinent information."WT/DS98/AB/R
Page 14
49. The European Communities argues that, while it is true that the Committee on Safeguards is
vested with the power to request information, Arti cle 12.2 expressly qualifies the information that the
Committee on Safeguards may request as additional  to that already required for the notifications
under Article 12.1(b)-(c).  This power cannot replace the unconditional, binding and enforceable
obligation incumbent on the notifying Member.
50. The European Communities considers that it is clear from the provisions of Article 12.2 that
the notification obligation pursues two main objectives. The first, which the Panel identified, is toallow the Members with trade interests to request consultations and defend their interests.  The secondis to ensure consistency and effective control of safeguards measures.  In view of the "limitative anddeprivational" character of safeguard measures, their inclusion in the WTO system is accompanied bylimits to their use, so that the interests of all the parties are protected.
D. Arguments of Korea – Appellee
1. Article XIX of the GATT 1994
51. Korea argues that the Panel correctly considered that the reference to "unforeseen
developments" in Article XIX:1(a) of the GATT 1994 does not impose an additional obligation forthe imposition of safeguard measures.  The drafters of the  Agreement on Safeguards  intended to
strike a new balance and move beyond Article XIX of the GATT, which had proved to be difficult toapply in practice.  Korea argues further that Article 2 of the  Agreement on Safeguards , which lays out
the "conditions" for taking safeguard measures and is titled accordingly, removes both the"unforeseen developments" language and the requirement to show that the difficulties were "the effectof the obligations incurred by the contracting party under this Agreement, including tariffconcessions".
52. It is Korea's contention that, contrary to the European Communities' assertions, the removal
of any pre-existing obligation regarding "unforeseen developments" was intended to strengthen  the
multilateral safeguard regime by ensuring the resort by Members to emergency action under the Agreement on Safeguards , rather than the use of trade-disruptive and non-transparent "grey area"
measures.
53. While Korea concedes that nowhere in the  Agreement on Safeguards  is there an express
derogation from Article XIX, Korea notes that the dr afters did not need to expressly signal every
derogation.  Any doubt as to the precedence of those provisions of the  Agreement on Safeguards  over
the provisions of Article XIX of the GATT is resolved by the General Interpretative Note to
Annex 1A of the WTO Agreement .  Further, to the extent that any condition regarding "unforeseen
developments" applies, the traditio nal interpretative principles of lex specialis  and lex generalisWT/DS98/AB/R
Page 15
indicate that the more specific conditions under the  Agreement on Safeguards  apply over the more
general conditions expressed in Article XIX.
54. With respect to the argument of the European Communities that "if" at the beginning of the
provision introduces a list of conditions under which safeguard measures may be imposed, Koreacontends that, while this may be true in the absence of the comma after "if", it is not true where therelevant phrase is set off by commas as a dependent clause. As the Panel found, the introductoryphrase simply highlights the general situation where negotiated concessions may need to be set asidebecause of an emergency situation.
55. Korea argues that there is nothing in the context of the opening phrase to contradict the
Panel's interpretation that a Member does not have to demonstrate the existence of "unforeseendevelopments" before it can impose safeguard measures.  The arguments of the European
Communities are irrelevant because they presume that the "unforeseen developments" clause
established a condition in the first place.  An analysis of the context of the relevant language inArticle XIX supports the Panel’s interpretation.  As context, Articles 1, 2, and 11.1(a) of theAgreement on Safeguards  demonstrate that the rules and conditions for applying safeguard measures
are found in that Agreement.
56. Korea submits that the Panel’s interpretation was also consistent with the object and purpose
of the relevant provision in Article XIX.  The European Communities attempts to bolster itsinterpretation by reference to the title of Article XIX: "Emergency Action on Imports of a ParticularProduct", arguing that the safeguard measures are inherently linked to the existence of an emergency
situation.  A more appropriate interpretation is that the title and the provision relating to "unforeseen
developments" simply set forth the general situation in which tariff concessions may be temporarilysuspended, as the Panel correctly found.  Korea considers that the object and purpose of the provisionis fully consistent with the Panel's interpretation.
57. With respect to the argument of the European Communities regarding subsequent practice,
Korea argues that the Panel properly viewed the Hatters ' Fur case as reinforcing the proposition that
the unforeseen developments "requirement" is not at all a condition as the Working Party consideredthat increased imports of fur felt hats were  ipso facto  an unforeseen development.
58. On national legislation, Korea submits that practice under Article XIX confirms that the
contracting parties to the GATT did not consider that the condition of "unforeseen developments" was
required.  The legislation of Members cited by the European Communities as requiring "unforeseendevelopments" is also consistent with the Pane l’s interpretation, given that these Members simply
copied, either verbatim or in a similar form, the language from Article XIX:1(a).WT/DS98/AB/R
Page 16
59. According to Korea, should the Appellate Body accept the European Communities'
interpretation of Article XIX, it would be inappropri ate for the Appellate Body to engage in a factual
analysis as to whether unforeseen developments existed.  Article 17.6 of the DSU expressly limits theAppellate Body's authority to the review of issues of law and legal interpretations.  Although the
Appellate Body has previously engaged in factual analysis in some cases, it has also refused to
perform such analysis in other cases either because there were not enough uncontested facts in therecord of the case, or because it was not necessary for the resolution of the dispute.  As the parties inthis case provided only very limited factual in formation regarding whether unforeseen developments
in fact existed, the Appellate Body would need to engage in a renewed factual investigation in order
to assess whether such developments existed at the time of the safeguards investigation.
60. Korea argues further, that if the Appellate Body accepts the European Communities'
interpretation of Article XIX of GATT 1994 and decides to engage in a factual analysis, the AppellateBody should find that unforeseen developments existed at the time of the safeguards investigation and
that, therefore, Korea acted in accordance with Article XIX.  Korea liberalized imports of skimmed
milk powder preparations and milk powder and applied a tariff rate of 40 percent and 220 percent onthese products  respectively.  At that time and subsequent to the Uruguay Round, Korea had no reasonto foresee that European Communities' milk powder exporters would change their product toskimmed milk powder preparations in order to circ umvent the high tariff on milk powder.  Korea
could not have foreseen that the European Communities would circumvent Korea’s good faithcommitments.
2. Article 12.2 of the Agreement on Safeguards
61. Korea argues that the Appellate Body should reject the appeal of the European Communities
relating to Article 12.2 of the  Agreement on Safeguards .  In the view of Korea, the Panel was correct
in drawing a distinction between the obligation in Ar ticle 12.2 to provide "all pertinent information",
and that in Article 3 to address "all pertinent issues of fact and law".  Accepting the interpretation ofthe European Communities would lead to the conclusion that a Member imposing a safeguardmeasure is required to provide the Committee on Safeguards with a broader or a more varied range ofmatters than such Member is required to include in its underlying investigation.
62. In the view of Korea, the Panel established a clear and comprehensible test as to what
Members have to do, in that the amount of information notified must be sufficient to be useful toMembers with a substantial interest in the proposed safeguard measure.  The Panel reviewed the
claims of the European Communities, and, after construing Article 12 in accordance with the object
and purpose of that provision, concluded that the information provided by Korea was sufficient.  Thestatement of the Panel relating to "what Korea considered to be evidence of injury" is a reference toWT/DS98/AB/R
Page 17
the circumstances under which information was provided by Korea and should not to be taken as the
standard applied by the Panel.
63. Korea submits that the European Communities' view that the purpose of Article 12 is to
impose some additional and unspecified burden on a Member imposing a measure is contrary to theintention of the drafters for two reasons. First, had the drafters intended this, they would not havereferred to the standard of "all pertinent info rmation", but would have provided for a precise
mechanism by which the analysis required under Articles 3 and 4 was made available to theCommittee on Safeguards.  Second, if an investigation fulfilled the requirements of Articles 2.1, 3.1and 4 and had been notified verbatim  to the Committee on Safeguards, the final sentence of
Article 12.2 would be redundant.  The obligation under Article 12 to provide "all pertinentinformation" is different from, and not as stringent as, the requirements under Articles 2, 3 and 4.
E. Arguments of the United States – Third Participant
1. Article XIX of the GATT 1994
64. In the view of the United States, the Agreement on Safeguards  now completely occupies the
field of regulation of safeguard measures in the WTO system.  If it were possible for Members to pickand choose between the rights and obligations in the original package of Article XIX of theGATT 1994, and the rights and obligations in the revised package in the  Agreement on Safeguards ,
and to bring claims under both agreements, the entire project represented by the  Agreement on
Safeguards  would be revised post hoc .  The text of Article XIX cannot be read outside the context of
the Agreement on Safeguards .  The omission of "unforeseen developments" from that Agreement was
intentional, and this express omission must be given meaning.
65. The United States argues that the European Communities has provided no basis for
suggesting that the phrase "unforeseeable developments" remains binding while other parts ofArticle XIX have ceased to be so.  The suggestion that other provisions of Article XIX remain fully ineffect is untenable.  If the "unforeseen developments" condition in Article XIX:1(a) can still beindependently read and enforced, divorced from its context in the  Agreement on Safeguards , this
might suggest that a Member could take compensatory measures whenever they would be permissibleunder Article XIX:3, notwithstanding the limits on such measures in Article 8.3 of the  Agreement on
Safeguards .WT/DS98/AB/R
Page 18
66. The United States notes that legal scholars agree that under the  WTO Agreement , "unforeseen
developments" are no longer a prerequisite for a safeguard action.26  State practice has also treated the
question of "unforeseen developments" as marginal, legally non-binding or subsumed by other aspects
of the safeguards process.  The great majority of safeguards legislation, including that of the European
Communities, notified to the WTO does not refer to "unforeseen developments," and thus does not
require that the relevant domestic authorities investigate or make a determination in this respect.Thus, nearly all Members have demonstrated their belief that the existence of "unforeseendevelopments" is not required as a condition for taking safeguard measures.
III. Issues Raised in this Appeal
67. This appeal raises the following issues:
(a) Whether the Panel erred in its conclusion that the clause in Article XIX:1(a) of the
GATT 1994 – "if, as a result of unforeseen developments and of the effect of theobligations incurred by a Member under this Agreement, including tariff
concessions …" – does not add conditions for any safeguard measure to be applied
pursuant to Article XIX of the GATT 1994;
(b) Whether the Panel erred in its interpretation and application of Article 5.1 of the
Agreement on Safeguards ;
(c) Whether the Panel erred in its interpretation and application of Article 12.2 of the
Agreement on Safeguards ;
(d) Whether the Panel erred in finding that the request for the establishment of a panel
submitted by the European Communities met the requirements of Article 6.2 of theDSU;
(e) Whether the Panel improperly based its findings of inconsistency with Article 4.2 of
Agreement on Safeguards  on the OAI Report;  and
(f) Whether the Panel erred in its application of the burden of proof in respect of its
findings under Article 4 of the Agreement on Safeguards .
                                                     
26See M. Bronckers, "Voluntary Export Restraints and the GATT 1994 Agreement on Safeguards", in
J.H.J. Bourgeois, F. Berrod and E. Fournier (eds.), The Uruguay Round Results: A European Lawyers'
Perspective  (European University Press, 1995), p. 275;  and M. Trebilcock and R. Howse, The Regulation of
International Trade , 2nd ed. (Routledge, 1999), p. 228.WT/DS98/AB/R
Page 19
IV. Claims Under Article XIX of the GATT 1994
68. The European Communities appeals the Panel's rejection of the claim by the European
Communities that Korea violated the provisions of Article XIX:1 of the GATT 1994 by failing to
examine whether the alleged increase in imports was "as a result of unforeseen developments".27  The
European Communities requests that the Appellate Body reverse the legal interpretations and findingsmade by the Panel in paragraphs 7.42 to 7.48 of the Panel Report, and, most notably, the"fundamental error"
28 made by the Panel in finding that:
… the prior section of the sentence, "If, as a result of unforeseen
developments and of the effect of obligations incurred by a contracting
party under this Agreement, including tariff concessions…" does not
add conditions  for any measure to be applied pursuant to
Article XIX … 29 (emphasis added)
The European Communities also asks that the Appellate Body complete the Panel's reasoning and find
on the basis of uncontested facts on the record that Korea did not comply with the "requirement"contained in Article XIX:1(a) of the GATT 1994 to apply safeguard measures only where the alleged
increase in imports is "as a result of unforeseen developments".
30
69. In its examination of the claim of the European Communities under Article XIX:1 of the
GATT 1994, the Panel stated that:
We consider that the terms and prescriptions of Article XIX:1 of
GATT are still generally applicable, as we are of the view that there is
no conflict between the provisions of Article XIX:1 of GATT andthose of Article 2.1 of the Agreement on Safeguards.
31
70. Having decided that Article XIX:1 of the GATT 1994 is still applicable under the  WTO
Agreement , the Panel proceeded to examine the meaning of the clause in Article XIX:1(a) – "If, as a
result of unforeseen developments and of the effect of the obligations incurred by a contracting partyunder this Agreement, including tariff concessions …".  The Panel stated that, in its view, this clause:
                                                     
27European Communities' appellant's submission, para. 14.
28Ibid., para. 15.
29Panel Report, para. 7.42.
30European Communities' appellant's submission, para. 17.  See also para. 137.
31Panel Report, para. 7.39.WT/DS98/AB/R
Page 20
… does not add conditions  for any measure to be applied pursuant to
Article XIX but rather serves as an explanation  of why an Article XIX
measure may be needed, taking into account the fact that at the time
(1947) the CONTRACTING PARTIES had just agreed (for the first
time) on multilateral tariff bindings and on a general prohibition againstquotas.
32  (emphasis added)
71. The Panel reasoned further:
… the proposition "as a result of unforeseen developments and of the
effect of the obligations incurred by a contracting party under this
Agreement" does not address the conditions for Article XIX measures to
be applied but rather explains why a provision such as Article XIX may
be needed .  For us, the object of this section of the first sentence of
paragraph 1 of Article XIX cannot be anything else but a statement (ofwhat we would now consider to be obvious) that because of the
binding nature of the GATT obligations and concessions, tariffs and
other obligations negotiated on the basis of trade expectations may
need to be changed temporarily in light of actual unforeseen
developments.  Thus, the phrase "unforeseen circumstances" does not
specify anything additional as to the conditions under which measures
pursuant to Article XIX may be applied .
33  (emphasis added)
72. In the view of the Panel, the adoption of the  Agreement on Safeguards  without this
"unforeseen developments" clause was "logical".  Because Uruguay Round negotiators "understoodthat this reference to 'unforeseen developments' did not add to the rest of the paragraph (but ratherdescribes its context), there was no need to insert it explicitly in the Agreement on Safeguards."
34
73. On the basis of this reasoning, the Panel concluded:
… we reject the specific claim of the European Communities that
Korea was wrong in failing to examine whether the import trends of
the products under investigation were the result of "unforeseen
developments" contrary to Article XIX:1(a), as we consider thatArticle XIX of GATT does not contain such a requirement.
35
                                                     
32Panel Report, para. 7.42.
33Ibid., para. 7.45.
34Ibid., para. 7.47.
35Ibid., para. 7.48.WT/DS98/AB/R
Page 21
74. We agree with the statement of the Panel that:
It is now well established that the WTO Agreement is a "Single
Undertaking" and therefore all WTO obligations are generally
cumulative and Members must comply with all of them
simultaneously … .36
In this context, we note that Article II:2 of the WTO Agreement  provides that:
The agreements and associated legal instruments included in
Annexes 1, 2 and 3 (hereinafter referred to as "Multilateral Trade
Agreements") are integral parts  of this Agreement, binding on all
Members .  (emphasis added)
75. We note, furthermore, that the GATT 1994 was incorporated into the  WTO Agreement  as one
of the Multilateral Agreements on Trade in Goods contained in Annex 1A to the  WTO Agreement .
The GATT 1994 consists of:  (a) the provisions of the GATT 1947, as rectified, amended or modifiedbefore the entry into force of the  WTO Agreement ;  (b) provisions of certain other legal instruments
which entered into force under the GATT 1947 and before the date of entry into force of the  WTO
Agreement ;  (c) a number of Uruguay Round Understandings on the interpretation of certain GATT
articles;  and  (d) the Marrakesh Protocol to GATT 1994.
37  The  Agreement on Safeguards  is one of
the thirteen Multilateral Agreements on Trade in Goods contained in Annex 1A of the  WTO
Agreement .  It is important to understand that the  WTO Agreement  is one treaty.  The GATT 1994
and the  Agreement on Safeguards  are both Multilateral Agreements on Trade in Goods contained in
Annex 1A, which are integral parts of that treaty and are equally binding on all Members pursuant toArticle II:2 of the  WTO Agreement .
76. The specific relationship between Article XIX of the GATT 1994 and the  Agreement on
Safeguards  within the  WTO Agreement  is set forth in Articles 1 and 11.1(a) of the  Agreement on
Safeguards :
                                                     
36Panel Report, para. 7.38.
37See paragraph 1 of the language incorporating the GATT 1994 into Annex 1A of the  WTO
Agreement.WT/DS98/AB/R
Page 22
Article 1
General Provision
 This Agreement establishes 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)
Article 11
Prohibition and Elimination of Certain Measures
1. (a) 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 . (emphasis added)
77. 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 inArticle 11.1(a) – "unless such action conforms with the provisions of that Article applied inaccordance 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 measure
38 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.
78. Having found that the provisions of both Article XIX:1 of the GATT 1994 and Article 2.1 of
the  Agreement on Safeguards  apply to any safeguard measure39 taken under the  WTO Agreement , we
now turn to interpret the meaning of the clause – "as a result of unforeseen developments and of theeffect of the obligations incurred by a Member under this Agreement, including tariffconcessions …" – in Article XIX:1(a).  The provisions of Article XIX:1(a) of the GATT 1994 andArticle 2.1 of the  Agreement on Safeguards  read as follows:
                                                     
38With the exception of special safeguard measures taken pursuant to Article 5 of the  Agreement on
Agriculture  or Article 6 of the  Agreement on Textiles and Clothing .
39Supra,  footnote 38 .WT/DS98/AB/R
Page 23
GATT 1994
Article XIX
Emergency Action on Imports of Particular Products
1. ( a)I f ,  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 suspendthe obligation in whole or in part or to withdraw or modify the
concession. (emphasis added)
Agreement on Safeguards
Article 2
Conditions
1. A Member may apply a safeguard measure to a product only
if that Member has determined, pursuant to the provisions set outbelow, 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. (footnote omitted)
79. The task before us in this appeal is not to interpret Article 2.1 of the  Agreement on
Safeguards , but rather  to interpret Article XIX:1(a) of the GATT 1994.  This appeal by the European
Communities relates to the Panel's rejection of the claim by the European Communities that Koreaviolated the provisions of Article XIX:1(a) of the GATT 1994 by failing to examine whether the
alleged increase in imports was "as a result of unfo reseen developments".  Therefore, our task in this
appeal is to interpret the first clause in Article XIX:1(a) – "as a result of unforeseen developments andof the effect of the obligations incurred by a Member under this Agreement, including tariff
concessions …" – and to determine whether the Panel erred in rejecting the European Communities'claim under Article XIX:1 of the GATT 1994.
80. Before we commence our analysis of this clause in Article XIX:1(a), it is useful, first, to
review certain principles relating to the interpretation of treaties.  We note, first, that Article 3.2 of theDSU provides that the dispute settlement system of  the WTO serves "to clarify the existing provisions
of [the covered] agreements in accordance with the customary rules of interpretation of public
international law ." (emphasis added)  The principles of interpretation of treaties set forth inWT/DS98/AB/R
Page 24
Articles 31 and 32 of the Vienna Convention on the Law of Treaties40 apply to the interpretation of
provisions of the  WTO Agreement .41  We have also recognized, on several occasions, the principle of
effectiveness in the interpretation of treaties ( ut res magis valeat quam pereat ) which requires that a
treaty interpreter:
… must give meaning and effect to all the terms of the treaty.  An
interpreter is not free to adopt a reading that would result in reducing
whole clauses or paragraphs of a treaty to redundancy or inutility.42
81. In light of the interpretive principle of effectiveness, it is the  duty of any treaty interpreter to
"read all applicable provisions of a treaty in a way that gives meaning to  all of them,
harmoniously."43  An important corollary of this principle is that a treaty should be interpreted as a
whole, and, in particular, its sections and parts should be read as a whole.44  Article II:2 of the  WTO
Agreement  expressly manifests the intention of the Uruguay Round negotiators that the provisions of
the  WTO Agreement  and the Multilateral Trade Agreements included in its Annexes 1, 2 and 3 must
be read as a whole.
                                                     
40Vienna Convention on the Law of Treaties , done at Vienna, 23 May 1969, 1155 U.N.T.S. 331;
(1969) 8 International Legal Materials 679.
41As we have stipulated in, for example, Appellate Body Report,  United States – Gasoline , supra ,
footnote 12, p. 17;  Appellate Body Report,  Japan – Taxes on Alcoholic Beverages  ("Japan – Alcoholic
Beverages "), WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, p. 11;  Appellate
Body Report,  India – Patents , supra , footnote 21, para. 46;  Appellate Body Report,  European Communities –
Customs Classification of Certain Computer Equipment  ("European Communities – Computer Equipment "),
WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, para. 84;  and Appellate BodyReport,  United States – Import Prohibition of  Certain Shrimp and Shrimp Products , WT/DS58/AB/R, adopted
6 November 1998, para. 114.
42Appellate Body Report, United States –  Gasoline , supra , footnote 12, p. 23.  We also confirmed this
principle in Appellate Body Report, Japan – Alcoholic Beverages , supra , footnote 41, p. 12;  Appellate Body
Report,  Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products ,
WT/DS103/AB/R, WT/DS113/AB/R, adopted 27 October 1999, para. 133; and Appellate Body Report,
Argentina – Safeguard Measures on Imports of Footwear , WT/DS121/AB/R, circulated 14 December 1999,
para. 88.
43We have emphasized this in Appellate Body Report, Argentina – Safeguard Measures on Imports of
Footwear , WT/DS121/AB/R, circulated 14 December 1999, para. 81.  See also Appellate Body Report,  United
States – Gasoline , supra , footnote 12, p. 23;  Appellate Body Report,  Japan – Alcoholic Beverages , supra ,
footnote 41, p. 12;  and Appellate Body Report,  India – Patents , supra , footnote 21, para. 45.
44The duty to interpret a treaty as a whole has been clarified by the Permanent Court of International
Justice in Competence of the I.L.O. to Regulate Agricultural Labour  (1922), PCIJ, Series B, Nos. 2 and 3, p. 23.
This approach has been followed by the International Court of Justice in Ambatielos Case  (1953) ICJ Reports ,
p. 10;  Reservations to the Convention on the Preventi on and Punishment of th e Crime of Genocide  (1951) ICJ
Reports , p. 15;  and  Case Concerning Rights of United States Nationals in Morocco  (1952) ICJ Reports ,
pp. 196-199.  See also I. Brownlie, Principles of Public International Law , 5th ed. (Clarendon Press, 1998),
p. 634;  G. Fitzmaurice, "The Law and Procedure of the International Court of Justice 1951-1954:  TreatyInterpretation and Other Treaty Points", 33 British Yearbook of International Law  (1957), p. 211 at p. 220;  A.
McNair, The Law of Treaties  (Clarendon Press, 1961), pp. 381-382;  I.  Sinclair, The Vienna Convention on the
Law of Treaties  (Manchester University Press, 1984), pp. 127-129;  M.O. Hudson, La Cour Permanente de
Justice Internationale  (Editions A Pedone, 1936), pp. 654-659;  and L.A. Podesta Costa and J.M. Ruda, Derecho
Internacional Público , Vol. 2 (Tipográfica, 1985), p. 105.WT/DS98/AB/R
Page 25
82. Having said that all of the provisions  of a treaty must be given meaning and legal effect, we
believe that the clause in Article XIX:1(a) – "as a result of unforeseen developments and of
the effect of the obligations incurred by a Member under this Agreement, including tariff
concessions …" – must have meaning.  We do not agree with the Panel's conclusion that it "does notadd conditions for any measure to be applied pursuant to Article XIX but rather serves as anexplanation of why an Article XIX measure may be needed".
45  We also do not agree with the Panel
that this clause "only describes generally the situations where the binding nature of the obligationscontained in Articles II and XI of GATT may need to be set aside (for a certain period)."
46
83. Having determined that this clause must have meaning, we now turn to examine what that
meaning is.  We refer again to the language of Article XIX:1(a), in its entirety:
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 suchconditions 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 theconcession. (emphasis added)
84. To determine the meaning of the clause – "as a result of unforeseen developments and of the
effect of the obligations incurred by a Member under this Agreement, including tariffconcessions …" – in sub-paragraph (a) of Article XIX:1, we must examine these words in theirordinary meaning, in their context and in light of the object and purpose of Article XIX.
   We look
first to the ordinary meaning of these words.  As  to the meaning of "unforeseen developments", we
note that the dictionary definition of "unforeseen", particularly as it relates to the word"developments", is synonymous with "unexpected".
 47  "Unforeseeable", on the other hand, is defined
in the dictionaries as meaning "unpredictable" or "incapable of being foreseen, foretold oranticipated".
 48  Thus, it seems to us that the ordinary meaning of the phrase "as a result of 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".  With respect to the phrase "of the effect of theobligations incurred  by a Member under this Agreement, including tariff concessions", we believe
                                                     
45Panel Report, para. 7.42.
46Ibid., para. 7.43.
47See  Webster's Third New International Dictionary  (Encyclopaedia Britannica Inc., 1966), Vol. 3,
p. 2496;  and  Black's Law Dictionary , 6th ed. (West Publishing Company, 1990), p. 1530.
48Ibid.WT/DS98/AB/R
Page 26
that this phrase simply means that it must be demonstrated, as a matter of fact, that the importing
Member has incurred obligations under the GATT 1994, including tariff concessions.  Here, we notethat the Schedules annexed to the GATT 1994 are made an integral part of Part I of that Agreement,pursuant to paragraph 7 of Article II of the GATT 1994.  Therefore, any concession or commitment in
a Member's Schedule is subject to the obligations contained in Article II of the GATT 1994.
85. When we examine this clause – "as a result of unforeseen developments and of the effect of
the obligations incurred by a Member under this Agreement, including tariff concessions …" – in itsimmediate context in Article XIX:1(a), we see that it relates directly to the second clause in thatparagraph – "If, … , any product is being imported into the territory of that Member in such increasedquantities and under such conditions as to cause or threaten serious injury to domestic producers inthat territory of like or directly competitive products …".  The latter, or second, clause inArticle XIX:1(a) contains the three conditions  for the application of safeguard measures.  These
conditions , which are reiterated in Article 2.1 of the Agreement on Safeguards
49, are that:  (1) a
product is being imported "in such quantities and under such conditions";  (2) "as to cause";
(3) serious injury or the threat of serious injury to domestic producers.  The first clause inArticle XIX:1(a) – "as a result of unforeseen developments and of the obligations incurred by aMember under the Agreement, including tariff concessions …" – is a dependent clause which, in ourview, is linked grammatically to the verb phrase "is being imported" in the second clause of thatparagraph.  Although we do not view the first clause in Article XIX:1(a) as establishing independentconditions  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 ofunforeseen developments and of the effect of the obligations incurred by a Member under thisAgreement, including tariff concessions …" – and the conditions set forth in the second clause ofArticle XIX:1(a) for the imposition of a safeguard measure.
86. Our reading is supported by the context of these provisions.  As part of the context of
paragraph 1(a) of Article XIX, we note that the title of Article XIX is:  " Emergency Action on Imports
of Particular Products ".  The words "emergency action" also appear in Article 11.1(a) of the
Agreement on Safeguards .  We note once again, that Article XIX:1(a) requires that a product be
imported " in such increased quantities  and  under such conditions  as  to cause or threaten serious
injury  to domestic producers … ". (emphasis added)  In our view, the text of Article XIX:1(a) of the
GATT 1994, read in its ordinary meaning and in its context, demonstrates that safeguard measures
                                                     
49We note that the title of  Article 2 of the  Agreement on Safeguards  is: "Conditions ".WT/DS98/AB/R
Page 27
were intended by the drafters of the GATT to be matters out of the ordinary, to be matters of urgency,
to be, in short, "emergency actions."  And, su ch "emergency actions" are to be invoked only in
situations when, as a result of obligations incurr ed under the GATT 1994, an importing Member finds
itself confronted with developments it had not "foreseen" or "expected" when it incurred thatobligation.  The remedy that Article XIX:1(a) allows in this situation is temporarily to "suspend theobligation in whole or in part or to withdraw or modify the concession".  Thus, Article XIX is clearlyan extraordinary remedy.
87. This reading of these clauses is also confirmed by the object and purpose of Article XIX of
the GATT 1994.  The object and purpose of Article XIX is to allow a Member to re-adjusttemporarily the balance in the level of concessions between that Member and other exportingMembers when it is faced with "unexpected" and, t hus, "unforeseen" circumstances which lead to a
product "being imported" in "such increased quantities and under such conditions as to cause or
threaten serious injury to domestic producers … of like or directly competitive products".  This allowsan importing Member to give the domestic industry in question enough time to adjust to the newcompetitive conditions caused by the increased imports.  We should not lose sight of the fact thattaking safeguard action results in restrictions on imports arising from "fair" trade.  The application ofa safeguard measure does not depend upon "unfair" trade actions, as is the case with anti-dumping orcountervailing measures.
88. Our reading of these prerequisites makes certain that  all  the relevant provisions of
Article XIX of the GATT 1994 and the  Agreement on Safeguards  relating to safeguard measures are
given their full meaning and their full legal effect.  Our reading, too, is consistent with the desire
expressed by the Uruguay Round negotiators in the Preamble to the  Agreement on Safeguards   "to
clarify and reinforce  the disciplines of GATT 1994, and specifically those of its Article XIX  …, to
re-establish multilateral control  over safeguards and eliminate measures that escape such
control …".
50  In furthering this statement of the object and purpose of the  Agreement on Safeguards ,
it must always be remembered that safeguard measures result in the temporary suspension of treatyconcessions or the temporary withdrawal of treaty obligations, which are fundamental to theWTO Agreement , such as those in Article II and Article XI of the GATT 1994.
89. In addition, we note that our reading of the clause "as a result of unforeseen developments
and of the effect of the obligations incurred by a Member under this Agreement, including tariff
concessions …" in Article XIX:1(a) is also consistent with the one GATT 1947 case that involved
                                                     
50Agreement on Safeguards , Preamble.WT/DS98/AB/R
Page 28
Article XIX, the so-called " Hatters' Fur " case.  51  Members of the Working Party in that case, in 1951,
stated:
… "unforeseen developments" should be interpreted to mean
developments occurring after the negotiation of the relevant tariffconcession which it would not be reasonable to expect that the
negotiators of the country making the concession could and should
have foreseen at the time when the concession was negotiated.
52
90. On the basis of the above reasoning, we do not agree with the Panel that the clause – "as a
result of unforeseen developments and of the effect of the obligations incurred by a Member under
this Agreement, including tariff concessions …" – "does not specify anything additional as to the
conditions under which measures pursuant to Article XIX may be applied."53  We, therefore, reverse
the Panel's conclusion that "Article XIX of GATT does not contain such a requirement."54
91. The European Communities further requests that we complete the Panel's reasoning and find
"on the basis of the found or uncontested facts" that by imposing a safeguard measure incircumstances where the alleged increase in imports was not "as a result of unforeseen developments"within the meaning of Article XIX:1(a) of the GATT 1994, Korea also violated its obligations underArticle XIX of the GATT 1994.
55
92. The Panel did not make any factual findings on whether the alleged increase in imports of
skimmed milk powder preparations was "a result of unforeseen developments and of the effect of the
obligations incurred by a Member under this Agreement, including tariff concessions …".  The factswere also contested by the parties.  While Korea ar gues that the increase in imports was "a result of
unforeseen developments", the European Communities disagrees with this view of the facts.  In theabsence of any factual findings by the Panel or undisputed facts in the Panel record relating to
whether the alleged increase in imports was, indeed, "a result of unforeseen developments and of theeffect of the obligations incurred by a Member under this Agreement, including tariffconcessions …", we are not in a position, within the scope of our mandate set forth in Article 17 ofthe DSU, to complete the analysis and make a determination as to whether Korea acted inconsistently
                                                     
51Report of the Intersessional Working Party on the Complaint of Czechoslovakia Concerning the
Withdrawal by the United St ates of a Tariff Concession under Article XIX of the GATT  ("Hatters' Fur "),
GATT/CP/106, adopted 22 October 1951.
52Ibid., para. 9.  This interpretation was proposed by the representative of Czechoslovakia, and was
accepted by all the Members of the Working Party, with the exception of the United States.
53Panel Report, para. 7.45.
54Ibid., para. 7.48.
55European Communities' appellant's submission, para. 137.  See also para. 17.WT/DS98/AB/R
Page 29
with its obligations under Article XIX:1(a).  Accordingly, we are unable to come to a conclusion on
whether or not Korea violated its obligati ons under Article XIX:1(a) of the GATT 1994.
V. Article 5.1 of the  Agreement on Safeguards
93. Korea appeals from the Panel's interpretation and application of Article 5.1 of the  Agreement
on Safeguards .  Article 5.1 provides:
A Member shall apply safeguard measures only to the extent necessary
to prevent or remedy serious injury and to facilitate adjustment.  If a
quantitative restriction is used, such a measure shall not reduce the
quantity of imports below the level of a recent period which shall be the
average of imports in the last three representative years for which
statistics are available, unless clear justification is given that a different
level is necessary to prevent or remedy serious injury.  Members shouldchoose measures most suitable for the achievement of these objectives.
94. In paragraph 7.101 of its Report, the Panel stated:
In our view a measure is defined by the following elements: product
coverage, form, duration and level. Thus, in order to comply with
Article 5.1 a Member must apply a measure which in its totality is no
more restrictive than is necessary  to prevent or remedy the serious
injury and facilitate adjustment.  In addition, it must be possible for a
Panel to evaluate, in accordance with the applicable standard of
review, whether a Member has acted in compliance with Article 5.1.
Therefore, the Member applying the measure must provide a reasoned
explanation  as to how the authorities reached the conclusion that the
particular measure in question satisfies all the requirements of
Article 5.1. We consider that the obligations of the first sentence ofArticle 5.1 apply to all safeguard measures in their entirety.
(emphasis added)
95. Korea argues that the Panel erred in interpreting Article 5.1 as imposing on a Member
applying a safeguard measure two "new" obligations wh ich are not contained in that provision.  In the
view of Korea, the first sentence of Article 5.1 "does not impose a clearly-defined obligation on animporting Member … applying a safeguard measure".
56  Rather, it articulates a principle or an
objective.  Nor does Article 5.1 contain an obligation to provide "a reasoned explanation as to how theauthorities reached the conclusion that the particular measure in question satisfies all the requirements
of Article 5.1."
57
                                                     
56Korea's appellant's submission, p. 38.
57Ibid., p. 41.WT/DS98/AB/R
Page 30
96. The first sentence of Article 5.1 provides:
A Member shall apply safeguard measures only to the extent necessary
to prevent or remedy serious injury and to facilitate adjustment.
We agree with the Panel that the wording of this provision leaves no room for doubt that it imposes an
obligation  on a Member applying a safeguard measure to ensure that the measure applied is
commensurate with the goals of preventing or remedy ing serious injury and of facilitating adjustment.58
We also agree that this obligation applies regardless of the particular form that a safeguard measure
might take.  Whether it takes the form of a quantita tive restriction, a tariff or a tariff rate quota, the
measure in question must be applied "only to the exte nt necessary" to achieve the goals set forth in the
first sentence of Article 5.1.59
97. In paragraph 7.109 of its Report, the Panel stated:
Members are required, in their recommendations or determinations on
the application  of a safeguard measure, to explain  how they
considered the facts before them and why they concluded,  at the time
of the decision , that the measure to be applied was necessary to
remedy the serious injury and facilitate the adjustment of the industry.
It is such reasoning and explanation concerning the measure adopted,
essential to evaluate Korea's compliance with Article 5.1, which we
cannot discern in Korea's determination to apply a safeguard measurein the present case. (emphasis added)
98. The second sentence of Article 5.1 provides:
If a quantitative restriction is used, such a measure shall not reduce the
quantity of imports below the level of a recent period which shall be
the average of imports in the last three representative years for which
statistics are available, unless clear justification is given that a
different level is necessary to prevent or remedy serious injury.
This sentence requires a "clear justification" if a Member takes a safeguard measure in the form of a
quantitative restriction which reduces the quantity of imports below the average of imports in the lastthree representative years for which statistics are available.  We agree with the Panel that this "clearjustification" has to be given by a Member applying a safeguard measure  at the time of the decision ,
in its recommendations or determinations on the application of the safeguard measure .
                                                     
58Panel Report, paras. 7.100 and 7.101.
59Ibid., para. 7.101.WT/DS98/AB/R
Page 31
99. However, we do not see anything in Article 5.1 that establishes such an obligation for a
safeguard measure  other  than a quantitative restriction which reduces the quantity of imports below
the average of imports in the last three representative years.  In particular, a Member is  not  obliged
to justify in its recommendations or determinations a measure in the form of a quantitative restrictionwhich is consistent with "the average of imports in the last three representative years for whichstatistics are available".
100. For these reasons, we do not agree with the Panel's broad finding in paragraph 7.109 that:
Members are required, in their recommendations or determinations on
the application of a safeguard measure, to explain how they
considered the facts before them and why they concluded, at the time
of the decision, that the measure to be applied was necessary to
remedy serious injury and facilitate the adjustment of the industry.
101. On the basis of this interpretation, the Panel came to the conclusion that "Korea's
determination of the measure did not meet the requirements of Article 5 of the Agreement onSafeguards".
60  Moreover, the Panel did not find it necessary to rule on whether the quantitative
restriction applied by Korea reduced the quantity of imports below the average of imports in the last
three representative years for which statistics are available.  According to the Panel:
Since we have already found that Korea's application of a measure
was not consistent with the provisions of the first sentence of
Article 5.1 which we consider to be generally applicable, also when a
quantitative restriction based on the average import levels for the last
three representative years is used, we do not address the question of
whether the quota level was calculated consistently with the secondsentence of Article 5.1.
61
102. In deciding whether Korea has acted inconsistently with the second sentence of Article 5.1,
we must determine whether the quantitative restriction imposed by Korea was below the average levelof imports in the last three representative years for which statistics are available, and if so, whetherKorea gave a reasoned explanation as required by the second sentence of Article 5.1.  The Panel didnot make any factual findings on the average level of imports of skimmed milk powder preparationsin the last three representative years.  The average level of imports in that period was also contestedby the parties.
62  Accordingly, we are not in a position, within the scope of our mandate under
Article 17 of the DSU, to complete the analysis in  this case and make a determination as to the
consistency of Korea's safeguard measure with the second sentence of Article 5.1.
                                                     
60Panel Report, para. 7.110.
61Ibid., para. 7.111.
62Ibid., paras. 4.613-4.626.WT/DS98/AB/R
Page 32
103. For these reasons, we uphold the Panel's finding, in paragraph 7.101 of its Report, that the
first sentence of Article 5.1 imposes an  obligation  on a Member applying a safeguard measure to
ensure that the measure applied is not more restrictive than necessary to prevent or remedy seriousinjury and to facilitate adjustment.  However, we reverse the Panel's broad finding, in paragraph 7.109
of its Report, that Article 5.1 requires a Member to explain, at the time it makes its recommendations
and determinations concerning the application of a safeguard measure, that its measure is necessary toremedy serious injury and to facilitate adjustment, even where the particular safeguard measureapplied is  not  a quantitative restriction which reduces the quantity of imports below the average of
imports in the last three representative years.  As to the question whether Korea's safeguard measureis consistent with the second sentence of Article 5.1, we are unable to come to a conclusion in theabsence of relevant factual findings in the Panel Report or undisputed facts in the Panel record.
VI. Article 12.2 of the  Agreement on Safeguards
104. The European Communities appeals from the Panel's interpretation of the phrase "all pertinent
information" in Article 12.2 of the  Agreement on Safeguards .  According to the European
Communities, the Panel effectively replaced the appropriate standard of "all pertinent information"with a lower and subjective standard ("sufficient information to enable consultations") without any
sound reasoning in support thereof.
63  The European Communities also requests the Appellate Body to
complete the analysis and find on the basis of found and uncontested facts that Korea did not complywith the requirement to provide "all pertinent information" laid down in Article 12.2 of the
Agreement on Safeguards .
64
105. Article 12.2 of the  Agreement on Safeguards   provides:
In making the notifications referred to in paragraphs 1(b) and 1(c), the
Member proposing to apply or extend a safeguard measure shall
provide the Committee on Safeguards with all pertinent information,
which shall include evidence of serious injury or threat thereof causedby increased imports, precise description of the product involved and
the proposed measure, proposed date of introduction, expected
duration and timetable for progressive liberalization.  In the case of an
extension of a measure,  evidence that the industry concerned is
adjusting shall also be provided.  The Council for Trade in Goods orthe Committee on Safeguards may request such additional
information as they may consider necessary from the Member
proposing to apply or extend the measure.
                                                     
63European Communities' appellant's submission, paras. 154-155.
64Ibid., para. 142.WT/DS98/AB/R
Page 33
106. In paragraph 7.127 of its Report, the Panel found:
… the ordinary meaning of the word "information" implies that the
other Members must gain knowledge of the actions undertaken by the
notifying Member.  In this sense, the amount of information notified
must be sufficient to be useful to Members with a substantial interestin the proposed safeguard measure.
107. In order to determine the appropriate meaning of "all pertinent information", we must
examine this phrase in the light of the text and the context of Article 12 as well as the object and
purpose of that Article.  The text of Article 12.2 makes it clear that a Member proposing to apply asafeguard measure is required to provide the Committee on Safeguards with  all  pertinent, not just
any  pertinent, information.  Moreover, it provides that such information  shall   include certain items
listed immediately after the phrase "all pertinent information", namely, evidence of serious injury orthreat thereof caused by increased imports, a precise description of the product involved and theproposed measure, the proposed date of introduction, the expected duration of the measure and atimetable for progressive liberalization.  These items, which are listed as mandatory components of"all pertinent information", constitute a minimum notification requirement that must be met if a
notification is to comply with the requirements of Article 12.
108. We do not agree with the Panel that "evidence of serious injury" in Article 12.2 is determined
by what the notifying Member considers to be sufficient information.
65  What constitutes "evidence of
serious injury" is spelled out in Article 4.2(a) of the  Agreement on Safeguards   which provides:
… 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 inthe level of sales, production, productivity, capacity utilization, profits
and losses, and employment.
We believe that "evidence of serious injury" in the sense of Article 12.2 should refer, at a minimum,
to the injury factors required to be evaluated under Article 4.2(a).
66  In other words, according to the
text and the context of Article 12.2, a Member must, at a minimum , address in its notifications,
pursuant to paragraphs 1(b) and 1(c) of Article 12, all the items specified in Article 12.2 asconstituting "all pertinent information", as well as th e factors listed in Article 4.2 that are required to
be evaluated in a safeguards investigation.  We believe that the standard set by Article 12 with respect
                                                     
65Panel Report, para. 7.136.
66See Appellate Body Report,  Argentina – Safeguard Measures on Imports of Footwear ,
WT/DS121/AB/R, circulated 14 December 1999, para. 136.WT/DS98/AB/R
Page 34
to the content of "all pertinent information" to  be notified to the Committee on Safeguards is an
objective standard independent of the subjective assessment of the notifying Member.
109. In concluding that there is a minimum objective standard, we do not mean to suggest that
"evidence of serious injury" should include all the details of the recommendations and reasoning to be
found in the report of the competent authorities.  We agree with the Panel that, if such had been the
intention of the drafters of the  Agreement on Safeguards , they would have simply referred back to
Articles 3 and 4 when requiring "evidence of serious injury" in Article 12.2.67  There is, however, an
intermediate position between notifying the full cont ent of the report of the competent authorities and
giving the notifying Member the discretion to determine what may be included in a notification.  Tocomply with the requirements of Article 12.2, the notifications pursuant to paragraphs 1(b) and 1(c) ofArticle 12 must, at a minimum , address all the items specified in Article 12.2 as constituting "all
pertinent information", as well as the factors listed in Article 4.2 that are required to be evaluated in asafeguards investigation.
110. We are aware that the last sentence of Article 12.2 provides that the Council for Trade in
Goods or the Committee on Safeguards may request such additional information as they may considernecessary from the Member proposing to apply a safeguard measure.  In our view, the request foradditional information is meant to enable the Council for Trade in Goods or the Committee onSafeguards to seek information on elements of information not covered by Article 12.2 or Article 4.2,or to elicit further details on "evidence of serious injury".  We note that the listing of elements is notexhaustive as they are cited following the words "including" or "in particular".  Contrary to whatKorea argued and the Panel reasoned, such a request is not meant to fill in gaps created by omittingelements required under "all relevant information" or "evidence of serious injury".
111. With respect to the object and purpose of Article 12, we agree with the Panel that:
… the notification serves essentially a transparency and information
purpose.  In ensuring transparency, Article 12 allows Members
through the Committee on Safeguards to review the measures.
Another purpose of the notification of the finding of serious injury
and of the proposed measure is to inform Members of the
circumstances of the case and the conclusions of the investigationtogether with the importing country's particular intentions.  This
allows any interested Member to decide whether to request
consultations with the importing country which may lead to
modification of the proposed measure(s) and/or compensation.
68
                                                     
67Panel Report,  para. 7.127.
68Ibid., para. 7.126.WT/DS98/AB/R
Page 35
We believe that the purpose of notification is better served if it includes all the elements of
information specified in Articles 12.2 and 4.2.  In  this way, exporting Members with a substantial
interest in the product subject to a safeguard measure will be in a better position to engage in
meaningful consultations, as envisaged by Articl e 12.3, than they would otherwise be if the
notification did not include all such elements.  And, the Committee on Safeguards can moreeffectively carry out its surveillance function set out in Article 13 of the  Agreement on Safeguards .
At the same time, providing the requisite information to the Committee on Safeguards does not placean excessive burden on a Member proposing to apply a safeguard measure as such information is, orshould be, readily available to it.
112. Whether Korea has acted consistently with the provisions of Article 12.2 depends on the
content and extent of the information it has made available to the Committee on Safeguards in its
notifications.  According to the Panel:
Korea's notification of the finding of serious injury caused by
increased imports stated that imports had grown, that the domestic
industry's share of domestic consumption had decreased and domestic
stocks had increased.  There is no explicit reference to any analysis of
the level of sales, production, productivity, and employment as such,
nor is there any reference to any causation element. … 
69
The Panel went on to state:
We consider, however, that this notification contains sufficient
information on what Korea considered to be evidence of injury causedby increased imports as well as on the other listed items in
Article 12.2. … Consequently, we consider that the content of that
Korean notification made pursuant to Article 12.1(b) meets the
requirements of Article 12.2 of the Agreement on Safeguards.
70
113. In light of the preceding analysis, we do not agree with the Panel that the content of Korea's
notification in this case satisfies the requiremen t to provide "all pertin ent information" to the
Committee on Safeguards, since Korea failed to address all the factors that must be covered as"evidence of serious injury".  Therefore, we reverse the Panel's finding in paragraph 7.136 of itsReport, and conclude that Korea has acted inconsistently with its obligations under Article 12.2 of theAgreement on Safeguards .
                                                     
69Panel Report, para. 7.135.
70Ibid., para. 7.136.WT/DS98/AB/R
Page 36
VII. Article 6.2 of the DSU
114. We turn now to certain procedural issues raised by Korea in the present appeal.  The first of
these procedural issues is whether the Panel erred in finding that the European Communities' requestfor the establishment of a panel met the requirements of Article 6.2 of the DSU.
115. Article 6.2 of the DSU reads as follows:
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 th e problem clearly.  In case the
applicant requests the establishment of  a panel with other than standard
terms of reference, the written request shall include the proposed text ofspecial terms of reference.
116. In its examination of whether the European Communities' request for a panel met the
requirements of Article 6.2 of the DSU, the Panel referred to a portion of a finding in our Report inEuropean Communities – Bananas , in which we stated:
"[we] accept the Panel’s view that it was sufficient for the
Complaining Parties to list the provisions of the specific agreements
alleged to have been violated  without setting out detailed arguments
as to which specific aspects of the measures at issue relate to which
specific provisions of those agreements".
71  (emphasis added by the
Panel)
117. The Panel also quoted from the European Communities' request for a panel in the instant case
in the following terms:
The contested safeguard measure was imposed in the form of an
import quota on imports of certain dairy products (Korean CN codes
0404.90.0000, 0404.10.2190, 0404.10.2900 and 1901.90.2000)
effective as of 7 March 1997 and made public through notification inthe revision of "Separated Notice of Export-Import" and in "Detailed
Principle of Import Licence on Imitation Milk Powder. …
Therefore, the EC requests that the panel consider and find that this
measure is in breach of Korea's obligations under the provisions of the
Agreement on Safeguards, in particular of Articles 2, 4, 5 and 12 ofthe said Agreement and in violation of Article XIX of GATT 1994.
72
                                                     
71Panel Report, para. 7.3.  See Appellate Body Report, supra , footnote 13, para. 141.
72Panel Report, para. 7.6.WT/DS98/AB/R
Page 37
118. Without further discussion, the Panel arrived at two conclusions.  The first is the general
statement that "a request for establishment of a panel is sufficiently detailed if it contains a description
of the measures at issue and the claims, i.e. the violations alleged."73  The second conclusion of the
Panel purports to be an application of this general statement to the case before it:
We consider, therefore, that the EC request for establishment of a
panel is sufficiently detailed as it contains a description of the
measures at issue and the claims, i.e. the violations alleged.74
119. Korea appeals both from the Panel's general statement regarding sufficiency under Article 6.2
of the DSU, and from the application of that statement to the European Communities' request for apanel in the present case.  Korea asks us to set aside the entirety of the panel proceedings because thePanel erred in law in interpreting and applying Article 6.2 of the DSU.
120. We start our analysis of the Panel's ruling by examining the text of Article 6.2 of the DSU.  It
is convenient to quote the pertinent part of Article 6.2, once more:
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. …
When parsed into its constituent parts, Article 6.2  may be seen to impose the following requirements.
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 clearly.  In its fourth requirement, Article 6.2 demands only asummary – and it may be a brief one – of the legal basis of the complaint;  but the summary must, inany event, be one that is "sufficient to present the problem clearly".  It is not enough, in other words,that "the legal basis of the complaint" is summarily  identified;  the identification must "present the
problem clearly".
                                                     
73Panel Report., para. 7.5.
74Ibid., para. 7.7.WT/DS98/AB/R
Page 38
121. As the Panel noted75, we said in  European Communities – Bananas , that:
[we] accept the Panel’s view that it was sufficient for the Complaining
Parties to list the provisions of the specific agreements alleged to havebeen violated without setting out detailed arguments as to which
specific aspects of the measures at issue relate to which specific
provisions of those agreements.
76
It appears to us that the Panel read this portion of our findings in European Communities – Bananas
as establishing a litmus test for determining the su fficiency of the statement of the legal basis of the
complaint.
122. The Panel, however, failed to note that in  European Communities - Bananas , we went on to
say that:
As a panel request is normally not subjected to detailed scrutiny by the
DSB, it is incumbent upon a panel to examine the request for the
establishment of the panel very carefully to ensure its compliance with
both the letter and the spirit of Article 6.2 of the DSU .  It is important
that a panel request be sufficiently precise for two reasons: first, it
often forms the basis for the terms of reference of the panel pursuant
to Article 7 of the DSU; and, second, it informs the defending party
and the third parties of the legal basis of the complaint . 77  (emphasis
added)
123. Thus, we did not purport in  European Communities – Bananas  to establish the mere listing of
the articles of an agreement alleged to have been breached as a standard of precision, observance of
which would  always   constitute sufficient compliance with the requirements of Article 6.2,  in each
and every case , without regard to the particular circumstances of such cases.  If we were in fact
attempting to construct such a rule in that case, th ere would have been little point to our enjoining
panels to examine a request for a panel " very carefully to ensure its compliance with both the letter
and the spirit of Article 6.2 of the DSU ".  Close scrutiny of what we in fact said in  European
Communities – Bananas  shows that we, firstly, restated the reasons why precision is necessary in a
request for a panel;  secondly, we stressed that claims, not detailed arguments, are what need to be setout with sufficient clarity;  and thirdly, we agreed with the conclusion of the panel that, in that case,
the listing of the articles of the agreements claimed to have been violated satisfied the  minimum
requirements of Article 6.2 of the DSU.  In view of all the circumstances surrounding that case, weconcurred with the panel that the European Communities had not been misled as to what claims werein fact being asserted against it as respondent.
                                                     
75Panel Report, para. 7.3.
76Appellate Body Report, European Communities – Bananas , supra , footnote 13, para. 141.
77Ibid., para. 142.WT/DS98/AB/R
Page 39
124. Identification of the treaty provisions claimed to have been violated by the respondent is
always necessary both for purposes of defining the terms of reference of a panel and for informing the
respondent and the third parties of the claims made by the complainant;  such identification is a
minimum prerequisite if the legal basis of the complaint is to be presented at all.78  But it may not
always be enough.  There may be situations where the simple listing of the articles of the agreementor 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 standardof 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 anagreement, in and of itself, may fall short of the standard of Article 6.2.
125. In  European Communities – Bananas , we stated:
Article 6.2 of the DSU requires that the claims , and not the arguments,
must all be specified sufficiently in the request for the establishment
of a panel in order to allow the defending party and any third parties to
know the legal basis of the complaint.
79
126. In European Communities – Computer Equipment , we explored the due process objective of
the request for the establishment of a panel with respect to the identification of the measure at issue,
and concluded that:
…We do not see how the alleged lack of precision of the terms, LAN
equipment and PCs with multimedia capability, in the request for the
establishment of a panel affected the rights of defence of the European
Communities in the course of the panel proceedings.  As the ability of
the European Communities to defend itself was not prejudiced by a
lack of knowing the measures at issue, we do not believe that thefundamental rule of due process was violated by the Panel.
80
127. Along the same lines, we consider that whether the mere listing of the articles claimed to have
been violated meets the standard of Article 6.2 must be examined on a case-by-case basis.  In
resolving that question, we take into account whether the ability of the respondent to defend itself wasprejudiced, given the actual course of the panel proceedings, by the fact that the panel request simplylisted the provisions claimed to have been violated.
                                                     
78See Appellate Body Report, Brazil – Desiccated Coconut , supra , footnote 21, p. 22;  Appellate Body
Report, European Communities – Bananas , supra , footnote 13, paras. 145 and 147;  and Appellate Body Report,
India – Patents , supra , footnote 21, paras. 89, 92 and 93.
79Appellate Body Report,  European Communities – Bananas , supra,  footnote 13, para. 143.
80Appellate Body Report, European Communities – Computer Equipment , supra , footnote 41, para. 70.WT/DS98/AB/R
Page 40
128. For the foregoing reasons, we do not agree with the position, implicitly taken by the Panel,
that the simple listing of articles of an agreement asserted to have been violated meets, always and inevery case, the requirements of Article 6.2 of the DSU.
129. In the present case, we note that the European Communities' request for a panel, after
identifying the Korean safeguard measure at issue, listed Articles 2, 4, 5 and 12 of the  Agreement on
Safeguards  and Article XIX of the GATT 1994.  Article XIX of the GATT 1994 has three sections
and a total of five paragraphs, each of which has at least one distinct obligation.  Articles 2, 4, 5and 12 of the  Agreement on Safeguards  also have multiple paragraphs, most of which have at least
one distinct obligation.  The  Agreement on Safeguards  in fact addresses a complex multi-phased
process from the initiation of an investigation, through evaluation of a number of factors,determination of serious injury and causation thereof, to the adoption of a definitive safeguardmeasure.  Every phase must meet with certain legal requirements and comply with the legal standardsset out in that Agreement.
130. In  European Communities – Bananas , we called upon panels to examine the request for a
panel "very carefully to ensure its compliance with both the letter and the spirit of Article 6.2 of theDSU".  We note that the Panel in the present case treated this important issue in a perfunctorymanner.
81  As discussed above, the Panel merely quoted a passage from our Report in European
Communities – Bananas  and the relevant part of the request for a panel.  We consider that the Panel's
treatment of this issue is not satisfactory.
131. In assessing whether the European Communities' request met the requirements of Article 6.2
of the DSU, we consider that, in view of the particular circumstances of this case and in line with theletter and spirit of Article 6.2, the European Communities' request should have been more detailed.
However, Korea failed to demonstrate to us that the mere listing of the articles asserted to have been
violated has prejudiced its ability to defend itself in the course of the Panel proceedings.  Korea didassert that it had sustained prejudice, but offered no supporting particulars in its appellant'ssubmission nor at the oral hearing.  We, therefore, deny Korea's appeal relating to the consistency ofthe European Communities' request for the establishment of a panel with Article 6.2 of the DSU.
                                                     
81In our Report in  European Communities – Bananas , we adverted to the possibility of dealing with
Article 6.2 problems of the kind addressed there "without causing prejudice or unfairness to any party or thirdparty" through standard, detailed working procedures for panels that provide for,  inter alia , preliminary rulings
(Appellate Body Report,  European Communities – Bananas , supra , footnote 13, para. 144).  We note that there
appears to be no legal obstacle to the inclusion, in  additional working procedures which panels adopt  ad hoc
after consultation with the parties, of provisions for preliminary rulings on,  inter alia , questions concerning
compliance with the requirements of Article 6.2.WT/DS98/AB/R
Page 41
VIII.  The OAI Report
132. We come to the second procedural issue raised in this appeal, namely whether the Panel had
improperly based its findings concerning the consistency of Korea's serious injury determination with
Article 4.2 of the  Agreement on Safeguards  on the OAI Report.
133. In the course of reaching its conclusion that Korea's serious injury determination is not
consistent with Article 4.2(a) of the  Agreement on Safeguards82, the Panel made the following
statements:
7.30 … We note that the European Communities has initially
relied on the notifications to the Committee on Safeguards to establish
its claims.  We are of the view that such notifications are not
necessarily complete evidence of what the Korean national authorities
actually did.  Rather, the full reflection of the Korean investigation
can only be found in the investigation report or the final determination
by the Minister, and not (as argued by the European Communities at
the first meeting of the Panel) in the notifications to the Committee on
Safeguards.  In its rebuttals and at the second meeting of the Panel
with the parties, the European Communities, in support of itsallegations, made reference to the OAI Report as well.
…
7.59 … Since our task is to make an objective assessment of the
factual considerations and reasoning of the Korean authorities in
arriving at a finding of serious injury at the time of the determination,
our analysis of Korea's compliance with the provisions in Article 4.2will be on the basis of the OAI Report. …
134. Korea appeals from the above statements of the Panel and ascribes three errors in law to the
Panel.  Korea claims that the Panel erred, firstly, in characterizing Korea's submission of the OAI
Report to the Panel
83;  secondly, in assessing Korea's action solely on the basis of the OAI Report84;
and thirdly, in failing to consider Korea's argument that parties to a dispute settlement procedurecannot introduce new claims at or subsequent to the rebuttal stage.
85
                                                     
82Panel Report, para. 8.1(a).  This conclusion  by the Panel is not appealed by Korea.
83Korea's appellant's submission, p. 27.
84Ibid., p. 23.
85Ibid., pp. 25-26.WT/DS98/AB/R
Page 42
135. In respect of Korea's first claim of error, we note that Korea submitted the OAI Report, in the
Korean language, to the Panel as an attachment to its first written submission.  The Panel said that if
Korea wished to rely upon the OAI Report and to use it "in support of its allegations", Korea shouldsubmit that Report in one of the official languages of the WTO.
86  Korea did submit an English
translation of the OAI Report after the first meeting of the Panel with the parties.87  Korea now states
that it did not place the OAI Report before the Panel "as a subject of dispute between the parties, or asevidence of compliance or non-compliance with the  Agreement on Safeguards ", but rather as
"information that might be useful in explaining the context of and background to the dispute."
88  In
addition to the OAI Report, Korea submitted other documentation that related to the actions taken bythe Korean Government in the process leading to its safeguard measure.
89
136. Whatever may have been Korea's specific purpose in submitting the OAI Report to the Panel,
Korea must have believed that it was useful, in respect of its case as respondent, to do so.  The Reportclearly became part of the record of the Panel proceedings.  We believe that the Panel was entitled to
examine the Report and to consider its import for the whole case since Korea had presented it with its
first written submission, even though Korea might not have submitted the OAI Report as evidence inits own defence.
137. In its second claim of error, Korea appears to  suggest that the Panel, in evaluating Korea's
actions leading up to the adoption of its safeguard measure, should have looked solely to the evidencesubmitted by the European Communities as complaining party.  We do not agree with Korea in thisrespect.  It is, of course, true that the European Communities has the onus  of establishing its claim that
Korea's safeguard measure is inconsistent with the requirements of Article 4.2 of the  Agreement on
Safeguards .  However, under Article 11 of the DSU, a panel is charged with the mandate to determine
                                                     
86In para. 7.16 of its Report, the Panel stated:
"… should it wish to refer to the OAI Report in support of its allegations ,
Korea should file a version of the report in one of the official languages ofthe WTO."  (emphasis added)
In para. 7.18, of its Report, the Panel also stated:
The Panel informed Korea that if it intended to submit any piece of evidence,
including the OAI Report , it should do so by 20 November 1998, that is, the
deadline given to the parties to answer  the questions posed to them during
the first substantive meeting of the Panel.  In this way parties would be ableto submit full and useful rebuttals before the second meeting of the Panel.(emphasis added)
87On 20 November 1998, Korea submitted, together with  its answers to the questions submitted to it, an
English version of the OAI Report, as Exhibit Korea-6.  See Panel Report, para. 7.18.
88Korea's appellant's submission, p. 27.  We note that in its appellee's submission, para. 51, the
European Communities stated that Korea cited the OAI Report in para. 94 of its first written submission to
refute the European Communities' claims.
89Panel Report, para. 7.30, footnote 417.WT/DS98/AB/R
Page 43
the facts of the case and to arrive at factual findings.  In carrying out this mandate, a panel has the
duty to examine and consider all the evidence before it, not just the evidence submitted by one or the
other party, and to evaluate the relevance and probative force of each piece thereof.  In  European
Communities – Hormones , we had occasion to stress that:
The duty to make an objective assessment of the facts is, among other
things, an obligation to consider th e evidence presented to a panel and
to make factual findings on the basis of that evidence.   The deliberate
disregard of, or refusal to consider, the evidence submitted to a panel is
incompatible with a panel's duty to make an objective assessment of the
facts. 90
The determination of the significance and weight properly pertaining to the evidence presented by one
party is a function of a panel's appreciation of the probative value of all the evidence submitted byboth parties considered together.
138. We note that in examining the OAI Report, the Panel did not do anything out of the ordinary.
The European Communities' claim was that Korea had disregarded certain requirements of Article 4.2of the  Agreement on Safeguards  in its actions preceding and accompanying the adoption of its
safeguard measure.  The OAI Report was issued by the Korean authorities which,  inter alia ,
investigated and evaluated the assertions of serious injury to the domestic industry involved.  Thus,that Report was clearly relevant to the task of the Panel to determine the facts, and the Panel was
within its discretionary authority in deciding whethe r or not, or to what extent, it should rely upon the
Report in ascertaining the facts relating to Korea's injury determination.
139. Turning to Korea's third claim of error, we agree with Korea that a party to a dispute
settlement proceeding may not introduce a new claim during or after the rebuttal stage.  Indeed, any
claim that is not asserted in the request for the establishment of a panel may not be submitted at anytime after submission and acceptance of that request.
91  B y  " claim " we mean a claim that the
respondent party has violated, or nullified or impaired the benefits arising from, an identifiedprovision of a particular agreement.  Such a  claim of violation  must, as we have already noted, be
distinguished from the  arguments  adduced by a complaining party to demonstrate that the responding
party's measure does indeed infringe upon the identified treaty provision.
92  Arguments supporting a
claim are set out and progressively clarified in the first written submissions, the rebuttal submissions
                                                     
90Appellate Body Report,  EC Measures Concerning Meat and Meat Products (Hormones)  ("European
Communities – Hormones "), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, para. 133.
91Appellate Body Report,  European Communities – Bananas , supra , footnote 13, para. 143.
92Ibid., para. 141.  See also Appellate Body Report,  India – Patents , supra , footnote 21, para. 88;  and
Appellate Body Report,  European Communities – Hormones , supra , footnote 90, para. 156.WT/DS98/AB/R
Page 44
and the first and second panel meetings with the parties.93  In  European Communities – Hormones ,
we emphasized the substantial latitude enjoyed by panels in treating the arguments  presented by either
of the parties and said:
… Panels are inhibited from addressing  legal claims falling outside their
terms of reference.  However, nothing in the DSU limits the faculty of a
panel freely to use arguments submitted by any of the parties -- or  to
develop its own legal reasoning -- to support its own findings andconclusions on the matter under its consideration.
94
Both "claims" and "arguments" are distinct from the "evidence" which the complainant or respondent
presents to support its assertions of fact and arguments.
140. Having carefully examined the Panel Report, we find no indication that the European
Communities asserted a new claim of violation  against Korea at or subsequent to the rebuttal stage of
the proceedings.  True enough, the European Communities in its first written submission reliedmainly on Korea's notifications to the Committee on Safeguards to prove its claim that Korea hadacted inconsistently with the requirements of Article 4.2 of the  Agreement on Safeguards .
95
Subsequently, in its rebuttal submission and at the second meeting of the Panel with the parties, the
European Communities explicitly referred to the OAI Report.  The European Communities' referenceto the OAI Report did not, however, constitute a new claim of violation.  To the contrary, the
European Communities referred to the OAI Report as evidence or supplemental evidence  to
substantiate the allegation of a violation of Article 4 already made in the request for the establishmentof a panel.
141. We, therefore, conclude that the Panel did not err in law in basing its findings of
inconsistency with Article 4.2 of the  Agreement on Safeguards  on the OAI Report.
IX. Burden of Proof
142. The third and last procedural issue raised in this appeal is whether the Panel erred in its
application of the burden of proof in respect of its findings under Article 4 of the  Agreement on
Safeguards .
                                                     
93Appellate Body Report,  India – Patents , supra , footnote 21, para. 88.
94Appellate Body Report,  European Communities – Hormones , supra , footnote 90, para. 156.
95The European Communities stated in para. 33 of its appellee's submission  that the OAI Report is the
same as the "KTC Report" and that in its first written submission it had already referred to the "KTC Report".WT/DS98/AB/R
Page 45
143. The Panel said in respect of the burden of proof:
In the context of the present dispute, which is concerned with the
assessment of the WTO compatibility of a safeguard measure imposed
by a national authority, we consider that it is for the European
Communities to submit a prima facie  case of violation of the
Agreement on Safeguards, namely, to demonstrate that the Korean
safeguard measures are not justified by reference to Articles 2, 4, 5and 12 of the Agreement on Safeguards. … In the present case, it is
for Korea to effectively refute the European Communities' evidence
and arguments, by submitting its own evidence and arguments in
support of its assertions that, at the time of its determination, Korea
did respect the requirements of the Agreement on Safeguards.  As a
matter of law the burden of proof rests with the European
Communities, as complainant, and does not shift during the panelprocess.  As a matter of process before the Panel, the European
Communities will submit its arguments and evidence and Korea will
respond to rebut the EC claims.  At the end of this process, it is for the
Panel to weigh and assess the evidence and arguments submitted by
both parties in order to reach conclusions as to whether the EC claimsare well-founded.
96
144. In its appeal, Korea contends that "as a threshold matter", "a panel must evaluate and make a
finding on whether the complaining Member (i.e., the Member with the burden of proof) has
established a  prima facie  case of a violation", before requiring the respondent to submit evidence of
its own case or defence.  The Panel, in Korea's vi ew, "ignored this step in describing how it would
apply the burden of proof and stated that it would simply weigh the evidence at the end of theproceedings."
97  Thus, the Panel "did not consider and a fortiori  did not find that the European
Communities made a  prima facie  case that justified its proceeding to examine the evidence and
arguments" of Korea.98
145. We find no provision in the DSU or in the  Agreement on Safeguards  that requires a panel to
make an explicit ruling on whether the complainant has established a  prima facie   case of violation
before a panel may proceed to examine the respondent's defence and evidence.  In our Report in
India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products , we
stated:
                                                     
96Panel Report, para. 7.24.
97Korea's appellant's submission, p. 30.
98Ibid., p. 31.WT/DS98/AB/R
Page 46
[W]e do not find it objectionable that the Panel took into account, in
assessing whether the United States had made a  prima facie  case, the
responses of India to the arguments of the United States.  This way of
proceeding does not imply, in our view, that the Panel shifted the
burden of proof to India.  We, therefore, are not of the opinion that thePanel erred in law in proceeding as it did.
99
146. Korea next argues that the Panel erred "in pr esuming that the European Communities satisfied
its burden of proof and in proceeding to find that Korea violated Article 4 of the  Agreement on
Safeguards  based solely on the OAI Report."  According to Korea, "the Panel does not have the
authority to make a party's claims for it or otherwise relieve a party of its task of presenting a prima facie  case."
100  Korea submits that it is the complainant , not the Panel, that must establish a
 prima facie  case.  Since the conclusions of the Panel in respect of Article 4 of the  Agreement on
Safeguards  were not based on any claims raised before the Panel by the complainant, Korea contends
that the Panel could not have properly concluded "that the European Communities had discharged itsburden of proof in respect of Article 4."
101  The Panel, hence, according to Korea, should have
dismissed the European Communities' case without proceeding to consideration of Korea's own
arguments and evidence.
147. As we understand it, the thrust of Korea's appeal in this respect is that the Panel had in effect
made the European Communities' case for the European Communities.  In  Japan – Agricultural
Products , we said:
We consider that it was for the United States to establish a
 prima facie  case that there is an alternative measure that meets all
three elements under Article 5.6 in order to establish a  prima facie  
case of inconsistency with Article 5.6.  Since the United States did not
even claim  before the Panel that the "determination of sorption levels"
is an alternative measure which meets the three elements under
Article 5.6, we are of the opinion that the United States did not
establish a  prima facie  case that the "determination of sorption
levels" is an alternative measure within the meaning of Article 5.6.102
(emphasis added)
                                                     
99Appellate Body Report, India - Quantitative Restrictions on Imports of Agricultural, Textile and
Industrial Products , WT/DS90/AB/R, adopted 22 September 1999, para. 143.  See also Appellate Body Report,
Canada – Aircraft , supra , footnote 15, para. 192.
100Korea's appellant's submission, p. 32.
101Ibid., p. 33.
102Appellate Body Report, Japan – Agricultural Products , supra , footnote 17, para. 126.WT/DS98/AB/R
Page 47
We went on to state:
Article 13 of the DSU and Article 11.2 of the  SPS Agreement  suggest
that panels have a significant investigative authority.  However, this
authority cannot be used by a panel to rule in favour of a complaining
party which has not established a  prima facie case of inconsistency
based on specific legal claims asserted by it .  A panel is entitled to
seek information and advice from experts and from any other relevant
source it chooses, pursuant to Article 13 of the DSU and, in an SPS
case, Article 11.2 of the  SPS Agreement , to help it to understand and
evaluate the evidence submitted and the arguments made by theparties, but not to make the case for a complaining party .
 103
(emphasis added)
148. In the present case, as we have already noted, the Panel stated that initially, i.e., in its first
written submission, the European Communities had relied mostly upon Korea's notifications to theCommittee on Safeguards to support its claims.
104  The Panel record shows that at the first meeting of
the Panel with the parties, the Panel posed the following questions to the European Communities:
Does the EC believe that the obligation in Articles 3 and 4 of [the
Agreement on Safeguards ] are evidenced in the WTO Notifications?
Why does the EC concentrate its argumentation only [on] what was
reflected [in] these WTO notifications?
The European Communities responded that all information relating to Korea's safeguards
investigation "should be found, or at least referred to, in the notification".105  However, in its rebuttal
submission and at the second meeting of the Panel with the parties, the European Communities madereferences to the OAI Report and relied on this Report as evidence or supplemental evidence tosupport its claim of violation of Article 4 of the  Agreement on Safeguards .
                                                     
103Appellate Body Report, Japan – Agricultural Products , supra , footnote 17, para. 129.  We
acknowledged this ruling in Appellate Body Report,  Canada – Aircraft , supra , footnote 15, para. 194.
104Panel Report, para. 7.24.
105See the European Communities' answers to the Panel's questions presented at the first meeting with
the Panel (10-11 November 1998).  We also note that as part of its response to the Panel's question:  "Whereshould the information used and analysis performed by the national authority of Korea in its determination of itssafeguard measures be found?", Korea stated:
Although it may be possible to conclude that the OAI Report forms the
fundamental basis of the Government of Korea's determination, it shouldbe clear that the [Korean Trade Commission] and the Minister togethercomprise the "competent authorities" and that … any information used at
any time subsequent to the issuance of the OAI Report and prior to the
Minister's final decisions to implement relief measures is also relevant  and
needs to be considered as part of that  decision.  (See Korea's answer to the
Panel's questions presented at the first meeting with the Panel(10-11 November 1998);  emphasis added)
In para. 33 of its appellee's submission, the European Communities stated that the notification by
Korea of the adoption of its safeguard measure containe d information more recent than that in the OAI Report
and that the European Communities wanted to give Korea the "benefit of the doubt".WT/DS98/AB/R
Page 48
149. On the basis of the questions posed by the Panel and the reactions of the European
Communities, we see no ground to conclude that the Panel relieved the European Communities of itstask of showing the inconsistency of Korea's safeguards investigation with Article 4.2 of theAgreement on Safeguards .  The Panel did not overstep the bounds of legitimate management or
guidance of the proceedings before it in the interest of efficiency and dispatch.
150. We, therefore, conclude that the Panel did not err in law in its application of the burden of
proof in respect of its findings under Article 4 of the  Agreement on Safeguards .
X. Findings and Conclusions
151. For the reasons set out in this Report, the Appellate Body:
(a) does not agree with the Panel that the clause – "as a result of unforeseen
developments and of the effect of the obligations incurred by a Member under thisAgreement, including tariff concessions …" – "does not specify anything additionalas to the conditions under which measures pursuant to Article XIX may be applied",
and, therefore, reverses the Panel's conclusion in paragraph 7.48 of its Report that
"Article XIX of GATT does not contain such a requirement";
(b) is unable to come to a conclusion on whether or not Korea violated its obligations
under Article XIX:1(a) of the GATT 1994 in the absence of relevant factual findingsin the Panel Report or undisputed facts in the Panel record;
(c) upholds the Panel's finding in paragraph 7.101 of its Report that the first sentence of
Article 5.1 of the  Agreement on Safeguards  imposes an  obligation  on a Member
applying a safeguard measure to ensure that the measure applied is not morerestrictive than necessary to prevent or remedy serious injury and to facilitate
adjustment;
(d) reverses the Panel's broad finding in paragraph 7.109 of its Report that Article 5.1
requires a Member to explain, at the time it makes its recommendations anddeterminations concerning the application of a safeguard measure, that its measure isnecessary to remedy serious injury and to facilitate adjustment, even where theparticular safeguard measure applied is  not  a quantitative restriction which reduces
the quantity of imports below the average of imports in the last three representativeyears;WT/DS98/AB/R
Page 49
(e) is unable to come to a conclusion on whether or not Korea's safeguard measure is
consistent with the second sentence of Article 5.1 of the  Agreement on Safeguards  in
the absence of relevant factual findings in the Panel Report or undisputed facts in the
Panel record;
(f) reverses the Panel's finding in paragraph 7.136 of its Report and concludes that Korea
has acted inconsistently with its obligation to notify "all pertinent information" underArticle 12.2 of the  Agreement on Safeguards ;
(g) denies Korea's appeal relating to the consistency of the European Communities'
request for the establishment of a panel with Article 6.2 of the DSU;
(h) concludes that the Panel did not err in law in basing its findings of inconsistency with
Article 4.2 of the  Agreement on Safeguards  on the OAI Report;  and
(i) concludes that the Panel did not err in law in its application of the burden of proof in
respect of its findings under Article 4 of the  Agreement on Safeguards .
152. The Appellate Body  recommends  that the DSB request that Korea bring its safeguard
measure found in this Report, and in the Panel Report as modified by this Report, to be inconsistentwith the  Agreement on Safeguards  into conformity with its obligations under that Agreement.WT/DS98/AB/R
Page 50
Signed in the original at Geneva this 29th day of November 1999 by:
Said El-Naggar
Presiding Member
Claus-Dieter Ehlermann Florentino Feliciano
Member Member