WORLD TRADE
ORGANIZATIONWT/DS202/AB/R
15 February 2002
(02-0717)
Original:  English
UNITED STATES – DEFINITIVE SAFEGUARD MEASURES ON IMPORTS OF
CIRCULAR WELDED CARBON QUALITY LINE PIPE FROM KOREA
AB-2001-9
Report of the Appellate BodyWT/DS202/AB/R
Page i
I. Introduction and Fa ctual Background.........................................................................................1
II. Arguments of the Participan ts and Third Pa rticipan ts ................................................................7
A. Claims of Error by the United States – Appellant .........................................................7
1. Necessity of a Discrete Determination Either of Serious Injury or of
Threat of Serious Injury....................................................................................7
2. Non-Attribution of the Injurious Effects of Other Factors to Increased
Imports..............................................................................................................9
3. Adequate Opportunity for Prior Consultations and Obligation to
Endeavour to Maintain a Substantially Equivalent Level of
Concessions ....................................................................................................10
4. Exclusion of " de minimis " Developing Country Exporters from the
Line Pipe Measure ..........................................................................................10
B. Arguments of Korea – Appellee ...................................................................................11
1. Necessity of a Discrete Determination Either of Serious Injury or of
Threat of Serious Injury..................................................................................11
2. Non-Attribution of the Injurious Effects of Other Factors to Increased
Imports............................................................................................................12
3. Adequate Opportunity for Prior Consultations and Obligation to
Endeavour to Maintain a Substantially Equivalent Level of
Concessions ....................................................................................................12
4. Exclusion of " de minimis " Developing Country Exporters from the
Line Pipe Measure ..........................................................................................12
C. Claims of Error by Korea – Appellant .........................................................................13
1. Article XXIV of the GATT 1994 ...................................................................13
2. "Parallelism" Between the Investigation and the Application of the
Line Pipe Measure ..........................................................................................14
3. The Requirement to Demonstrate  a priori   the Necessity of the Line
Pipe Measure ..................................................................................................15
4. The Proportionality of th e Line Pipe Measure................................................15
D. Arguments of the United States – Appellee ..................................................................16
1. Article XXIV of the GATT 1994 ...................................................................16
2. "Parallelism" Between the Investigation and the Application of the
Line Pipe Measure ..........................................................................................17
3. The Requirement to Demonstrate  a priori   the Necessity of the Line
Pipe Measure ..................................................................................................18
4. The Proportionality of th e Line Pipe Measure................................................18
E. Arguments of the Third Participants ............................................................................19
1. Australia..........................................................................................................19
2. Canada ............................................................................................................203. European Communities...................................................................................20
4. Japan ...............................................................................................................23
5. Mexico ............................................................................................................24
III. Issues Raised in this Appeal ............................................................................................... ......25
IV. Introductory  Remarks ........................................................................................................ .......27WT/DS202/AB/R
Page ii
V. Adequate Opportunity for Prior Consultations .........................................................................30
VI. Obligation to Endeavour to Maintain a Substantially Equivalent Level of Concessions
and Other Ob ligati ons.......................................................................................................... .....39
VII. Exclusion of " de minimis " Developing Country Exporters from the Line Pipe Measure.........40
VIII. Necessity of a Discrete Dete rmination Either of Serious Injury or of Threat of Serious
Injury......................................................................................................................... ................45
IX. "Parallelism" Between the Investigation and the Application of the Line Pipe Measure.........58
X. Non-Attribution of the Injurious Effects of Other Factors to Increased Imports......................65
XI. The Application of the Line Pipe Measure:  Express Justification and Permissible
Extent......................................................................................................................... ...............72
A. The Express Justification of the Line Pipe Measure at the Time of Application .........73
B. The Permissible Extent of the Line Pipe Measure .......................................................76
XII. Findings and Conclusions................................................................................................... ......84WT/DS202/AB/R
Page 1
WORLD TRADE ORGANIZATION
APPELLATE BODY
United States – Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line
Pipe from Korea
United States, Appellant/Appellee
Korea, Appellant/Appellee
Australia, Third Participant
Canada, Third Participant
European Communities, Third Participant
Japan, Third Participant
Mexico, Third ParticipantAB-2001-9
Present:Lacarte-Muró, Presiding Member
Bacchus, MemberAbi-Saab, Member
I. Introduction and Factual Background
1. The United States and Korea appeal from certain issues of law and legal interpretations in the
Panel Report, United States – Definitive Safeguard Measur es on Imports of Circular Welded Carbon
Quality Line Pipe from Korea  (the "Panel Report"). 1
2. The dispute concerns the imposition of a definitive safeguard measure by the United States on
imports of circular welded carbon quality line pipe ("line pipe").  This measure was imposedfollowing an investigation conducted by the United States International Trade Commission (the"USITC"), a body comprised of six Commissi oners that is charged with conducting such
investigations under United States law.  On 29 July 1999, the USITC initiated the safeguard
investigation into imports of line pipe.
 2  The USITC finally determined that "circular welded carbon
quality line pipe … is being imported into the United States in such increased quantities as to be asubstantial cause of serious injury or the threat of serious injury".
 3  Three Commissioners made a
finding of serious injury.  Two Commissioners made a finding of threat of serious injury. 4  T h e
affirmative vote of these five Commissioners constituted the majority supporting the "affirmativedetermination" 
5 of the USITC.  A single Commissioner made a negative determination that there was
                                                     
1WT/DS202/R, 29 October 2001.
2G/SG/N/6/USA/7, 6 August 1999.
3Exhibit USA-17 submitted by the United States to the Panel, Circular Welded Carbon Quality Line
Pipe, Investigation No. TA-201-70, USITC Publication 3261 (December 1999) (the "USITC Report"), p. I-3.
4USITC Report, p. I-3, footnote 2.
5Under Section 202 of the United States Trade Act of 1974, as amended, the USITC can make an
affirmative or a negative determination of serious injury or the threat thereof.WT/DS202/AB/R
Page 2
neither serious injury nor threat of serious injury.  The views of that Commissioner are not part of the
USITC determination.  In the light of these findings, the USITC determined that "line pipe … is … asubstantial cause of serious injury or the threat of serious injury".
 6
3. In its investigation, the USITC identified a number of factors, apart from increased imports,
which had caused serious injury or threat of serious injury to the domestic line pipe industry. 7
However, the USITC concluded that increased imports  were "a cause which is important and not less
than any other cause" and that, therefore, the statutory requirement of "substantial cause" 8 was met. 9
On 8  November  1999, the United States notified the Committee on Safeguards, pursuant toArticle 12.1(b) of the  Agreement on Safeguards ,  that the USITC had reached an affirmative finding
of serious injury or threat thereof caused by increased imports.
 10
4. On 8 December 1999, the USITC announced its remedy recommendation.  The two
Commissioners who concluded that the industry was suffering threat of serious injury recommended adifferent measure from that recommended by the three Commissioners who concluded that the
industry was suffering serious injury.
 11  On 24 January 2000, the United States made a supplemental
notification under Article 12.1(b), which essentially summarized the Report of the USITCinvestigation dated 22 December 1999, Circular Welded Carbon Quality Line Pipe  
12 (the "USITC
Report").  This supplemental notification contained detailed information on the measuresrecommended by the USITC to the President of the United States.
 13  Also on 24 January 2000, the
United States and Korea held consultations in Washington, D.C., on the USITC Report. 14
5. On 11 February 2000, the President of the United States issued a press release announcing the
application of a safeguard measure on imports of line pipe.  The press release contained details of the
measure announced by the President, which was different from the measures proposed by the USITC.
Korea learned of the measure announced by the President through this press release. 15
                                                     
6USITC Report, p. I-3.  The United States has confirmed that this is the determination made by the
USITC. (United States' appellant's submission, para. 20)
7USITC Report, pp. I-27–I-32, and pp. I-49 and I-50, respectively.
8Section 202(b)(1)(B) of the United States Trade Act of 1974, as amended, provides: "For purposes of
this section, the term 'substantial cause' means a cause which is important and not less than any other cause."
9USITC Report, pp. I-20, I-22 and I-44.
10G/SG/N/8/USA/7, 11 November 1999.
11USITC Report, pp. I-4 and I-5.
12Supra , footnote 3.
13G/SG/N/8/USA/7/Suppl.1, 25 January 2000.
14Panel Report, para. 7.310.
15Ibid., para. 7.307.WT/DS202/AB/R
Page 3
6. By Proclamation of the President of the United States, dated 18 February 2000, the
United States imposed a definitive safeguard measure on imports of line pipe in the form of a dutyincrease for three years applicable on imports above 9,000 short tons from each country, effective asof 1 March 2000 (the "line pipe measure").
 16  The duty increase was 19 percent  ad valorem   in the
first year, and 15 percent in the second year.  In the third year, the duty increase will be 11 percent.
The line pipe measure applies to imports from all countries, including Members of the World TradeOrganization (the "WTO"), but excludes imports from Canada and Mexico.
7. On 22 February 2000, pursuant to Article 12.1(c) of the  Agreement on Safeguards ,  the
United States notified the Committee on Safeguards of its decision to apply a safeguard measure onimports of line pipe.
 17  The line pipe measure applied by the United States as of 1 March 2000 was
the same as that set out in the press release of 11 February 2000 and was found by the Panel to"differ[] substantially" 
18 from the measures recommended by the USITC.
8. On 13 June 2000, Korea requested consultations with the United States pursuant to Article 4
of the  Understanding on Rules and Procedures Governing the Settlement of Disputes  (the "DSU"),
Article XXII:1 of the  General Agreement on Tariffs and Trade 1994  (the "GATT 1994") and
Article 14 of the  Agreement on Safeguards , with regard to the line pipe measure. 19  On 28 July 2000,
Korea and the United States held the requested consultations, but failed to resolve the dispute.Consequently, on 14 September 2000, Korea requested the establishment of a panel to examine thematter.
 20
9. The Panel was established on 23 October 2000 to consider a complaint by Korea with respect
to the line pipe measure. 21  The Panel considered claims by Korea that, in imposing the line pipe
measure, the United States acted inconsistently with Articles I, XIII and XIX of the GATT 1994,
and with Articles 2, 3.1, 4, 5, 7.1, 8.1, 9.1, 11 and 12.3 of the  Agreement on Safeguards . 22
                                                     
16"Proclamation 7274 of 18 February 2000  –  To Facilitate Positive Adjustment to Competition From
Imports of Certain Circular Welded Carbon Quality Line Pipe", United States Federal Register,23 February 2000 (Volume 65, Number 36), pp. 9193–9196;  Panel Report, para. 7.176.
17G/SG/N/10/USA/5, 23 February 2000; G/SG/N/10/USA/5/Rev.1, G/SG/N/11/USA/4, 28 March 2000.
18Panel Report, footnote 243 to para. 7.313.
19WT/DS202/1, G/L/388, G/SG/D10/1, 15 June 2000.
20WT/DS202/4, 15 September 2000.
21WT/DS202/5, 22 January 2001.
22Panel Report, para. 3.1.WT/DS202/AB/R
Page 4
10. The Panel Report was circulated to Members of the WTO on 29 October 2001.  The Panel
concluded that the line pipe measure is inconsistent with certain of the provisions of the GATT 1994and the  Agreement on Safeguards .  Specifically, the Panel found that:
− the line pipe measure is not consistent with the general rule contained in the  chapeau
of Article XIII:2 of the GATT 1994 because it has been applied without respecting
traditional trade patterns;
− the line pipe measure is not consistent with Article XIII:2(a) of the GATT 1994
because it has been applied without fixing the total amount of imports permitted at the
lower tariff rate;
− the United States acted inconsistently with Articles 3.1 and 4.2(c) of the  Agreement
on Safeguards   by failing to include in its published report a finding or reasoned
conclusion either (i) that increased imports have caused serious injury, or (ii) thatincreased imports are threatening to cause serious injury;
− the United States acted inconsistently with Article 4.2(b) of the  Agreement on
Safeguards   by failing to establish a causal link between the increased imports and the
serious injury, or threat thereof;
− the United States did not comply with its obligations under Article 9.1 of the
Agreement on Safeguards   by applying the measure to developing countries whose
imports do not exceed the individual and collective thresholds contained in thatprovision;
− the United States acted inconsistently with its obligations under Article XIX of the
GATT 1994 by failing to demonstrate the existence of unforeseen developments prior
to the application of the line pipe measure;
− the United States acted inconsistently with its obligations under Article 12.3 of the
Agreement on Safeguards   by failing to provide an adequate opportunity for prior
consultations with Members having a substantial interest as exporters of line pipe;andWT/DS202/AB/R
Page 5
− the United States acted inconsistently with its obligations under Article 8.1 of the
Agreement on Safeguards   to endeavour to maintain a substantially equivalent level of
concessions and other obligations. 23
11. The Panel rejected Korea's claims that:
− the line pipe measure is inconsistent with the provisions of Article 5 of the
Agreement on Safeguards ;
− the line pipe measure violates Article XIX:1 of the GATT 1994 and Articles 5.1
and 7.1 of the  Agreement on Safeguards   because the measure was not limited to the
extent and the time necessary to remedy the injury and allow adjustment;
− the United States' finding of increased imports was inconsistent with Article 2.1 of the
Agreement on Safeguards   and Article XIX of the GATT 1994;
− the United States violated Articles 4.1(c) and 4.2 (a), (b) and (c) of the  Agreement on
Safeguards   because the data relied on by the USITC was flawed in that it contained
data from other industries;
− the USITC erred in finding serious injury because the downturn in the state of the
domestic industry was merely temporary, and the condition of the industry was
improving at the end of the period of investigation;
− the United States acted inconsistently with its obligations under Articles 2 and 4.1(b)
of the  Agreement on Safeguards   by basing a finding of threat of serious injury on an
allegation, conjecture or remote possibility;
− the failure of the United States to include relevant confidential information in a
published determination constitutes a violation of Articles 3.1 and 4.2(c) of the
Agreement on Safeguards ;
− the line pipe measure does not satisfy the requirements of emergency action of
Article 11 (and the preamble) of the  Agreement on Safeguards   or Article XIX of the
GATT 1994;
− the United States violated Articles 2 and 4 of the  Agreement on Safeguards   by
exempting Canada and Mexico from the measure;  and
                                                     
23Panel Report, para. 8.1.WT/DS202/AB/R
Page 6
− the United States violated Articles I, XIII:1 and XIX of the GATT 1994 by exempting
Canada and Mexico from the measure. 24
12. The Panel concluded that, to the extent that the United States has acted inconsistently with the
provisions of the  Agreement on Safeguards   and the GATT 1994, the United States has nullified or
impaired the benefits accruing to Korea under those two Agreements. 25  The Panel recommended that
the Dispute Settlement Body (the "DSB") request the United States to bring the line pipe measure intoconformity with the  Agreement on Safeguards   and the GATT 1994.
 26  The Panel declined Korea's
request, under Article 19.1 of the DSU, that the Panel provide a specific suggestion on ways in which
the United States could implement the recommendations made in the Panel Report. 27
13. On 6 November 2001, the United States notified the DSB of its intention to appeal certain
issues of law covered in the Panel Report and certain legal interpretations developed by the Panel,pursuant to paragraph 4 of Article 16 of the DSU, a nd filed a notice of appeal pursuant to Rule 20 of
the  Working Procedures for Appellate Review  (the " Working Procedures ").
 28  For scheduling
reasons, on 13 November 2001, the United States notified the Chairman of the Appellate Body andthe Chairman of the DSB of its decision to withdraw the notice of appeal filed on6 November 2001.
 29  The withdrawal was made pursuant to Rule 30(1) of the  Working Procedures ,
and was conditional on the right to file a new notice of appeal.  On 19 November 2001, the
United States again notified the DSB of its intention to appeal certain issues of law covered in thePanel Report and certain legal interpretations developed by the Panel, pursuant to paragraph 4 ofArticle 16 of the DSU, and filed a new notice of appeal pursuant to Rule 20 of the  Working
Procedures .
 30  On 20 November 2001, the United States filed an appellant's submission. 31  O n  2 6
November 2001, Korea filed an other appellant's submission. 32  On 7 December 2001, the
United States and Korea each filed an appellee's submission. 33  On 14 December 2001, Australia,
Canada, the European Communities, Japan and Mexico each filed a third participant's submission. 34
                                                     
24Panel Report, para. 8.2.
25Ibid., para. 8.3.
26Ibid., para. 8.4.
27Ibid., paras. 8.5 and 8.6.
28WT/DS202/7, 6 November 2001.
29WT/DS202/8, 13 November 2001.
30WT/DS202/9, 19 November 2001.
31Pursuant to Rule 21(1) of the  Working Procedures .
32Pursuant to Rule 23(1) of the  Working Procedures .
33Pursuant to Rules 22 and 23(3) of the  Working Procedures .
34Pursuant to Rule 24 of the  Working Procedures .WT/DS202/AB/R
Page 7
14. The oral hearing in the appeal was held on 15 January 2002.  The participants and third
participants presented oral arguments and responded to questions put to them by the Members of theDivision hearing the appeal.
II. Arguments of the Participants and Third Participants
A. Claims of Error by the United States – Appellant
1. Necessity of a Discrete Determination Either of Serious Injury or of Threat of
Serious Injury
15. The United States recalls that the USITC determ ined that line pipe is being imported in such
increased quantities as to be a substantial cause of serious injury or the threat of serious injury. 35  The
Panel found that the United States violated Articles 3.1 and 4.2(c) of the  Agreement on Safeguards
by failing to include in the USITC Report a findin g either (i) that increased imports have caused
serious injury, or (ii) that increased imports are threatening to cause serious injury. 36  According to
the United States, the Panel erred in finding that Articles 3.1 and 4.2(c) require a discrete finding ofserious injury or of threat of serious injury.
16. The United States explains that the competent authority conducting safeguards investigations
in the United States is the USITC, a body comprised of six Commissioners.  By law, the affirmative
or negative vote of a majority of the Commissioners constitutes the determination of the USITC.  No
provision of United States law requires the Commissioners to reach a consensus as the basis for eitheran affirmative or a negative determination.  In the safeguards investigation underlying this appeal,three of the six USITC Commissioners found that the domestic industry was  seriously injured  and
two found that the domestic industry was  threatened with serious injury .  On the basis of this vote,
the USITC determined that the subject line pipe wa s "being imported into the United States in such
increased quantities as to be a substantial cause of  serious injury or the threat of serious injury ".
 37
The United States stresses that this determination, together with in-depth explanations of all of the
Commissioners' findings and reasoned conclusion s, was published by the USITC in the USITC
Report.
17. The United States submits that the USITC Report complies fully with the express
requirements of Article 3.1 of the  Agreement on Safeguards .  The Commissioners who made a
determination of serious injury and the Commissioners who made a determination of threat of serious                                                     
35USITC Report, p. I-3.
36Panel Report, para. 7.271.
37USITC Report, p. I-3. (emphasis added)WT/DS202/AB/R
Page 8
injury fully explained their findings and conclusions.  Although the Panel framed its analysis in terms
of the requirements of Article 3.1, essentially it interpreted one of the basic conditions for theapplication of a safeguard measure contained in Article 2.1.  By requiring a discrete determinationeither of serious injury or of threat thereof, the Panel essentially read into Article 2.1 a substantive
requirement that does not exist in the  Agreement on Safeguards .  The United States argues that the
Panel's decision is not supported by an analysis of the ordinary meaning of the  Agreement on
Safeguards ,  according to which a determination either of serious injury, or of threat of serious injury,
or of both ,  satisfies Article 2.1.
18. The United States further submits that the conditions of serious injury and threat of serious
injury are closely interrelated, and that neither Article XIX of the GATT 1994 nor the  Agreement
on Safeguards ,  except for the particular situation contemplated in Article 5.2(b) relating to quota
modulations, distinguishes procedural or substantive effects between the two conditions.  TheAgreement on Safeguards   certainly does not support the rigid division between the concepts of
serious injury and threat of serious injury found by the Panel.  The definitions of " serious injury " and
"threat of serious injury " describe two variations of the same basic condition.  The  injury  component
of the two definitions is the same, and competent authorities are required to evaluate the sameenumerated factors set out in Article 4.2(a) in all injury investigations.  The definitions of "seriousinjury" and "threat of serious injury", therefore, do not require that a competent authority composed ofmultiple decision-makers (such as the USITC) make a discrete finding either of serious injury or ofthreat thereof.  In the view of the United Stat es, the word "or" connecting the two concepts in
Article 2.1 is used in the inclusive sense, so that a finding either of serious injury, or of threat of
serious injury, or both, would satisfy  this basic condition of Article 2.1.
19. The United States also contends that Article 5 of the  Agreement on Safeguards   does not
require that Members make a discrete finding of serious injury or of threat of serious injury.  The firstsentence of Article 5.1 makes clear that the condition of the industry and its need for adjustment, andnot the characterization of that condition as serious injury or threat of serious injury, establish thebenchmark by which a Member determines the nature of the safeguard measure required.  TheUnited States adds that the necessity of a discrete finding also cannot be drawn from Article 5.2(b),the only provision concerning the remedy that does not apply in the case of threat of serious injury.
20. The United States further stresses that the  Agreement on Safeguards   leaves entirely to
Members' discretion how they structure their competent authorities and the decision-making process
in safeguards investigations.  According to the United States, by construing the  Agreement on
Safeguards   to require a discrete finding by a competent authority either of serious injury or of threat
of serious injury, the Panel disregarded the principle " in dubio mitius ", an accepted principle of treatyWT/DS202/AB/R
Page 9
interpretation, and infringed unnecessarily on the manner in which the United States has internally
structured the decision-making process of its competent authority.
2. Non-Attribution of the Injurious Effects of Other Factors to Increased
Imports
21. According to the United States, the Panel based its finding of inconsistency with
Article 4.2(b) of the  Agreement on Safeguards   upon an incorrect legal interpretation.  The
United States argues that the Panel simply presumed, without a factual analysis, that the USITC did
not comply with Article 4.2(b) in this case.  This presumption was based on the Appellate Body's
findings in  United States – Safeguard Measures on Imports  of Fresh, Chilled or Frozen Lamb Meat
from New Zealand and Australia ("US – Lamb ") 38, and in  United States – Definitive Safeguard
Measures on Imports of Wheat Gluten from the European Communities ("US – Wheat Gluten ") 39, to
the effect that the USITC had failed in those cases to ensure that it did not attribute injury caused byother factors to imports.  Moreover, the United States contends that the Panel misread these previousAppellate Body Reports.  In those Reports, the A ppellate Body emphasized that Article 4.2(b) does
not prescribe a particular methodology that Member s must apply.  Rather, the relevant question for
determining compliance with the causation requirements of the  Agreement on Safeguards   is whether
the Member, under whatever methodology it applies, identifies, distinguishes, and assesses the
injurious effects of factors other than the imports.
22. The United States contends that, despite thorough analysis in the USITC Report showing that
the United States identified and distinguished the effects of other factors, and that it did not attributeinjury caused by other factors to imports, the Pane l failed even to acknowledge or review these
findings and analyses.  Instead, the Panel "rejected offhand" 
40 the references the United States made
to the USITC findings, based on the Panel's view that the USITC's relative injury causation analysiscould not possibly have entailed separation and assessment of the injurious effects of the factors otherthan imports.  Hence, in the view of the United States, the Panel's conclusions are "faulty".
 41
23. For these reasons, the United States requests that the Appellate Body reverse the Panel's
finding of a violation of Article 4.2(b).  The United States argues, furthermore, that given the Panel'sfailure to make a sufficient analysis of the USITC's determination, there is an insufficient basis forthe Appellate Body to complete the legal analysis.  If the Appellate Body nevertheless decides tocomplete the analysis that the Panel failed to undertake, it should find, as the Panel would have done                                                     
38Appellate Body Report, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001.
39Appellate Body Report, WT/DS166/AB/R, adopted 19 January 2001.
40United States' appellant's submission, para. 12.
41Ibid.WT/DS202/AB/R
Page 10
had it conducted a proper analysis, that the findings and reasoned conclusions in the USITC Report
demonstrate that the United States did not misattribute injurious effects of other factors to imports.
3. Adequate Opportunity for Prior Consultations and Obligation to Endeavour
to Maintain a Substantially Equivalent Level of Concessions
24. The United States maintains that the Panel re lied on an incorrect legal interpretation in
finding that the United States failed to comply with both Articles 12.3 and 8.1 of the  Agreement on
Safeguards .  The Panel concluded that Article 12.3 requires a Member proposing to apply a safeguard
measure to "ensure" that exporting Members "obtained" the information that Members must review in
consultations pursuant to that Article.  The text imposes no such obligation.  Article 12.3 requires aMember to provide "adequate opportunity" prior to the application of a safeguard measure forconsultations with Members having a substantial export interest in the product in question, with aview to reviewing certain informati on.  In the view of the United States, this standard is met, as the
Appellate Body has recognized 
42, when the Member with a substantial export interest obtains the
relevant information.
25. According to the United States, the Panel did not perform the factual analysis necessary to
evaluate whether the United States has complied with this obligation.  Instead, the Panel assumed—
without citing any evidence—that the press release by which Korea obtained the relevant information
did not ensure receipt of that information by exporting Members.  Not only is this assumption withoutsupport, it does not address the relevant question—whether Korea obtained the information.  Koreaitself admitted that it did.  Therefore, the United States requests that the Appellate Body reverse thePanel's finding on Article 12.3 as resting on a misinterpretation of the  Agreement on Safeguards   and
unsupported by the factual findings necessary to evaluate compliance with the obligation.
26. In the view of the United States, the Panel derived its finding of a breach of Article 8.1
exclusively from its invalid conclusion on Article 12.3.  Accordingly, the United States argues that theAppellate Body should also reverse the Panel's finding on Article 8.1.
4. Exclusion of " de minimis " Developing Country Exporters from the Line Pipe
Measure
27. According to the United States, the Panel erred by interpreting Article 9.1 of the  Agreement
on Safeguards   as requiring that any safeguard measure specifically list the developing country
Members to which the measure is not applied.  The text of the article conditionally prohibits
application of a measure "as long as" a developing country Member accounts for less than three
                                                     
42Appellate Body Report, US – Wheat Gluten , supra , footnote 39, para. 137.WT/DS202/AB/R
Page 11
percent of total imports.  However, it is silent as to  how  a Member may comply with that obligation,
and certainly does not require a list of the developing country Members covered by Article 9.1.  TheUnited States stresses that the only support cited by the Panel for this proposition was the suggestedformats of the Committee on Safeguards, which by their terms carry no interpretative authority.
 43
28. The United States believes that it met the Article 9.1 requirement by establishing a
mechanism—a 9,000 ton exemption for each country—under which the 19-percent safeguard duty onimports did not apply to any developing country Member accounting for less than three percent oftotal imports.  The Panel concluded that the fact that developing country Members were subject to theexemption meant that the line pipe measure did, in fact, "apply" to them.  This conclusion does notrepresent a valid interpretation of the requirement that a safeguard measure "not be applied" to adeveloping country Member accounting for more than three percent of imports.  "Application" of theexemption provided for in the line pipe measure certainly cannot breach Article 9.1, as the exemptionwas the administrative device designed to prevent additional duties from being applied to exports of
developing country Members.  Nor could it be a breach of Article 9.1 to apply the supplemental duty
to developing country Members with more than 9,000 tons in imports, because these Members wouldexceed the three-percent threshold.  Accordingly, the United States believes that the Appellate Bodyshould reverse the Panel's conclusion that the line pipe measure was inconsistent with Article 9.1.
B. Arguments of Korea – Appellee
1. Necessity of a Discrete Determination Either of Serious Injury or of Threat of
Serious Injury
29. In Korea's view, the United States' appeal on Articles 3.1 and 4.2(c) of the  Agreement on
Safeguards   is premised on the argument that there is no distinction in either  procedural  or
substantive  effect between a determination of serious injury and one premised on a threat of serious
injury.  Korea believes that, contrary to the argument put forward by the United States, theinterpretation of Articles 2.1 and 4.2(a) in accordance with the ordinary meaning of the terms of thoseprovisions in their context and in the light of their object and purpose, supports the finding of thePanel.  According to Korea, the additional argument of  the United States to the effect that the Panel's
finding infringes on the United States' sovereignty "is irrelevant" 
44 and should be rejected.
                                                     
43G/SG/1, Formats for Certain Notifications  under the Agreement on Safeguards , 1 July 1996.
44Korea's appellee's submission, paras. 15 and 39.WT/DS202/AB/R
Page 12
2. Non-Attribution of the Injurious Effects of Other Factors to Increased
Imports
30. Korea states that the United States' appeal w ith respect to the USITC causation determination
is based on two arguments.  First, the United States argues that the Panel's finding is based on anerroneous interpretation of Article 4.2(b) and an incorrect reading of Appellate Body Reports.Second, the United States argues that the Panel did not provide sufficient basis for a conclusion thatthe United States failed to comply with Article 4.2(b).
31. According to Korea, the first argument of th e United States is based on a selective and
distorted reading of the Appellate Body Reports.  The second argument of the United States ignores
the fact that the Panel fully assessed the causation analysis of the USITC and concluded that it failedto meet the requirements of Article 4.2(b).  The assertion of the United States that the USITCdistinguished the serious injury attributable to incr eased imports and that attributable to other factors
is, according to Korea, an unsubstantiated  ex post  effort at "curing the flaws" 
45 of the USITC
investigation.
32. Korea also does not agree with the United States that the Appellate Body should refrain from
completing the analysis if it were to find that the Panel erred in its finding on the USITC causation
determination.
3. Adequate Opportunity for Prior Consultations and Obligation to Endeavour
to Maintain a Substantially Equivalent Level of Concessions
33. With respect to the alleged violation of Articles 12.3 and 8.1, Korea notes that the
United States announced the safeguard measure through a press release of the White House on
11 February 2000.  The contents of the measure had never been communicated to Korea before thatdate.  A purpose of consultations under Article 12.3 is to reach an understanding on ways to achievethe objective set out in Article 8.1.  After the press release, which was the "announcement of a  fait
accompli
 " 46, there was thus no practical possibility to have consultations to achieve that objective.
Hence, Korea submits that it was deprived of an "adequate opportunity" under Article 12.3.
4. Exclusion of " de minimis " Developing Country Exporters from the Line Pipe
Measure
34. With respect to the issue of the exclusion of " de minimis " developing country exporters under
Article 9.1 of the  Agreement on Safeguards ,  Korea contends that the United States makes an
                                                     
45Korea's appellee's submission, para. 48.
46Ibid., para. 80.WT/DS202/AB/R
Page 13
artificial distinction between "non-application" and "not be applied".  The United States' argument
that the line pipe measure failed to meet the first test but somehow met the second is misconceived.
35. Korea states that, irrespective of such an artificial distinction, the United States' safeguard
measure applies to imports from developing coun try Members.  The United States' measure violates
the legal right of developing country Members arising from Article 9.1 because it fails to ensure that
the measure does not apply to imports from developing countries whose share of imports of line pipedoes not exceed three percent.
36. Korea argues that the Appellate Body should uphold the Panel's findings on Article 9.1.  If the
Appellate Body reverses any finding of the Panel, Korea requests the Appellate Body to complete theanalysis on any such issues.
C. Claims of Error by Korea – Appellant
1. Article XXIV of the GATT 1994
37. Korea requests the Appellate Body to reverse the Panel's finding that the United States is
entitled to rely on Article XXIV of the GATT 1994 to  justify the violation of the obligation contained
in Article 2.2 of the  Agreement on Safeguards .
38. Korea submits that the Panel erred in finding that the United States met the conditions
governing the application of Article XXIV of the GATT 1994.  As stipulated in Article XXIV:4, the
purpose of a free-trade area is, on the one hand, to "facilitate trade" between constituent members.  Onthe other hand, this should be done in a manner "not to raise barriers to the trade" with third countries.The Panel totally ignored this balance in its application of Article XXIV as it did not take intoconsideration the second part of the purpose of a free-trade area.  In its Report in  Turkey –
Restrictions on Imports of Textile and Clothing Products ("Turkey – Textiles
 "), the Appellate Body
found that "the purpose set forth in paragraph 4 [not to raise barriers to the trade of other Members]informs the other relevant paragraphs of Article XXIV".
 47
39. Korea argues that, on the basis of its analysis of the balance between different purposes of a
free-trade area, the Appellate Body also provided in  Turkey – Textiles  a clear guideline for the
application of Article XXIV as an exception to other obligations under the GATT 1994:  "First, theparty claiming the benefit of this defence must demonstrate that the measure at issue is introducedupon the formation of a customs union" (a free-trade area in the present case) "that  fully  meets the
requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV" (sub-paragraphs 8(b) and 5(b) in the
                                                     
47Appellate Body Report, WT/DS34/AB/R, adopted 19 November 1999, para. 57.WT/DS202/AB/R
Page 14
present case).  And, "second, that party must demonstrate that the formation of that customs union
would be prevented if it were not allowed to introduce the measure at issue." 48  Korea argues that the
Panel ignored this clear guideline and procee ded to a "perfunctory or totally flawed" 49 analysis
exempting the line pipe measure from the "nece ssity test" instead of assessing whether the
requirements of sub-paragraphs 8(b) and 5(b) were  fully  met.
40. Korea further submits that the Panel erred in finding that a defence based on Article XXIV of
the GATT 1994 "cures" a violation of Article 2.2 of the  Agreement on Safeguards .  The Panel
ignored the fact that the  Agreement on Safeguards   constitutes a  lex specialis vis-à-vis  the general
obligations arising from the GATT 1994.  The obligations arising under the  Agreement on
Safeguards   may go beyond the obligations arising from the GATT 1994.  In the event of conflict,
Korea argues, the provisions of the  Agreement on Safeguards   prevail pursuant to the General
interpretative note to Annex  1A of the  Marrakesh Agreement Establishing the World Trade
Organization  (the " WTO Agreement ").
41. Korea further contends that footnote 1 to the  Agreement on Safeguards  does not apply to
Article 2.2 and that, therefore, the basic prerequisites for an Article XXIV defence are not satisfied.The Panel ignored the fact that both the location of footnote 1 and the Appellate Body jurisprudencesupport Korea's argument that footnote 1 does not extend to Article 2.2 of the  Agreement on
Safeguards .  It is clear that, in its Report in  Argentina – Safeguard Measur es on Imports of Footwear
("Argentina – Footwear (EC)
 "), the Appellate Body found that the first sentence of footnote 1
establishes the scope of the  entire  footnote. 50  Korea argues that if footnote 1 does not apply to
measures taken by individual members of customs unions,  a fortiori  it cannot be relevant to actions
taken by individual members of free-trade areas, which are not even mentioned in the footnote.
2. "Parallelism" Between the Investigation and the Application of the Line Pipe
Measure
42. Korea submits that its parallelism claim before the Panel was relatively simple.  Essentially,
in Korea's view, there was a gap between the scope of the injury investigation by the United States
and the scope of its safeguard measure.  Korea's claim that the measure was in violation of parallelismwas  never  challenged by the United States before the Panel.  Nevertheless, the Panel (i) imposed a
"flawed standard" for the establishment of a  prima facie  case 
51;  (ii) committed a serious error in
                                                     
48Appellate Body Report, Turkey –Textiles , supra , footnote 47, para. 58. (emphasis added)
49Korea's other appellant's submission, para. 18.
50WT/DS121/AB/R, adopted 12 January 2000, para. 106 and footnote 95 thereto.
51Korea's other appellant's submission, paras. 65, 69, 100 and 106.WT/DS202/AB/R
Page 15
treating arguments and evidence submitted by the parties;  and (iii) introduced an arbitrary and flawed
minimum condition  for Korea to establish a  prima facie  case.
3. The Requirement to Demonstrate  a priori   the Necessity of the Line Pipe
Measure
43. Korea submits that the Panel's finding regarding the requirement to demonstrate  a priori  the
necessity of the line pipe measure, if sustained, would seriously undermine the fundamental disciplineon the extent of safeguard measures contained in Article 5.1, first sentence, of the  Agreement on
Safeguards .  This is particularly worrisome, since the obligation contained in the first sentence of
Article 5.1 is the  only  discipline on the extent of safeguard measures other than quantitative
restrictions.  Such undermining of the discipline woul d lead to abuse and would prejudice the rights of
WTO Members.  Furthermore, the Panel itself was c onscious of the flaws inherent in its own finding.
The Panel, therefore, released the United States from the obligation to make an  ex ante
demonstration that the United States  ensured  compliance with Article 5.1.
4. The Proportionality of the Line Pipe Measure
44. As with the previous issue, Korea submits that the United States should have demonstrated
that its measure was consistent with Article 5.1, first sentence, of the  Agreement on Safeguards   at
the time it imposed the measure.  However, even assuming that the United States could make sucha demonstration  ex post facto ,  the United States nevertheless failed to demonstrate that it complied
with the discipline contained in the first sentence of Article 5.1.
45. Korea submits that, first of all, the United States failed to identify correctly the goal to be met
through the imposition of the safeguard measure.  The United States did not specify whether the goalwas to  prevent  or to  remedy  serious injury.  Furthermore, in Korea's view, the United States failed
to ensure that the measure addressed only the serious injury attributed to increased imports.
46. Assuming  that an  ex post facto  demonstration is permitted and that the United States
correctly identified the goal of the measure, Kor ea submits that the United States nevertheless failed
to provide sufficient  ex post  arguments.  The  ex post  explanation failed to address certain key
factors, such as the improving market situation and the effect of "operating leverage".  In short,according to Korea, the United States'  ex post  demonstration was far from meeting the standard
established in  Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products   ("KoreaWT/DS202/AB/R
Page 16
– Dairy ") of " ensur[ing] that the measure applied is commensurate with the goals of preventing or
remedying serious injury and of facilitating adjustment." 52
47. Korea contends that the Panel made a serious error in ignoring important flaws in the  ex post
demonstration.  As a consequence, under the Panel's assessment, the obligation under Article 5.1, first
sentence, was reduced to a "theoretical, hollow discipline". 53
D. Arguments of the United States – Appellee
1. Article XXIV of the GATT 1994
48. The United States requests the Appellate B ody to uphold the Panel's finding that the
United States met the requirements to invoke Article XXIV of the GATT 1994 as a defence againstalleged inconsistencies with Articles I, XIII, and XIX of the GATT 1994 and Article 2.2 of theAgreement on Safeguards .
49. The United States emphasizes that it established that the North American Free-Trade
Agreement ("NAFTA") meets all the requirements for the formation of a free-trade area underArticle XXIV.  Korea provides no basis to reverse the Panel's conclusions in this regard.  Korea's onlyargument with regard to the requirements of Article XXIV:8(b) is that the Panel was required toconsider the preliminary analysis and conclusions in a draft report of the Committee on Regional
Trade Agreements.  However, the Panel correctly placed no weight on this draft document, which is
still subject to change.  Korea also argues that the NAFTA safeguard exclusion is inconsistent withthe Article XXIV:5(b) requirement not to increase restrictive regulations on trade with Members notparty to a free-trade agreement.  The United States stresses, however, that the NAFTA did not changethe applicability of its parties' safeguards laws as they apply to imports from non-parties.
50. The United States recalls that the NAFTA provides for the exclusion of imports from NAFTA
partners from safeguard measures, under certain circumstances.  This requirement was one of themeasures to eliminate duties and other restrictive regulations of commerce on substantially all tradenecessary to form the free-trade area.  Korea incorrectly asserts that the Panel misapplied the
Appellate Body's reasoning in  Turkey – Textiles  by not evaluating whether the NAFTA safeguards
exclusion by itself was "necessary" to the formation of the free-trade area.  Article XXIV dictates thattrade liberalizing measures be considered in  aggregate   in evaluating whether failure to adopt them
would prevent formation of a free-trade area.  Accord ing to the United States, applying the "necessity
                                                     
52Appellate Body Report, WT/DS98/AB/R, adopted 12 January 2000,  para. 96. (emphasis added)
53Korea's other appellant's submission, paras. 144 and 175.WT/DS202/AB/R
Page 17
test"  separately   to each measure implementing a free-trade area would lead to the absurd result of
preventing the liberalization steps envisaged by Article XXIV.
51. The United States further supports the Panel's finding that, in the light of the relationship
between Article XIX of the GATT 1994 and the  Agreement on Safeguards ,  the Article XXIV
defence applies also to Article 2.2 of the  Agreement on Safeguards .  The Panel correctly found
confirmation for this conclusion in the text of the last sentence of footnote 1 to the  Agreement on
Safeguards .  The text of that last sentence explicitly applies both to the  Agreement on Safeguards   as
a whole and to free-trade areas.  The United States asserts that this reading is not inconsistent with theAppellate Body Report in  Argentina – Footwear (EC) ,  which did not address the last sentence of
footnote 1.
2. "Parallelism" Between the Investigation and the Application of the Line Pipe
Measure
52. According to the United States, the Panel correctly found that Korea failed to establish a
prima facie  case of inconsistency with the so-called "parallelism" between Articles 2.1 and 2.2 of
the  Agreement on Safeguards .  Korea did not demonstrate that the USITC failed to perform an injury
analysis specific to imports from non-NAFTA sources.  Despite the undisputed existence of an
exhaustive discussion of the relevant data on imports from sources other than Canada and Mexico in
footnote 168 of the USITC Report, Korea's claim rests on the bare assertion that the USITC non-NAFTA analysis has "no legal significance".  The United States contends that the Panel was correct inrejecting this assertion, and in finding that footnote 168 clearly formed part of the USITC's publisheddetermination and contained findings by the USITC.
53. The United States submits that Korea attempts to "elaborate" its presentation to the Panel
with entirely new arguments.
 54  Even if the Appellate Body were to consider these arguments, they
are unconvincing.  Korea incorrectly characterizes the USITC's analysis of imports from sources otherthan Canada and Mexico as merely a "conditional statement".  The Panel's finding that the content of
footnote 168 formed the basis for a finding that non-NAFTA imports caused serious injury to the
domestic industry contradicts this view.  The introductory statement to footnote 168 merely explainedthat, in conjunction with the analysis of all imports, the USITC conducted an analysis of imports fromnon-NAFTA sources, and that both analyses led to an affirmative injury determination.  Thus,according to the United States, the Panel correctly found that the USITC conducted a separateanalysis of imports from non-NAFTA sources, and that Korea failed to demonstrate otherwise.
                                                     
54United States' appellee's submission, paras. 6 and 77.WT/DS202/AB/R
Page 18
3. The Requirement to Demonstrate  a priori   the Necessity of the Line Pipe
Measure
54. Korea challenges the Panel's finding that Article 5.1, first sentence, does not require a
Member to issue an explanation of its compliance with that provision at the time that it takes asafeguard measure.  In reply, the United States argues that the text of Article 5.1 confirms the Panel'sfinding that "justification" of certain types of quantitative restrictions is explicitly required in thesecond sentence, but that there is no such requirement in the first sentence, which is generally
applicable to all safeguard measures.
55. The United States submits that the Appellate Body endorsed this interpretation in  Korea –
Dairy .
 55  The United States contends that Korea criticizes the Panel's interpretation of Article 5.1 as
"loose" and suggests that a more "rigorous" approach is necessary.  However, Korea cites no authorityfor the view that the  Agreement on Safeguards   may be interpreted by anything other than customary
rules of treaty interpretation, which the Panel applied.  Korea also argues that Members bear anobligation to "ensure" compliance with Article 5.1, which in Korea's view, creates an obligation toissue an explanation of that compliance at the time of taking a safeguard action.  However, ensuringconformity with obligations is part of the basic good faith with which Members undertake all WTO
commitments.  The obligation to ensure conformity has never been found to create a separate
obligation to issue a public explanation, at the time of taking a measure, of how that measureconforms to WTO obligations.  This interpretation does not prejudice Members whose exports aresubject to a safeguard measure.  Their position is no different from that of any Member concernedabout another Member's conformity with its WTO obligation.  Indeed, the United States argues,
Members whose exports are subject to a safeguard measure are in a  better   position, because
compliance with Article 5.1 is determined with reference to the public findings of the competentauthorities.
4. The Proportionality of the Line Pipe Measure
56. In the view of the United States, Korea's challenge of the Panel's finding that Korea failed to
demonstrate that the United States applied the line pipe safeguard beyond the extent necessary toprevent or remedy serious injury and to facilitate adjustment is not convincing.  Korea first contendsthat the United States was required to indicate whether it based the measure either on serious injury oron threat of serious injury because the Panel found that a discrete determination was necessary.  Asthe United States showed in its appellant's submission, the Panel erred in this finding.  In any event,
no such distinction is necessary to comply with Article 5.1, which puts a limit on the extent of
                                                     
55Appellate Body Report, supra , footnote 52, paras. 98 and 99.WT/DS202/AB/R
Page 19
application of a safeguard measure.  According to the United States, "[i]f the limit implicated by a
finding of serious injury is different from the limit implicated by a finding of threat, one measure thatwas less [extensive] than [either limit] could comply with both, thus removing any need to specify the
basis for the measure."
 56
57. With respect to Korea's argument that the Unit ed States failed to apply its measure only to
that portion of the serious injury caused by imports, the United States contends that the AppellateBody has established, in past disputes, that the term "serious injury" in Article 4.2(b) refers to injurycaused by both increased imports and other factors.
 57  Thus, "serious injury" in Article 5.1, first
sentence, is the entirety of the serious injury experienced by the domestic industry, and not just theinjury attributable to increased imports.  In any event, the United States asserts that it has shown thatthe line pipe measure did not address injury caused by factors other than increased imports.  However,the Panel bore no obligation to analyze whether the explanation given by the United States as tocompliance with Article 5.1 was sufficient, since Korea failed to present a  prima facie  case on its
Article 5 claim.  Korea has also failed to identify any deficiency in the explanation given by the
United States.  Finally, Korea contends that the Panel erred in rejecting import statistics for the periodafter application of the safeguard measure as evidence of the effect of the measure.  In this regard, theUnited States submits that, as the Panel pointed out, in the absence of information on other factors thatcould have been affecting imports, it could not assume that the safeguard measure was responsible inpart or in full for observed import patterns.
E. Arguments of the Third Participants
1. Australia
58. Australia supports Korea's appeal against the Panel's finding that there was no requirement for
the United States to demonstrate, at the time of imposition, that the line pipe measure was "necessaryto prevent or remedy serious injury and to facilitate adjustment", as required by Article 5.1, firstsentence, of the  Agreement on Safeguards .  Because of the exceptional nature of safeguard measures,
and because of the requirement that they also facilitate adjustment, there is an  ex ante   obligation on a
Member to ensure that the affected Members are in a position to verify and monitor compliance withthe obligations of Article 5.1, first sentence, of the  Agreement on Safeguards .  Without a sufficient
demonstration of why the applied measure is necessary in terms of the level of the remedy and how itwill contribute to the process of adjustment, the obligations stipulated in Article 5.1 may be
                                                     
56United States' appellee's submission, para. 9.
57Appellate Body Report, US – Wheat Gluten , supra , footnote 39, para. 70;  Appellate Body Report,
US – Lamb , supra , footnote 38, para. 166.WT/DS202/AB/R
Page 20
undermined.  Australia submits that, in order to ensure the protection of the rights of affected
Members, the onus of this demonstration must be on the Member applying the safeguard measure.
59. Australia also supports the arguments presented by Korea, Japan and the European
Communities with respect to causation, parallelism and Article XXIV of the GATT 1994.
2. Canada
60. Canada requests the Appellate Body to reject Korea's appeal and to find that the exclusion of
a free-trade area partner from a safeguard  measure is not inconsistent with Article 2.2 of the
Agreement on Safeguards  or with Articles I, XIII or XIX of the GATT 1994.  The Panel correctly
found that the United States is entitled to rely on Article XXIV of the GATT 1994 as a defenceagainst Korea's claims under Articles XI, XIII and XIX.  The United States demonstrated that the
NAFTA established a free-trade area within the meaning of Article XXIV and Korea has not
presented any pertinent evidence to the contrary.  The NAFTA safeguard exclusion was part of thepackage of trade liberalizing measures introduced in accordance with Article XXIV:8(b) and,therefore, was necessary for the formation of a free-trade area consistent with Article XXIV.  Canadaagrees with the United States that nothing in the Appellate Body Report in  Turkey – Textiles   requires
an analysis of whether each trade liberalizing measure introduced in forming a free-trade area orcustoms union is, by itself, necessary to reach the Article XXIV:8 threshold.
61. Canada further submits that the Panel correctly found that Article XXIV also applies as a
defence against claims under Article 2.2 of the  Agreement on Safeguards .  The last sentence of
footnote 1 to the  Agreement on Safeguards  confirms the applicability of Article XXIV against claims
brought under the  Agreement on Safeguards .  The Appellate Body's findings regarding the exclusion
of customs union members from a safeguard measure in  Argentina – Footwear (EC)  were not based
on the last sentence of footnote 1.  Finally, Canada contends that this sentence does not specificallymention customs unions and thus also applies to free-trade areas.
3. European Communities
(a) Necessity of a Discrete Determination Either of Serious Injury or of
Threat of Serious Injury
62. The European Communities believes that the Panel's finding on the necessity of a discrete
finding either of serious injury or of threat of se rious injury is correct and requests the Appellate Body
to uphold it.  The United States has not demonstrated that "serious injury" and "threat thereof " may
coexist and are not, therefore, different concepts.  Coexistence is, in any event, not dispositive of the
issue of whether a "discrete" finding by domestic authorities is required.  In addition, the EuropeanWT/DS202/AB/R
Page 21
Communities submits that, contrary to what the United States seems to suggest, the requirement of a
discrete finding of "serious injury" or of "threat of  serious injury" is not incompatible with entrusting
"multiple decision makers" with safeguards enforcement at the national level.
63. The European Communities takes issue with the United States' proposition that the distinction
between serious injury and threat of serious injury is without legal significance.  First, this proposition
would render redundant the two definitions in Article 4.1 of the  Agreement on Safeguards .  Second,
Article 5.1 assumes a difference between the concepts, since a measure "necessary" to prevent seriousinjury may differ in type and extent from a measure "necessary" to remedy a serious injury that hasalready materialized.  Third, a finding of "serious injury" and a finding of "threat of serious injury"are likely to have different implications for any extension of a safeguard measure under Article 7.2 ofthe  Agreement on Safeguards :  in the case of an initial finding of threat of serious injury, it would be
difficult to maintain that materialization of injury is still imminent after three years.  The EuropeanCommunities submits, therefore, that an extension of a measure would be difficult to justify in such
circumstances.
(b) Non-Attribution of the Injurious Effects of Other Factors to Increased
Imports
64. The European Communities requests the Appellate Body to uphold the Panel's finding with
respect to causation.  The Panel's approach was justified and consistent with previous Appellate BodyReports.  In particular, the Panel correctly concluded that the United States authorities' discussion ofthe "other factors" included no indication as to how those authorities complied with the obligation, in
the second sentence of Article 4.2(b) of the  Agreement on Safeguards ,  to ensure that the injurious
effect of the other factors  were not included  in the assessment of the  injury ascribed to increased
imports .  The European Communities adds that the Unit ed States, while insisting that the Panel did
not examine the USITC Report, does not indicate where those questions are addressed and answeredin the USITC Report.
65. The European Communities believes that the Panel was also correct in criticizing the
United States authorities for immediately determining whether there was a link between the increasedimports and the serious injury, without first attempting to separate out injury caused by other factors.
(c) Article XXIV of the GATT 1994
66. With respect to the exclusion of NAFTA imports from the line pipe measure, the European
Communities submits that the Panel's flawed findings should be reversed on appeal.  The defence of
Article XXIV of the GATT 1994 is not available in this case because the test set out by the AppellateWT/DS202/AB/R
Page 22
Body in  Turkey – Textiles 58 is applicable, and the United States has not met this test.  In  Argentina –
Footwear (EC) ,  the Appellate Body confirmed the applicability of this test in this type of situation. 59
The Panel "hastily dismissed" 60 this test as irrelevant.  The imposition of a new safeguard measure in
the present case amounted precisely to the  introduction  of a trade restriction having an adverse effect
on the trade of other Members.  According to th e European Communities, the argument that the
exclusion of its NAFTA imports from the measure was authorized as part of the elimination of therestrictions necessary to establish a free-trade area is contradicted by the facts.  The EuropeanCommunities stresses that the United States retains discretion to apply safeguard measures onNAFTA imports.
67. As for the relationship between Article XXIV of the GATT 1994 and the  Agreement on
Safeguards ,  the European Communities submits that footnote 1 to the  Agreement on Safeguards 
does not affect the applicability of Article 2.2 of the  Agreement on Safeguards  to this case.  The
Panel was wrong to dismiss the Appellate Body's characterization of the scope of footnote 1 to the
Agreement on Safeguards   in  Argentina – Footwear (EC)  as applying only in the case of a customs
union taking a safeguard measure.
 61  The Panel failed to recognize that the various sentences of
footnote 1 constitute context for one another.  By  stating that the Appellate Body's finding does not
provide any guidance for the interpretation of the la st sentence of footnote 1, in the view of the
European Communities, the Panel effectively reduced the status of that Appellate Body Report to lessthan an unadopted panel report under the GATT 1947.
(d) "Parallelism" Between the Investigation and the Application of the
Line Pipe Measure
68. The European Communities submits that, contrary to Article 2 of the  Agreement on
Safeguards ,  the United States did not respect the parallelism between the exporting Members
included in the investigation and those included in the scope of the measure applied as a result of theinvestigation.  Contrary to what was required by the Appellate Body in  US – Wheat Gluten 
62, the
United States authorities did not make a finding  that all imports, excluding those from NAFTA
parties, were responsible for serious injury.  On the contrary, footnote 168 to the USITC Report atbest includes a hypothetical finding and, therefore, has no significance.  The European Communitiesargues that, consistent with previous findings of  the Appellate Body, the United States, therefore,
                                                     
58Appellate Body Report, supra , footnote 47, para. 58.
59Appellate Body Report, supra , footnote 50, paras. 109 and 110.
60European Communities' third participant's submission, para. 86.
61Appellate Body Report, supra , footnote 50, paras. 106–108.
62Appellate Body Report, supra , footnote 39, para. 98.WT/DS202/AB/R
Page 23
violated Article 2.2 of the  Agreement on Safeguards  by excluding Canada and Mexico from the
scope of the safeguard measure.
(e) The Requirement to Demonstrate  a priori   the Necessity of the Line
Pipe Measure
69. In the European Communities' view, the Panel's interpretation of Article 5.1 of the
Agreement on Safeguards  and the Panel's rejection of Korea's claim under that provision are flawed.
Accordingly, the European Communities submits that they should be reversed on appeal.
70. According to the European Communities, Article 5.1 of the  Agreement on Safeguards
embodies an obligation to ensure that the measure applied is  commensurate  with the goals of
preventing or remedying serious injury and of facilitating adjustment.  Although this does not alwaysrequire a "clear justification" (which is reserved by the second sentence of Article 5.1 to a veryspecific case), it still means that the respect for that obligation must be explained.  The EuropeanCommunities submits that providing such an explanation is incumbent upon the investigatingauthorities, since respect for this obligation is part of the conditions upon which safeguard action isauthorized under the  Agreement on Safeguards .
4. Japan
(a) Adequate Opportunity for Prior Consultations and Obligation to
Endeavour to Maintain a Substantially Equivalent Level of
Concessions
71. Japan submits that the Panel correctly found that the United States failed to provide an
adequate opportunity for prior consultations.  The United States did not disclose the proposed measureto Korea prior to or during the consultations held in Washington, D.C. on 24 January 2000.  Korealearned of the details of the proposed measure through a White House press release issued on
11 February 2000.  The Panel correctly found that a press release does not ensure that exporting
Members obtain the necessary detailed information on the proposed measure, since a press releasemay not even be accessible to all Members having a substantial interest.  Japan, therefore, supportsthe Panel's findings and requests the Appellate Body to uphold the Panel's conclusion.
(b) Article XXIV of the GATT 1994
72. Japan requests the Appellate Body to rule that the Panel erred in finding the exclusion of
Canada and Mexico from the remedy to be consistent with Article XXIV of the GATT 1994.  Japan
argues that the Panel misinterpreted the relationship between Article XIX and Article XXIV of the
GATT 1994, as it failed to assess ob jectively whether safeguard measures are restrictive regulationsWT/DS202/AB/R
Page 24
of commerce in the sense of Article XXIV:8(b).  The list of exceptions in Article XXIV:8(b) is not
exhaustive, since otherwise even security exceptions pursuant to Article XXI would not be allowed ina free-trade area.  Hence, safeguard measures, which are permitted only as exceptional emergencyactions, should be included among those excepti ons.  As provided in Article 2.2 of the  Agreement on
Safeguards ,  safeguard measures must be applied to a product irrespective of its source.  Japan adds
that the Panel failed to make an objective asse ssment explaining why it considered the information
provided by the United States and the information submitted to the Committee on Regional TradeAgreements in order to establish a  prima faci e  case that the NAFTA is in compliance with
Article XXIV of the GATT 1994.
5. Mexico
73. Mexico requests the Appellate Body to reject Korea's claims with respect to the conditions for
invoking Article XXIV of the GATT 1994 and the relationship between that Article and theAgreement on Safeguards .  According to Mexico, NAFTA is clearly a free-trade area that fully meets
the requirements of Articles XXIV:8(b) and XXIV:5(b) of the GATT 1994.
74. Mexico emphasizes that the right to be excluded from the application of a safeguard measure
forms part of the elimination of the "other restric tive regulations of commerce" referred to in Article
XXIV:8(b) of the GATT 1994.  This right does not make the "duties" and the "other restrictive
regulations of commerce" applied to Korea any more rigorous.  Mexico contends that Koreaimproperly interpreted the "necessity test" elaborated by the Appellate Body in  Turkey – Textiles .
 63
If WTO Members had to demonstrate that the elimination of a non-tariff restriction was the
determining factor in establishing a free-trade area, in Mexico's view, it would be highly improbablethat they could ever invoke Article XXIV.
75. Mexico also submits that Korea's claims with respect to the inapplicability of footnote 1 of
the  Agreement on Safeguards   are unfounded.  The last sentence of that footnote does not distinguish
between customs unions and free-trade areas.  According to Mexico, the ordinary meaning of thatsentence clearly establishes that the entire  Agreement on Safeguards   cannot affect the rights of
parties to a free-trade area.
                                                     
63Appellate Body Report, supra , footnote 47, para. 58.WT/DS202/AB/R
Page 25
III. Issues Raised in this Appeal
76. The measure at issue in this dispute is the safeguard measure applied by the United States on
imports of circular welded carbon quality line pipe ("line pipe").  At the oral hearing in this appeal,Korea confirmed that this safeguard measure alone is the measure at issue in this dispute, and thatKorea is not challenging any provision of United States law  as such .
 64  Rather, Korea is challenging
only the application of United States law through the line pipe measure and the investigation leadingto the imposition of the measure.
77. With this in mind, we confine our rulings in this appeal to the safeguard measure applied,
effective as of 1 March 2000, on imports of line pipe, in the form of an increased duty applicable forthree years, to imports of more than 9,000 short tons per year from each country (the "line pipe
measure").  The main features of the line pipe measure have been described earlier in this Report.
 65
The duty increase was 19 percent  ad valorem   in the first year, and 15 percent in the second year.  In
the third year, the duty increase will be 11 percent.  The line pipe measure applies to imports from allcountries, including WTO Members, but excludes imports from Canada and Mexico.
78. With respect to the line pipe measure, we will ad dress the issues raised in this appeal in the
following order:
(a) whether the Panel erred in finding that the United States acted inconsistently with its
obligation under Article 12.3 of the  Agreement on Safeguards   to provide an adequate
opportunity for prior consultations;
(b) whether the Panel erred in finding that the Un ited States, by failing to comply with its
obligations under Article 12.3 of the  Agreement on Safeguards ,  had also failed to
comply with its obligation to endeavour to maintain a substantially equivalent level ofconcessions and other obligations, as required by Article 8.1 of the  Agreement on
Safeguards ;
(c) whether the Panel erred in finding that the United States did not comply with its
obligations under Article 9.1 of the  Agreement on Safeguards   by applying the line
pipe measure to developing countries whose imports do not exceed the  de minimis
individual and collective thresholds contained in that provision;
                                                     
64Korea's response to questioning at the oral hearing.
65See, supra , para. 6.WT/DS202/AB/R
Page 26
(d) whether the Panel erred in finding that the United States acted inconsistently with
Articles 3.1 and 4.2(c) of the  Agreement on Safeguards   by failing to include in its
published report a distinct finding or reasoned conclusion either (i) that increasedimports have caused serious injury, or (ii) that increased imports are threatening to
cause serious injury;
(e) whether the Panel erred in finding that Korea had not established a  prima facie   case
that the United States violated Articles 2 and 4 of the  Agreement on Safeguards   by
including Canada and Mexico in the determination under Article 2.1 of theAgreement on Safeguards   but excluding Canada and Mexico from the scope of the
line pipe measure;
(f) whether the Panel erred in finding that the United States was entitled to rely on
Article XXIV of the GATT 1994 as a defence to Korea's claims under Articles I,XIII and XIX of the GATT 1994 and Article 2.2 of the  Agreement on Safeguards
regarding the exclusion of imports from Canada and Mexico from the scope of the
line pipe measure;
(g) whether the Panel erred in finding that the United States acted inconsistently with
Article 4.2(b) of the  Agreement on Safeguards   by not adequately explaining in the
USITC Report how it ensured that injury caused by factors other than increasedimports was not attributed to increased imports;
(h) whether the Panel erred in finding that the United States was not required under
Article 5.1, first sentence, of the  Agreement on Safeguards   to demonstrate, at the
time of the imposition of the measure, that the line pipe measure was necessary to
prevent or remedy serious injury and to facilitate adjustment;  and
(i) whether the Panel erred in finding that Korea failed to meet its burden to assert and
prove that the United States violated Article 5.1, first sentence, of the  Agreement on
Safeguards  by imposing the line pipe measure beyond the extent necessary to prevent
or remedy serious injury and to facilitate adjustment.
79. Before taking up the issues raised in this appeal, we note, with respect to the ambit of this
appeal, that the Panel reached certain conclusions on the inconsistency of the line pipe measure withWTO obligations of the United States which have not been appealed.  The Panel found that the line
pipe measure is inconsistent with the general rule contained in the  chapeau  of Article XIII:2 of theWT/DS202/AB/R
Page 27
GATT 1994 because it has been applied without respecting traditional trade patterns. 66  In addition,
the Panel found that the line pipe measure is inconsistent with Article XIII:2(a) of the GATT 1994because it has been applied without establishing the total amount of imports permitted at the lowertariff rate.
 67  The Panel found as well that the United States had acted inconsistently with its
obligations under Article XIX of the GATT 1994 by failing to demonstrate the existence of
unforeseen developments before applying the line pipe measure. 68  Neither participant challenges
these findings.  Accordingly, in view of our mandate under Article 17.12 of the DSU, we do notaddress those issues in this appeal.  Thus, whatever conclusions we reach with respect to the issuesraised in this appeal, the line pipe measure has been found, in any event and to the extent of thePanel's findings, to be inconsistent with the obligations of the United States under the  WTO
Agreement .
IV. Introductory Remarks
80. Before turning to the first issue raised in this appeal, it is useful to recall that safeguard
measures are extraordinary remedies to be taken only in emergency situations.  Furthermore, they areremedies that are imposed in the form of import restrictions in the absence of any allegation of an
unfair trade practice.  In this, safeguard measures differ from, for example, anti-dumping duties and
countervailing duties to counter subsidies, which are both measures taken in response to unfair tradepractices.  If the conditions for their imposition are fulfilled, safeguard measures may thus be imposedon the "fair trade" of other WTO Members and, by restricting their imports, will prevent those WTOMembers from enjoying the full benefit of trade concessions under the  WTO Agreement .
                                                     
66Panel Report, para. 8.1(1).
67Ibid., para. 8.1(2).
68Ibid., para. 8.1(6).WT/DS202/AB/R
Page 28
81. As we held in our Report in  Argentina – Footwear (EC) , both the context and the object and
purpose of Article XIX of the GATT 1994 confirm the extraordinary nature of safeguard measures:
… 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)
Clearly, this is not the language of ordinary events in routine
commerce.  In our view, the text of Article XIX:1(a) of theGATT 1994, read in its ordinary meaning and in its context,
demonstrates that safeguard measures 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, such "emergency
actions" are to be invoked only in situations when, as a result ofobligations incurred under the GATT 1994, a Member finds itself
confronted with developments it had not "foreseen" or "expected"
when it incurred that obligation.  The remedy that Article XIX:1(a)
allows in this situation is temporarily to "suspend the obligation in
whole or in part or to withdraw or modify the concession".  Thus,Article XIX is clearly, and in every way, an extraordinary remedy.
This reading of these phrases is also confirmed by the object and
purpose of Article XIX of the GATT 1994.  The object and purpose
of Article XIX is, quite simply, to allow a Member to re-adjust
temporarily the balance in the level of concessions between thatMember and other exporting Members when it is faced with
"unexpected" and, thus, "unforeseen" circumstances which lead to
the 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".  In perceiving
and applying this object and purpose to the interpretation of this
provision of the  WTO Agreement , it is essential to keep in mind that
a safeguard action is a "fair" trade remedy.  The application of a
safeguard measure does not depend upon "unfair" trade actions, as is
the case with anti-dumping or countervailing measures.  Thus, the
import restrictions that are imposed on products of exporting
Members when a safeguard action is taken must be seen, as we havesaid, as extraordinary.  And, when construing the prerequisites for
taking such actions, their extraordinary nature must be taken into
account.
… 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
concessions or withdrawal of obligations, such as those in Article II
and Article XI of the GATT 1994, which are fundamental to the
WTO Agreement . …
 69 (original emphasis, underlining added)
                                                     
69Appellate Body Report, supra , footnote 50, paras. 93–95.  See also,  Appellate Body Report, Korea –
Dairy , supra , footnote 52, paras. 86–88.WT/DS202/AB/R
Page 29
82. These statements are valid for both Article XIX of the GATT 1994 and the  Agreement on
Safeguards ,  since both rest on the same premise, and since the  Agreement on Safeguards   both
reiterates, and further elaborates on, much of what long prevailed under the GATT 1947.Nevertheless, part of the  raison d'être  of Article XIX of the GATT 1994 and the  Agreement on
Safeguards   is, unquestionably, that of giving a WTO Member the possibility, as trade is liberalized,
of resorting to an effective remedy in an extrao rdinary emergency situation that, in the judgement of
that Member, makes it necessary to protect a domestic industry temporarily.
83. There is, therefore, a natural tension between, on the one hand, defining the appropriate and
legitimate scope of the right to apply safeguard measures and, on the other hand, ensuring thatsafeguard measures are not applied against "fair trade" beyond what is necessary to provideextraordinary and temporary relief.  A WTO Member seeking to apply a safeguard measure willargue, correctly, that the  right   to apply such measures must be respected in order to maintain the
domestic  momentum and motivation for ongoing trade liberalization.  In turn, a WTO Member whose
trade is affected by a safeguard measure will argue, correctly, that the  application   of such measures
must be limited in order to maintain the  multilateral   integrity of ongoing trade concessions.  The
balance struck by the WTO Members in reconciling this natural tension relating to safeguardmeasures is found in the provisions of the  Agreement on Safeguards .
84. This natural tension is likewise inherent in two basic inquiries that are conducted in
interpreting the  Agreement on Safeguards .  These two basic inquiries are:  first,  is there a right to
apply a safeguard measure?  And,  second ,  if so, has that right been exercized, through the
application of such a measure, within the limits set out in the treaty?  These two inquiries are separate
and distinct.  They must not be confused by the treaty interpreter.  One necessarily precedes and leads
to the other.  First ,  the interpreter must inquire whether there is a right, under the circumstances of a
particular case, to apply a safeguard measure.  For this right to exist, the WTO Member in questionmust have determined, as required by Article 2.1 of the  Agreement on Safeguards   and pursuant to the
provisions of Articles 3 and 4 of the  Agreement on Safeguards ,  that a product is being imported into its
territory in such increased quantities and under such conditions as to cause or threaten to cause serious
injury to the domestic industry.  Second ,  if this first inquiry leads to the conclusion that there  is  a
right to apply a safeguard measure in that particular case, then the interpreter must next considerwhether the Member has applied that safeguard measure "only to the extent necessary to prevent or
remedy serious injury and to facilitate adjustment", as required by Article 5.1, first sentence, of the
Agreement on Safeguards .  Thus, the right to apply a safeguard measure—even where it has been
found to exist in a particular case and thus can be exercized—is not unlimited.  Even when a Memberhas fulfilled the treaty requirements that establish the right to apply a safeguard measure in aparticular case, it must do so "only to the extent necessary … ."WT/DS202/AB/R
Page 30
85. With these general considerations in mind, we address the issues raised in this particular
appeal.
V. Adequate Opportunity for Prior Consultations
86. We begin with the issue of whether the Panel erred in finding that, when applying the line
pipe measure, the United States violated its obligations under Article 12.3 of the  Agreement on
Safeguards .  Article 12.3 provides:
Notification and Consultation
A Member proposing to apply or extend a safeguard measure shall
provide adequate opportunity for prior consultations with those
Members having a substantial interest as exporters of the productconcerned, with a view to,  inter alia, reviewing the information
provided under paragraph 2, exchanging views on the measure and
reaching an understanding on ways to achieve the objective set out in
paragraph 1 of Article 8.
87. First, we recall briefly the sequence of events relevant to this issue: 
70
− on 4 August 1999:   pursuant to Article 12.1(a) of the  Agreement on Safeguards ,  the
United States notified the Committee on Safeguards that its competent authorities had
initiated a safeguard investigation on 29 July 1999 regarding imports of line pipe 71;
− on 8 November 1999:   pursuant to Article 12.1(b) of the  Agreement on Safeguards ,
the United States notified the Committee on Safeguards that the USITC had reached
an affirmative finding of serious injury or threat thereof caused by increased importsof line pipe 
72;
− on 8 December 1999:   the USITC announced to the President of the United States its
recommendations for a remedy 73;
− on 24 January 2000:   the United States made a supplemental notification under
Article 12.1(b), summarizing the USITC Report of 22 December 1999 and containing
                                                     
70See, s upra , paras. 2–7.
71G/SG/N/6/USA/7, 6 August 1999.
72G/SG/N/8/USA/7, 11 November 1999;  Panel Report, para. 7.310.
73Panel Report, para. 2.4.WT/DS202/AB/R
Page 31
detailed information on the measures recommended by the USITC to the President of
the United States 74;
− on 24 January 2000:   the United States and Korea held consultations in Washington,
D.C. on the USITC Report 75;
− on 11 February 2000:   the United States issued a press release announcing the
President's decision on a safeguard measure for line pipe that "differed
substantially" 76 from the measure recommended to the President and notified to the
Committee on Safeguards on 24 January 2000 77;
− on 18 February 2000:  the United States issued a Presidential Proclamation on the line
pipe measure as described in the press release and indicating its effective date of
1 March 2000 78;
− on 22 February 2000: the United States notified the Committee on Safeguards
pursuant to Article 12.1(c) of its decision to apply a safeguard measure on imports of
line pipe as described in the press release 79;  and
− on 1 March 2000: the safeguard measure as described in the press release took
effect. 80
88. Before the Panel, Korea argued that "the United States did not advise Korea of the measure
the President intended to take before the bilateral consultations" 81 held on 24 January 2000, and that
"Korea was only informed of the actual measure imposed by a press release from the White House on11 February 2000." 
82  On this basis, Korea argued before the Panel that it "had no meaningful ability
to discuss the actual remedy proposed before it was imposed" because it was "a  fait accompli  at that
                                                     
74G/SG/N//8/USA/7/Suppl.1, 25 January 2000;  Panel Report, para. 7.310.
75Panel Report, para. 7.310.
76Ibid. , footnote 243 to para. 7.313.
77Ibid. , para. 7.310.
78Proclamation 7274 of 18 February 2000  –  To Facilitate Positive Adjustment to Competition From
Imports of Certain Circular Welded Carbon Quality Line Pipe", United States Federal Register,23 February 2000 (Volume 65, Number 36), pp. 9193–9196.
79G/SG/N/10/USA/5, 23 February 2000; G/SG/N/10/USA/5Rev.1, G/SG/N/11/USA/4, 28 March 2000.
80Panel Report, para. 7.310;  Presidential Proclamation, supra , footnote 78, at p. 9194.
81Korea's first submission to the Panel, para. 324.
82Ibid.WT/DS202/AB/R
Page 32
point." 83  Therefore, the United States had not complied with its obligations under Article 12.3 of the
Agreement on Safeguards . 84
89. In reply, the United States maintained before the Panel that it had fulfilled its obligations
under Article 12.3 when it issued the press release on 11 February 2000.  The United States argued
that, as of that date, it stood ready to hold consultations and had provided the information an exporting
Member, such as Korea, would need to conduct consultations.  Therefore, in the view of the
United States, Korea had been provided with an adequate opportunity to request consultations, anopportunity that Korea failed to seize.
 85
90. Agreeing with Korea, the Panel concluded that the United States had acted inconsistently with
its obligations under Article 12.3 of the  Agreement on Safeguards  by failing to provide an adequate
opportunity for prior consultations.  The Panel reasoned that:
… a press release does not ensure that exporting Members obtained
the necessary detailed information on the proposed measure.  Asimple press release does not guarantee that exporting Members
obtained the information contained therein … .  Therefore, we find
that the 11 February 2000 press release, regardless of its content,
cannot itself be considered to have provided Korea with an adequate
opportunity for prior consultations.
 86
91. The United States appeals this finding, arguin g that the Panel relied on an incorrect legal
interpretation of Article 12.3, and that the Panel failed to perform the factual analysis necessary toevaluate compliance with Article 12.3.
92. According to the United States, the Panel erred in concluding that Article 12.3 requires a
Member proposing to apply a safeguard measure to "ensure" 
87 that exporting Members "obtained" 88
the information that Members must review in c onsultations pursuant to that Article.  The
United States submits that the text imposes no such obligation.  Rather, as the United States sees it,Article 12.3 requires a Member to provide an "adequate opportunity" prior to the application of asafeguard measure for consultations with Members having a substantial export interest in the productin question, with a view to reviewing certain information.  The United States contends that thisstandard is met when the Member with a substantial export interest  obtains  the relevant information.
                                                     
83Korea's first submission to the Panel, para. 324.
84Panel Report, para. 7.307.  See also, Korea's first submission to the Panel, para. 323.
85Panel Report, para. 7.309.
86Ibid. , para. 7.314.
87Ibid.
88Ibid.WT/DS202/AB/R
Page 33
The United States points out that Korea admitted it obtained the information about the measure on
11 February 2000, when it received the press release.  The United States asserts, moreover, that Koreawas provided with "much of the information" 
89 about the measure before 11 February 2000.  In the
view of the United States, consultation is a "dynamic" 90 process which is "triggered" 91 by an
Article 12.1(b) notification and which continues until the measure takes effect.  The United States
maintains, therefore, that the period from the init ial Article 12.1(b) notification to the day the measure
takes effect is relevant for assessing whether the United States provided an adequate opportunity forprior consultations.
93. In addition, according to the United States, the Panel did not conduct the factual analysis
necessary to determine compliance with Article 12.3.  Instead, the United States argues that the Panelassumed—without citing any evidence—that the press release did not ensure receipt of the necessary
information by exporting Members.  The relevant question, according to the United States, is notwhether a Member applying the safeguard measure "ensure[s]" 
92 or "guarantee[s]" 93 receipt of
information by exporting Members, but whether the exporting Members "obtain" 94 the information.
The United States emphasizes the fact that Korea admitted that it did. 95
94. The United States asks us, for these reasons, to reverse the Panel's finding on Article 12.3. 96
95. Korea maintains on appeal that the necessary information about the line pipe measure had
never been communicated to Korea before the press release of 11 February 2000.  Korea argues alsothat the press release was an inappropriate means for providing the necessary information, as it was anannouncement of a " fait accompli " 
97 followed by a Presidential Proclamation of the measure on
18 February 2000.  Moreover, according to Korea, there was "no practical possibility" 98 to hold
consultations after 11 February 2000.
                                                     
89United States' statement at the oral hearing.
90United States' response to questioning at the oral hearing.
91Ibid.
92United States' appellant's submission, para. 78.
93Ibid.
94United States' appellant's submission, para. 81.
95Ibid. , paras. 74 and 81.
96Ibid. , para. 80.
97Korea's appellee's submission, paras. 80 and 99.
98Ibid. , para. 80.WT/DS202/AB/R
Page 34
96. Relying on our ruling in  US – Wheat Gluten  99, Korea emphasizes that a Member proposing
to apply a safeguard measure "should provide exporting Members with sufficient  information   and
time  … to allow a  meaningful exchange   on the issues identified." 100  In Korea's view, the
United States "failed to provide either sufficient  information   or  time" 101 and, hence, Korea was
deprived of an "adequate opportunity" for prior consultations under Article 12.3.
97. In considering these arguments, we note, first, that the requirements of Article 12.3 of the
Agreement on Safeguards   have been examined previously in  US – Wheat Gluten . 102  In that case, the
panel found that consultations were held "on the basis of the information contained in the USITCReport [and] that no consultations were held on the final measure that was approved by theUnited States President
 ". 103  The panel in  US – Wheat Gluten   concluded that the notifications by the
United States under Article 12.1(b) "did not provide a description of the measure under considerationsufficiently precise as to allow the European Communities to conduct meaningful consultations withthe United States, as required by Article 12.3 of the  Agreement on Safeguards ." 
104
98. On appeal in that case, we agreed with the panel's assessment.  We also noted that "the
recommendations made by the USITC did  not  include specific numerical quota shares for the
individual exporting Members concerned", and that, therefore, "these 'recommendations' did not allow
the European Communities to assess accurately the likely impact of the measure being contemplated,nor to consult adequately on overall equivalent concessions with the United States." 
105
                                                     
99Korea's appellee's submission, para. 85, referring to Appellate Body Report, US – Wheat Gluten ,
supra , footnote 39, para. 136.
100Ibid. , para. 85. (original emphasis)
101Ibid.
102Panel Report, WT/DS166/R, adopted 19 January 2001, as modified by the Appellate Body Report,
WT/DS166/AB/R;  Appellate Body Report, supra, footnote 39.
103Appellate Body Report, supra , footnote 39, para. 139, referring to Panel Report, supra , footnote 102,
para. 8.217.
104Appellate Body Report, supra , footnote 39, para. 142;  Panel Report, supra , footnote 102, paras.
8.218 and 8.219.
105Appellate Body Report, US – Wheat Gluten, supra,  footnote 39, para. 141.WT/DS202/AB/R
Page 35
99. With respect to the requirements of Article 12.3, we observed in that appeal that:
Article 12.3 states that an "adequate opportunity" for consultations is
to be provided "with a view to":  reviewing the information furnishedpursuant to Article 12.2;  exchanging views on the measure; and
reaching an understanding with exporting Members on an equivalent
level of concessions.  In view of these objectives, we consider that
Article 12.3 requires a Member proposing to apply a safeguard
measure to provide exporting Members with  sufficient information
and time to allow for the possibility, through consultations, for a
meaningful exchange  on the issues identified.
 106 (emphasis added)
100. We explained there what is necessary in order to comply with those requirements:
… it follows from the text of Article 12.3 itself that information on
the  proposed   measure must be provided in  advance   of the
consultations, so that the consultations can adequately address that
measure.  Moreover, the reference, in Article 12.3, to "the
information provided under" Article 12.2, indicates that Article 12.2identifies the information that is needed to enable meaningful
consultations to occur under Article 12.3.  Among the list of
"mandatory components" regarding information identified in Article
12.2 are:  a precise description of the  proposed  measure, and its
proposed   date of introduction.
 107 (original emphasis, footnote
omitted)
101. We concluded that:
… an exporting Member will not have an "adequate opportunity"
under Article 12.3 to negotiate overall equivalent concessions
through consultations unless, prior to those consultations, it has
obtained,  inter alia ,  sufficiently detailed information on the form of
the proposed measure, including the nature of the remedy. 108
102. The factual similarities between the present case and the  US – Wheat Gluten   case are
manifest.  In this case, as in  US – Wheat Gluten ,  consultations were held on the basis of information
in the USITC Report, and not on the basis of  the measure eventually announced by the President ofthe United States.  In this case, as in  US – Wheat Gluten ,  the USITC recommendations did not
include the proposed date of application.
103. The notifications that informed the consultations held on 24 January 2000 described the
measures proposed by the USITC.  The Panel found, as a matter of fact, that these proposed measures
                                                     
106Appellate Body Report, US – Wheat Gluten, supra,  footnote 39, para. 136.
107Ibid.
108Ibid. , para. 137.WT/DS202/AB/R
Page 36
"differed substantially" 109 from the one announced by the President on 11 February 2000 and
eventually applied by the United States, effective as of 1 March 2000.  For this reason, we do notbelieve that the notifications by the United States under Article 12.1(b) in this case were sufficientlyprecise to allow Korea to conduct meaningful consultations on the measure at issue.
104. We do not mean by this to imply that the "prior consultations" envisioned by Article 12.3
must be on a proposed measure that is identical, in every respect, to the one that is eventually applied.Presumably, the "prior consultations" will, from tim e to time, result in some changes in a proposed
measure.  But where, as here, the proposed measure "differed substantially" from the measure thatwas later applied, and not as a consequence of "prior consultations", we fail to see how meaningful"prior consultations" could have occurred, as required by Article 12.3.  Therefore, to determinewhether the United States has fulfilled its obligations under Article 12.3 with respect to the linepipe measure, we must examine whether the issuance on 11 February 2000 of the press releaseannouncing the pending application of the measure—which described the measure as it was actually
applied—served the purpose of fulfilling those obligations.
105. As we have noted 
110, the Panel concluded that the United States was in violation of
Article 12.3 because "a press release does not ensure that exporting Members obtained the necessarydetailed information on the proposed measure." 
111
106. As we stated in  US – Wheat Gluten ,  and as we have here reaffirmed 112, Article 12.3 requires
"a Member proposing to apply a safeguard measure to provide exporting Members with  sufficient
information and time  to allow for the possibility, through consultations, for a  meaningful
exchange ". 113  In this case, Korea has acknowledged th at it obtained the information about the
measure through the press release issued on 11 February 2000.  Therefore, the Panel's inquiry as to
whether the United States " ensure[d] " 114 that Korea obtained the information was, in our view,
misdirected.  The appropriate inquiry here is whether the United States provided Korea with"sufficient time" to allow for a "mean ingful exchange" on the information.
107. Article 12.3 does not specify precisely how much time should be made available for
consultations.  Therefore, a finding on the adequacy of time in any particular case must necessarily beaddressed on a case-by-case basis.  The facts before us in this case are these:  Korea learned of the                                                     
109Panel Report, footnote 243 to para. 7.313.
110Supra , para. 90.
111Panel Report, para. 7.314.
112Supra , paras. 99–101.
113Appellate Body Report, supra , footnote 39, para. 136. (emphasis added)
114Panel Report, para. 7.314.WT/DS202/AB/R
Page 37
actual measure on 11 February 2000—18 days before the measure took effect.  Korea learned of the
effective date of the measure on 18 February 2000—11 days before the measure took effect.  And,lastly, the United States filed a notification of the measure pursuant to Article 12.1(c) of theAgreement on Safeguards  on 22 February 2000—eight days before the measure took effect.
108. As we stated in  US – Wheat Gluten ,  there must be sufficient time "to allow for the
possibility … for a meaningful exchange".
 115  This requirement presupposes that exporting Members
will obtain the relevant information sufficiently in advance to permit analysis of the measure, andassumes further that exporting Members will have  an adequate opportunity to consider the likely
consequences of the measure before the measure takes effect.  For it is only in such circumstances thatan exporting Member will be in a position, as required by Article 12.3, to "reach[] an understandingon ways to achieve the objective set out in paragraph 1 of Article 8" of "maintain[ing] a substantiallyequivalent level of concessions and other obligations to that existing under GATT 1994".  We see thisspecific textual link between Article 12.3 and paragraph 1 of Article 8 as especially significant.
109. We note that reaching such an "understanding" serves the interests not only of the exporting
Members, but also of the importing Member, who will wish to avoid excessive compensatorymeasures in response to the safeguard action.  As we have said, the  Agreement on Safeguards
permits Members to impose measures against "fair trade".  As a result, Members against whom suchmeasures are imposed are prevented from enjoying the full benefit of trade concessions.  For thisreason, Article 8.1 of the  Agreement on Safeguards  provides that "Members concerned may agree on
any adequate means of trade compensation for the adverse effects of the measure on their trade."  Ifno agreement on compensation is reached, Article 8.2 provides that "the affected … Members shall be
free, not later than 90 days after the measure is applied, to suspend … the application of substantially
equivalent concessions or other obligations under GATT 1994, to the trade of the Member applyingthe safeguard measure".
 116  Thus, there is an interest on the part of both the exporting Member and the
importing Member applying the safeguard measure to engage in "prior consultations" with a view toreaching an understanding on the import of the measure.
110. Finally, the notion of a  meaningful exchange ,  as we see it, assumes that the importing
Member will enter into consultations in good faith 
117 and will take the time appropriate to give due
consideration to any comments received from exporting Members before implementing the measure.
                                                     
115Appellate Body Report, supra , footnote 39, para. 136.
116The suspension must be notified to the Council for Trade in Goods and must not be "disapprove[d]"
by the Council.  See, Article 8.2 of the  Agreement on Safeguards.
117Article 26 of the  Vienna Convention on the Law of Treaties  (the " Vienna Convention ") provides that
"[e]very treaty in force is binding on the parties to it and must be performed by them  in good faith ." (Done at
Vienna, 23 May 1969, 1155 U.N.T.S. 331; 8 International Legal Materials 679) (emphasis added)WT/DS202/AB/R
Page 38
As always, we must assume that WTO Members seek to carry out their WTO obligations in good
faith.
111. We are mindful of the need for Members to act quickly when applying a safeguard measure.
A safeguard measure is, as we have stressed, an extraordinary measure that is applied in extraordinary
circumstances.  As we have said, the amount of time needed for a meaningful exchange must be
judged on a case-by-case basis, depending on the prevailing circumstances.  In this case, we do notbelieve it would have been possible, under the circumstances, to have a meaningful exchange withinthe period following the proclamation of the effective date of the measure, or even during the periodfollowing the issuance of the press release.  It would not have been possible, in our view, for Korea tohave analyzed the measure, considered its likely consequences, conducted appropriate consultationsdomestically, and prepared for consultations with the United States in so short a time.  Indeed, theUnited States appears to have recognized the need for adequate time to prepare for the consultationsheld on 24 January 2000 with respect to the measure recommended by the USITC.  Those
consultations took place 77 days after the initial notification under Article 12.1(b) and 47 days after
the announcement of the USITC recommendations.  Korea may not have needed that much time toprepare for consultations, but, in our view, Korea needed more time than it got.
112. The United States also argues that "[s]ince Korea never attempted to hold such consultations,
its assertions that they could not be meaningful are pure speculation, and cannot create a  prima facie
case of a breach of the Safeguards Agreement." 
118  We are not persuaded by this argument.  The
obligation of an importing Member under Article 12.3 is to "provide adequate opportunity for  prior
consultations". (emphasis added)  That obligation cannot be met if there is insufficient time prior to
the application of the measure to have a  meaningful   exchange.  The importing Member's failure to
provide information about a safeguard measure to an exporting Member sufficiently in advance of
that measure taking effect is not excused by the fact that the exporting Member did not requestconsultations during that inadequate time-period.
113. In the light of these considerations, we uphold, albeit for different reasons, the conclusion of
the Panel in paragraph 8.1(7) of the Panel Report that the United States acted inconsistently with itsobligations under Article 12.3 of the  Agreement on Safeguards   by failing to provide an adequate
opportunity for prior consultations on the line pipe measure with Korea, a Member having asubstantial interest as an exporter of line pipe.
                                                     
118United States' statement at the oral hearing.WT/DS202/AB/R
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VI. Obligation to Endeavour to Maintain a Substantially Equivalent Level of Concessions
and Other Obligations
114. We next consider the issue of compliance by the United States with its obligations under
Article 8.1 of the  Agreement on Safeguards .  Article 8.1 provides:
Level of Concessions and Other Obligations
A Member proposing to apply a safeguard measure or seeking an
extension of a safeguard measure shall endeavour to maintain a
substantially equivalent level of concessions and other obligations to
that existing under GATT 1994 between it and the exporting
Members which would be affected by such a measure, in accordance
with the provisions of paragraph 3 of Article 12.  To achieve thisobjective, the Members concerned may agree on any adequate means
of trade compensation for the adverse effects of the measure on their
trade.
115. Before the Panel, Korea argued that Articles 8.1 and 12.3 of the  Agreement on Safeguards
"are explicitly linked, and require … an opportunity for prior consultation with full knowledge of theproposed measure." 
119  In reply, the United States argued that Korea's claim under Article 8.1 was
explicitly linked to its claim under Article 12.3 and that, as the United States had complied with
Article 12.3, it had also acted in conformity with Article 8.1. 120
116. The Panel agreed with Korea, and found that:
… the United States, by failing to comply with its obligations under
Article 12.3, has also acted inconsistently with its obligations under
Article 8.1 to endeavour to maintain a substantially equivalent levelof concessions and other obligations.
 121
117. The United States argues on appeal that the sole basis for the Panel's finding of inconsistency
with Article 8.1 is its erroneous finding with resp ect to Article 12.3.  Accordingly, the United States
asks us to conclude that the Article 8.1 finding is equally flawed, and to reverse the Panel's finding onthis ground.
                                                     
119Panel Report, para. 7.315.
120Ibid. , para. 7.316.
121Ibid. , para. 7.319.WT/DS202/AB/R
Page 40
118. In coming to its conclusion on this matter, the Panel relied on our Report in  US – Wheat
Gluten ,  where we said:
In view of [the] explicit link between Articles 8.1 and 12.3 of the
Agreement on Safeguards , a Member cannot, in our view,
"endeavour to maintain" an adequate balance of concessions unless it
has, as a first step, provided an adequate opportunity for prior
consultations on a proposed measure. 122
119. In our view, our reasoning in  US – Wheat Gluten  is also applicable in this case.  Therefore,
we agree with the Panel that the United States, "by failing to comply with its obligations under
Article 12.3, has also acted inconsistently with its obligations under Article 8.1 to endeavour tomaintain a substantially equivalent level of concessions … ." 
123  We, therefore, uphold the Panel's
finding that the United States acted inconsistently with its obligations under Article 8.1 of theAgreement on Safeguards .
VII. Exclusion of " de minimis " Developing Country Exporters from the Line Pipe Measure
120. Next we turn to Article 9.1 of the  Agreement on Safeguards ,  which states:
Developing Country Members
Safeguard measures shall not be applied against a product originating
in a developing country Member as long as its share of imports of the
product concerned in the importing Member does not exceed
3 per cent, provided that developing country Members with less than3 per cent import share collectively account for not more than9 per cent of total imports of the product concerned. 
2
2A Member shall immediately notify an action taken under
paragraph 1 of Article 9 to the Committee on Safeguards.
121. Korea claimed before the Panel that the line pipe measure is inconsistent with Article 9.1
because it treats developing countries the same as all other suppliers and allocates to each of thedeveloping countries, irrespective of their previous import levels, the same quota of 9,000 short tonsthat has been allocated to all other exporters.  Ko rea argued before the Panel that Article 9.1 of the
Agreement on Safeguards   requires a Member imposing a safeguard measure to "determine which
developing countries were to be exempted from the measure" 
124, and that the United States did not
fulfill this requirement.
                                                     
122Appellate Body Report, supra , footnote 39, para. 146.
123Panel Report, para. 7.319.
124Ibid. , para. 7.172.WT/DS202/AB/R
Page 41
122. As we have explained, the line pipe measure took the form of a duty increase for three years,
effective as of 1 March 2000.  The first 9,000 short tons of imports from each country, irrespective oftheir origin, were  excluded each year from the duty increase, with annual reductions in the rate of duty
in the second and third years.  In the first year, imports above 9,000 short tons were subject to an
additional duty of 19 percent  ad valorem .  The additional duty was reduced to 15 percent in the
second year.  The additional duty is to be reduced to 11 percent in the third year.  Imports fromCanada and Mexico have been excluded in their entirety from the measure.  The measure has noexplicit exclusion for developing countries exporting under the  de minimis  levels set out in
Article 9.1 of the  Agreement on Safeguards .  Nor does the measure contain an explicit inclusion of
developing countries exporting above those  de minimis  levels.
123. In considering whether this measure complies with Article 9.1, the Panel asked, first, whether
it is necessary to make an express exclusion of those developing countries exporting belowde minimis  levels.  The Panel's answer to this question was not conclusive.  The Panel said:  "[i]n our
view, if a measure is not to apply to certain countries, it is  reasonable to expect   an express exclusion
of those countries from the measure".
 125
124. In an effort to determine whether the line pipe measure contains an express exclusion of those
developing countries which fit the description of  de minimis   importers in Article 9.1, the Panel
examined the notification by the United States to the WTO Committee on Safeguards pursuant tofootnote 2 to Article 9, as well as three internal United States documents relating to theimplementation of the measure.  The Panel found that the notification by the United States to theCommittee on Safeguards did not specify the developing countries excluded from the measure.
 126
Likewise, the Panel found also that none of the internal United States documents—namely, thePresidential Proclamation of the measure, dated 18 February 2000;  the President's Memorandum tothe Secretary of the Treasury and the United States Trade Representative, dated 18 February 2000;and the Memorandum from the Customs Service Director of Trade Programs to all Port Directors,dated 29 February 2000—contained a list of developing countries excluded from the measure, or anyother indication of how the measure would co mply with the obligation under Article 9.1.
 127  T h e
Panel, therefore, found that these documents "do not contain any express exclusion", and, "[i]n theabsence of any other relevant documentation", concluded that the line pipe measure "applies to those
                                                     
125Panel Report, para. 7.175. (emp hasis added, footnote omitted)
126Ibid., para. 7.179.
127Ibid., paras. 7.176–7.178.WT/DS202/AB/R
Page 42
developing countries" with  de minimis   imports. 128  Accordingly, the Panel found that "the
United States has not complied with its obligations under Article 9.1". 129
125. The Panel then went on to ask whether, despite the absence of an express exclusion, the
measure was crafted, as the United States asserted, in such a way as to ensure that it would not be
"applied against a product originating in a developing country Member" whose share of imports is
below the  de minimis  levels provided in Article 9.1.  The United States acknowledged before the
Panel that the 9,000 short-ton exemption from the supplemental duty represented only 2.7 percent oftotal imports in 1998, but argued that, because the total volume of imports would decrease as a resultof the measure, any country reaching the 9,000 ton limit of the exemption would in fact account formore   than three percent of total imports in 2000 and thereafter.  In considering this argument, the
Panel noted that the line pipe measure does not set an overall limit on the quantity of imports of linepipe and that, therefore, if importers are willing to pay the duty for over-quota imports,  there is norestriction on the total volume of line pipe imports that may enter the United States from any one
country.  The Panel also noted that, given that Canada and Mexico were completely excluded from
the measure, there is no impediment to an increase in imports from those countries.  For this reason,the Panel found that there was no assurance in the line pipe measure that the total volume of importswould decrease, or that the three-percent thres hold would be exceeded.  The Panel concluded that:
Article 9.1 contains an obligation not to apply a measure, and we find
that the line pipe measure "applies" to all developing countries in
principle, even though it may not have any impact in practice.
Therefore, for the reasons described above we find that the
United States has not complied with its obligations under Article 9.1of the Agreement on Safeguards.
 130
126. The United States appeals this finding.  The United States argues on appeal that the "most
basic flaw in the Panel's reasoning is that Article 9.1 does not obligate Members to providespecifically for 'non-application' of a safeguard measure", and that the "text requires only that thesafeguard measure 'not be applied' against a developing country Member having less than threepercent of imports." 
131  According to the United States, Article 9.1 "is silent as to  how  a Member
may meet this obligation [in Article 9.1], and certainly does not require a list of the developingcountries [excluded from the measure]".
 132  The United States believes that it met the Article 9.1
                                                     
128Panel Report, para. 7.180.
129Ibid.
130Ibid. , para. 7.181.  The Panel made a similar finding in paragraph 7.180 after examining the relevant
United States documents pertaining to th e application of the measure.  See, supra , para. 124.
131United States' appellant's submission, para. 89.
132Ibid., para. 86. (original emphasis)WT/DS202/AB/R
Page 43
requirement by establishing a mechanism—a 9,000 ton exemption for each country—under which the
safeguard duty on imports could not possibly apply to any developing country Member accounting for
less than three percent of total imports. 133
127. We agree with the United States that Article 9.1 does not indicate how a Member must
comply with this obligation.  There is nothing, for exam ple, in the text of Article 9.1 to the effect that
countries to which the measure will not apply must be expressly excluded from the measure.Although the Panel may have a point in saying that it is "reasonable to expect" an express exclusion,we see nothing in Article 9.1 that requires one.
128. We agree also with the United States that it is possible to comply with Article 9.1 without
providing a specific list of the Members that are either included in, or excluded from, the measure.Although such a list could, and would, be both useful and helpful by providing transparency for thebenefit of all Members concerned, we see nothing in Article 9.1 that mandates one.
129. The United States argues as well that special attention should be paid to the word "apply" in
Article 9.1.  On this point, we start by observing that Article 9.1 obliges Members not to  apply  a
safeguard measure against  products  originating in developing countries whose individual exports are
below a  de minimis   level of three percent of the imports of that product, provided that the collective
import share of such developing countries does not account for more than nine percent of the totalimports of that product.  We believe the United States is correct insofar as it stresses the significanceof the word "applied" in Article 9.1.  However, we note that Article 9.1 is concerned with theapplication of a safeguard measure on a  product .  And we note, too, that a duty, such as the
supplemental duty imposed by the line pipe measure, does not need actually to be enforced and
collected to be "applied" to a product.  In our view, duties are "applied against a  product
 " when a
Member imposes conditions under which that product can enter that Member's market—includingwhen that Member establishes, as the United States did here, a duty to be imposed on over-quotaimports.  Thus, in our view, duties are "applied" irrespective of whether they result in making importsmore expensive, in discouraging imports because they become more expensive, or in preventingimports altogether.
130. The United States argues in its appellant's submission that it has complied with Article 9.1 by
structuring the safeguard duty "so that it  automatically  would not apply to developing countries
accounting for less than three percent of imports." 
134  On this basis, the United States argues that the
line pipe measure has not been "applied" to those developing countries with  de minimis   imports in
                                                     
133United States' appellant's submission, para. 86.
134Ibid. (emphasis added)WT/DS202/AB/R
Page 44
the United States.  But, according to the latest data available at the time the line pipe measure took
effect—data found in the Panel record and not disputed by the United States—the 9,000 short-tonexemption from the over-quota duty imposed by the line pipe measure did  not  represent three
percent of the total imports.  Rather, the exemption represented only 2.7 percent of total imports.
According to the evidence in the Panel record, an exemption of approximately 10,000 short tons
would have amounted at the time to a three-pe rcent exclusion.  The exemption applied by the
United States was, on the evidence, too small.
131. As we have already noted, the United States argued before the Panel that it "expected" the
measure would result in a decrease from the total volume of imports in 1998 and that, consequently,the general 9,000 short-ton exemption from the supplemental duty would satisfy the requirements ofArticle 9.1 because "any country reaching the 9000 ton limit of the exemption would account formore than three per cent of total imports." 
135  But expectations are not realized "automatically".  The
facts indicate that, when the measure was adopted, the 9,000 ton exclusion represented less than three
percent of total imports into the United States market.  The over-quota duty applied to imports that
exceeded the 9,000 short-ton exemption, irrespective of their origin.
132. As the Panel emphasized, too, the available documents reveal no effort whatsoever by the
United States—apart from the claimed "automatic" structure of the measure itself—to make certain
that  de minimis   imports from developing countries were excluded from the application of the
measure.  Whatever the "expectations" of the United States, we are not persuaded by the facts beforeus that the United States took all reasonable steps that it could and, thus, should have taken toexclude developing countries exporting less than the  de minimis   levels in Article 9.1 from the scope
and, therefore, the application of the supplemental duty.
133. For these reasons, we find that the line pipe measure has been applied against products
originating in those developing countries whose imports into the United States are below thede minimis   levels set out in Article 9.1.  And, consequently, we uphold the Panel's findings in
paragraphs 7.180 and 7.181 of its Report, that the United States acted inconsistently with itsobligations under Article 9.1 of the  Agreement on Safeguards .
                                                     
135Panel Report, para. 7.173.WT/DS202/AB/R
Page 45
VIII.  Necessity of a Discrete Determination Either of Serious Injury or of Threat of Serious
Injury
134. We turn now to the issue of whether the  Agreement on Safeguards   requires a discrete 136
determination  either   of serious injury  or  of threat of serious injury.
135. In applying the line pipe measure, the USITC determined that "circular welded carbon quality
line pipe … is being imported into the United States in such increased quantities as to be a substantialcause of  serious injury or the threat of serious injury ".
 137
136. With respect to this USITC determination, the Panel found:
… that the United States violated Articles 3.1 and 4.2(c) by failing to
include in its published report a finding or reasoned conclusion either
(1) that increased imports have caused serious injury, or (2) that
increased imports are threatening to cause serious injury. 138
137. The Panel decided that, when applying a safeguard measure, the fulfilment of the basic
conditions set out in Article 2.1 of the  Agreement on Safeguards   constitutes a "pertinent issue[] of …
law" for which, pursuant to Article 3.1, "findings" or "reasoned conclusions" must be included in the
published report of the competent authorities.  The Panel added that among those "issues" is the
condition that the "product" must be "imported … in such increased quantities, … and under suchconditions as  to cause or threaten to cause serious injury
 ". 139  Based on this, the Panel reasoned that
Article 3.1 requires WTO Members to include in their published reports findings or reasonedconclusions on whether increased imports have caused or threatened to cause serious injury.
 140  The
Panel concluded that this requirement cannot be met by a finding, such as that by the USITC in this
case, of "serious injury or the threat of serious injury". 141
138. The Panel reached this conclusion in part "as a result of the definitions" 142 of "serious injury"
and "threat of serious injury" contained in Articles 4.1(a) and 4.1(b), respectively.  Noting the
distinctions in these definitions, the Panel concluded that if "serious injury" is present, it cannot " at
                                                     
136Discrete determination means in this context a determination of serious injury only, or a
determination of threat of serious injury only.  By "d iscrete", it is meant, "separate, detached from others;
individually distinct". ( The New Shorter Oxford English Dictionary , L. Brown (ed.) (Clarendon Press, 1993),
Vol. I, p. 688)
137USITC Report, p. I-3. (emphasis added)
138Panel Report, para. 7.271.
139Ibid., para. 7.263. (emphasis added)
140Ibid.
141Ibid., para. 7.264.
142Ibid.WT/DS202/AB/R
Page 46
the same time " be "clearly imminent", as required to meet the definition of "threat of serious
injury". 143  Thus, the Panel saw these definitions as "mutually exclusive". 144
139. The Panel agreed with the United States that "the condition of the … industry is the
benchmark for application of a safeguard measure". 145  However, the Panel did not agree with the
United States that the definitions of "serious injury" and "threat of serious injury" "do not themselves
indicate the condition of the industry". 146  The Panel concluded that the two definitions "do indicate
the condition of the industry, as a result of the definitions … contained in Article 4.1(a) and (b)." 147
140. The Panel read Article 5.1 of the  Agreement on Safeguards   as reinforcing the conclusion that
"serious injury" and "threat of serious injury" are "mutually exclusive".  Observing that Article 5.1allows a Member to apply a safeguard measure "to prevent … serious injury", the Panel reasoned thatpreventing   serious injury presupposes a finding of  threat of serious injury .  Observing also that
Article 5.1 allows a Member to "remedy serious injury", the Panel reasoned that  remedying   serious
injury presupposes a finding of  serious injury .  The Panel reasoned further that, since Article 5.1 does
not allow Members to apply safeguard measures to " 'prevent and/or remedy serious injury', …
Members must clearly determine in advance whether there is either a threat of serious injury to be
prevented, or present serious injury to be remedied." 148
141. The Panel also saw Article 5.2 of the  Agreement on Safeguards   as supporting this
conclusion.  The Panel pointed out that Article 5.2(b) precludes quota modulation "in the case ofthreat of serious injury".  Thus, the Panel noted, "important substantive consequences result[] fromwhether a Member finds 'serious injury' or 'threat of serious injury'."
 149
142. The Panel reasoned as well that the inclusion of the phrase "in accordance with the provisions
of Article 3" in Article 4.2(c) implies that Article 4.2(c) should be read in the light of Article 3.1, and,
in particular, its last sentence.  Accordingly, the Panel concluded that the "detailed analysis" to bepublished under Article 4.2(c) should include the elements required by Article 3.1, last sentence,
                                                     
143Panel Report, para. 7.264.
144Ibid.
145Ibid., para. 7.266.
146Ibid.
147Ibid. (original underlining)
148Ibid., para. 7.267. (original underlining)
149Ibid., para. 7.268.WT/DS202/AB/R
Page 47
namely, "findings and conclusions reached on all pertinent issues of fact and law", including "a
finding and conclusion on whether there is  either   serious injury,  or  threat of serious injury." 150
143. In sum, the Panel concluded that a discrete determination  either   of serious injury  or  of a
threat of serious injury is necessary, and found that "the United States violated Articles 3.1 and 4.2(c)
by failing to include in its published report a finding or reasoned conclusion either (1) that increased
imports have caused serious injury, or (2) that increased imports are threatening to cause seriousinjury." 
151
144. On appeal, the United States claims that the Panel erred by concluding that the  Agreement on
Safeguards   requires a discrete—that is, a separate and distinct—finding  either   of serious injury  or
of threat of serious injury. 152
145. The United States argues that the USITC Report complied fully with the express requirements
of Article 3.1 of the  Agreement on Safeguards .  The United States points out that the USITC
Commissioners who made a determination of se rious injury and the USITC Commissioners who
made a determination of threat of serious injury fully explained their findings and conclusions.  The
United States argues that, by requiring a discrete determination  either   of serious injury  or  of threat
of serious injury, the Panel essentially read into Article 2.1 a substantive requirement that does notexist in the  Agreement on Safeguards .  The United States argues further that the Panel's decision is
not supported by the ordinary meaning of the terms of the  Agreement on Safeguards .  More
specifically, the United States submits that the word "or" connecting the two concepts in Article 2.1 isused in the  inclusive   sense, so that a finding either of serious injury, or of threat of serious injury, or
both, will satisfy this basic condition of Article 2.1.
 153
146. The United States further submits that the conditions of serious injury and threat of serious
injury are closely interrelated, and that neither Article XIX of the GATT 1994 nor the  Agreement on
Safeguards ,  except for the particular situation contemplated in Article 5.2(b) relating to quota
modulation, distinguishes between the procedural and substantive legal effects of the two conditions.According to the United States, the definitions of "serious injury" and "threat of serious injury" in theAgreement on Safeguards   describe two variations of the same basic condition.  As the United States
reads them, those definitions do not require a competent authority consisting of multiple decision-
                                                     
150Panel Report, para. 7.270. (emphasis added)
151Ibid., para. 7.271.
152United States' appellant's submission, para. 24.
153Ibid., para. 34.WT/DS202/AB/R
Page 48
makers—such as the USITC—to make a discrete finding  either   of serious injury  or  of threat of
serious injury. 154
147. The United States further stresses that the  Agreement on Safeguards   leaves entirely to
Members' discretion how they structure their competent authorities and the decision-making process
in safeguard investigations.  According to the United States, by construing the  Agreement on
Safeguards   to require a discrete finding by a competent authority either of serious injury or of threat
of serious injury, the Panel infringed unnecessarily on the manner in which the United States hasinternally structured the decision-making process of its competent authority.
 155
148. Korea replies that an interpretation of Articles 2.1 and 4.2(a) in accordance with the ordinary
meaning of the terms of those provisions, in their context and in the light of their object and purpose,supports the finding of the Panel.  In particular, Korea considers that the word "or" connecting theterms "cause" and "threaten to cause" in Article 2.1 has an  exclusive   meaning.
 156
149. Korea also submits that the Panel's finding is supported by the two separate definitions for
"serious injury" and "threat of serious injury" provided in Article 4.1.  Korea contends further that a
discrete finding of serious injury or threat of serious injury is also required because Article 5.2(b)establishes a distinction, be it procedural or substantive in effect, between a determination of seriousinjury and one premised on a threat of serious injury.  Finally, Korea concludes that the argument ofthe United States to the effect that the Panel's finding infringes on United States sovereignty byinterfering with how the United States has structured its internal decision-making process is irrelevantand should be rejected because a party may not invoke provisions of its internal law as a justificationfor its failure to perform a treaty.
 157
150. In addressing this issue, we begin by setting out the relevant treaty provisions.
                                                     
154United States' appellant's submission, para. 40.
155Ibid., paras. 10 and 47.
156Korea's appellee's submission, paras. 17 and 19.
157Ibid., paras. 21–26, 32 and 43.WT/DS202/AB/R
Page 49
151. Article 2.1 of the  Agreement on Safeguards   states:
Conditions
A Member may apply a safeguard measure to a product only if that
Member has determined, pursuant to the provisions set out below,
that such product is being imported into its territory in such increased
quantities, absolute or relative to domestic production, and under
such conditions as to cause or threaten to cause serious injury to the
domestic industry that produces like or directly competitive products.(footnote omitted)
152. Also, Article 3.1 of the  Agreement on Safeguards   provides:
Investigation
A Member may apply a safeguard measure only following an
investigation by the competent authorities of that Member pursuant
to procedures previously established and made public in consonance
with Article X of GATT 1994.  This investigation shall include
reasonable public notice to all interested parties and public hearingsor other appropriate means in which importers, exporters and other
interested parties could present evidence and their views, including
the opportunity to respond to the presentations of other parties and to
submit their views,  inter alia,  as to whether or not the application of
a safeguard measure would be in the public interest.  The competentauthorities shall publish a report setting forth their findings and
reasoned conclusions reached on  all pertinent issues of fact and law .
(emphasis added)
153. Further, Article 4.2(c) of the  Agreement on Safeguards   provides that the competent
authorities:
… shall publish promptly, in accordance with the provisions of
Article 3, a detailed analysis of the case under investigation as well
as a demonstration of the relevance of the factors examined.
154. We note, too, that paragraphs (a) and (b) of Article 4.1 provide definitions of "serious injury"
and "threat of serious injury":
Determination of Serious Injury or Threat Thereof
For the purposes of this Agreement:
(a) "serious injury" shall be understood to mean a significant
overall impairment in the position of a domestic industry;
(b) "threat of serious injury" shall be understood to mean serious
injury that is clearly imminent, in accordance with the
provisions of paragraph 2.  A determination of the existence
of a threat of serious injury shall be based on facts and not
merely on allegation, conjecture or remote possibility;  []WT/DS202/AB/R
Page 50
155. And we note also that there is a reference to "prevent or remedy serious injury" in Article 5.1,
first sentence, which provides:
A Member shall apply safeguard measures only to the extent
necessary to  prevent or remedy serious injury   and to facilitate
adjustment. (emphasis added)
156. The issue to be decided is whether, under these provisions of the  Agreement on Safeguards ,
the USITC was obliged to make a discrete determination  either   of serious injury  or  of threat of
serious injury.
157. We begin by noting that we are dealing here with the first of two basic inquiries that can
confront an interpreter of the  Agreement on Safeguards :  whether there is a right in a particular case
for a WTO Member to apply a safeguard measure.  Under the  Agreement on Safeguards ,  that right
exists only if certain conditions are met, and among those conditions is that, in the words ofArticle 2.1, a product must be "imported … in such increased quantities, absolute or relative todomestic 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." (emphasis added)  The crux of
this particular issue is:  what do the words "cause  or threaten to cause serious injury" mean with
respect to the determination that must be made by the competent authorities of a WTO Member as anecessary prerequisite  to establishing a right to apply a safeguard measure ?
158. We note also that we are not concerned with how the competent authorities of WTO Members
reach their determinations in applying safeguard measures.  The  Agreement on Safeguards   does not
prescribe the internal decision-making process for making such a determination.  That is entirely up toWTO Members in the exercise of their sovereignty.  We are concerned only with the determination
itself, which is a singular act for which a WTO Member may be accountable in WTO dispute
settlement.  It is of no matter to us whether that singular act results from a decision by one, onehundred, or—as here—six individual decision-makers under the municipal law of that WTO Member.What matters to us is whether the determination, however it is decided domestically, meets therequirements of the  Agreement on Safeguards .
159. With these considerations in mind, we turn to the Panel's reasoning and conclusions on this
issue.  As always in our treaty interpretation, we take the approach of the  Vienna Convention on the
Law of Treaties  (the " Vienna Convention ") and, thus, look first to the text of the treaty.  The principal
treaty provision at issue here is Article 2.1 of the  Agreement on Safeguards ,  which establishes the
"conditions" for applying a safeguard measure.  Those conditions include the requirement that a
"product is being imported" into the "territory" of  the Member that wishes to apply the safeguardWT/DS202/AB/R
Page 51
measure "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." (emphasis added)
160. We agree with the Panel that the fulfilment of the basic conditions set out in Article 2.1 is a
"pertinent issue[] of law" for which "finding[s]" or "reasoned conclusion[s]" must be included in the
published report of the competent authorities, as required by Article 3.1. 158  We agree with the Panel
also that among those "issues" is the condition that the "product" must be "imported … in suchincreased quantities, … and under such conditions as  to cause or threaten to cause serious injury ".
 159
161. But precisely what kind of "finding" on this "pertinent issue of law" must appear in the
published report of the competent authorities?  The question is:  s hould the phrase " cause or threaten
to cause " in Article 2.1 be read as "cause or threaten to cause" in the sense of either  one  ("cause")
or the other   ("threaten to cause"), but not both  ?  Or should this phrase be read rather as "cause or
threaten to cause" in the sense of  either one or the other, or both in combination   ("cause or threaten
to cause") ?
162. The crucial word in the text of this treaty provision is, thus, "or".  The Panel did not dwell, in
its reasoning, on the word "or".  Rather, pointing to the different definitions of "serious injury" and"threat of serious injury", the Panel found that "serious injury" and "threat of serious injury" are"mutually exclusive".
 160  As we previously explained, the Panel reached this conclusion by reasoning
that:
[s]ince "threat of serious injury" is defined as "serious injury that is
clearly imminent", necessarily "threat of serious injury" can onlyarise if serious injury is not present.  If serious injury is present, it
cannot at the same time be "clearly imminent".
 161
From this reasoning, and from the conclusion the Panel reached about what it saw as a requirement
for a discrete determination, it seems clear to us that the Panel considered that the phrase "cause orthreaten to cause" means  one or the other, but not both .  Korea submits that the Panel was right to do
so.  The United States submits that the Panel erred because, in the view of the United States, the word"or" connecting the terms "to cause" and "threaten to cause" in Article 2.1 is used in the inclusive
                                                     
158Panel Report, para. 7.271.
159Ibid., para. 7.263.
160Ibid., para. 7.264.
161Ibid.WT/DS202/AB/R
Page 52
sense.  If so, this would imply that the phrase "cause or threaten to cause" in Article 2.1, should be
read instead as  either one or the other , or both in combination .
163. Our view is that the phrase "cause or threaten to cause" can be read either way.  As we read it,
the dictionary definition of "or" supports either conclusion. The New Shorter Oxford English
Dictionary   provides several definitions of the word "or".  The dictionary definitions accommodate
both usages. 162  The New Shorter Oxford English Dictionary   recognizes that the word "or" can have
an inclusive meaning as well as an exclusive meaning.
164. Thus, "or" can be exclusive, and "or" can also be inclusive.  The text of Article 2.1 does not
provide decisive interpretative guidance in this respect.   This is not to say that we believe that "serious
injury" and "threat of serious injury" are the same thing, or that competent authorities may make afinding that both exist at the same time.  Rather, we believe that the text of Article 2.1 lends itself toeither interpretation.
165. As with every word of the Agreement, we mu st identify a proper meaning for this word.
Having found that the text of Article 2.1 is not determinative of the meaning of the word "or", we
must look to the context of this treaty provision for guidance in interpreting it.  In doing so, we mustconsider the provisions of the  Agreement on Safeguards   as a whole.
                                                     
162Supra , footnote 136, Vol. II, p. 2012, provides the following definition of "or":
or / A conj.   1  Introducing the second of two, or all but the first or only the
last of several, alternatives.  ME.  b  Introducing an emphatic repetition of a
rhetorical question.  colloq .  M20  2  Introducing the only remaining
possibility or choice of two or more quite different or mutually exclusivealternatives.  Freq. following either , *other , (in neg. contexts, colloq .)
neither .  ME.  3  Followed by or, as an alternative;  either.  Formerly also,
introducing alternative questions.  Now arch. & poet.  ME.  4  Introducing,
after a primary statement, a secondary alternative, or consequence of setting
aside the primary statement;  otherwise, else;  if not.  ME  5  Connecting
two words denoting the same thing, or introducing an explanation of apreceding word etc.;  otherwise called, that is.  ME.  6  Introducing a
significant afterthought, usu. in the form of a question, which casts doubt ona preceding assertion or assumption.  E20.
…
B  n. (Usu. OR.) Computing .  A Boolean operator which gives the value
unity if at least one of the operands is unity, and is otherwise zero.  Usu.
attrib .  M20.
inclusive OR  = sense B. above.  exclusive OR  a function that has the value
unity if at least one, but not all, of the variables are unity.
C v.t. (Usu. OR.) Computing .  Combine using a Boolean OR operator.
Chiefly ass ORed  ppl a. L20.WT/DS202/AB/R
Page 53
166. As the Panel rightly observes, Article 4.1 is part of the context of Article 2.1.  Indeed, we see
Article 4.1 as the most relevant context to the phrase "cause or threaten to cause" in Article 2.1,because Article 4.1 provides two different definitions of terms that are crucial to the interpretation ofthat phrase in Article 2.1—"serious injury" and "threat of serious injury".  Paragraph (a) of Article 4.1
defines "serious injury" as "a significant overall impairment in the position of a domestic industry".
Paragraph (b) of Article 4.1 defines "threat of serious injury" as "serious injury that is clearlyimminent …".  In  US – Lamb ,  we clarified the meaning of the term "threat of serious injury".  We
recognized there that "serious injury" and "threat of serious injury" are different and distinct, as theyrefer to different moments in time.  We explained:
Returning now to the term " threat   of serious injury", we note that
this term is concerned with "serious injury" which has  not  yet
occurred, but remains a future event whose actual materialization
cannot, in fact, be assured with certainty.  We note, too, that Article
4.1(b) builds on the definition of "serious injury" by providing that,in order to constitute a "threat", the serious injury must be " clearly
imminent ".  The word "imminent" relates to the moment in time
when the "threat" is likely to materialize.  The use of this word
implies that the anticipated "serious injury" must be on the very
verge of occurring.  Moreover, we see the word "clearly", which
qualifies the word "imminent", as an indication that there must be a
high degree of likelihood that the anticipated serious injury willmaterialize in the very near future.  We also note that Article 4.1(b)
provides that any determination of a threat of serious injury "shall be
based on facts and not merely on allegation, conjecture or  remote
possibility ." (emphasis added)  To us, the word "clearly" relates also
to the  factual   demonstration of the existence of the "threat".  Thus,
the phrase "clearly imminent" indicates that, as a matter of fact, it
must be manifest that the domestic industry is on the brink of
suffering serious injury.
 163 (original emphasis)
167. For these reasons, we agree with the Panel that the respective definitions of "serious injury"
and "threat of serious injury" are two distinct concepts that must be given distinctive meanings in
interpreting the  Agreement on Safeguards .  Yet, although we agree with the Panel that the  Agreement
on Safeguards   establishes a distinction between "serious injury" and "threat of serious injury", we do
not agree with the Panel that a requirement follows from such a distinction to make a discrete findingeither of "serious injury" or of "threat of serious injury" when making a determination relating to theapplication of a safeguard measure.
168. As we see it, these two definitions reflect the reality of how injury occurs to a domestic
industry.  In the sequence of events facing a domestic industry, it is fair to assume that, often, there isa continuous progression of injurious effects eventually rising and culminating in what can be                                                     
163Appellate Body Report, supra , footnote 38, para. 125.WT/DS202/AB/R
Page 54
determined to be "serious injury".  Serious injury does not generally occur suddenly.  Present serious
injury is often preceded in time by an injury that threatens clearly and imminently to become serious
injury, as we indicated in  US – Lamb . 164  Serious injury is, in other words, often the realization of a
threat of serious injury.  Although, in each case, the investigating authority will come to the
conclusion that follows from the investigation carried out in compliance with Article 3 of the
Agreement on Safeguards ,  the precise point where a "threat of serious injury" becomes "serious
injury" may sometimes be difficult to discern.  But, clearly, "serious injury" is something  beyond   a
"threat of serious injury".
169. In our view, defining "threat of serious injury" separately from "serious injury" serves the
purpose of setting a  lower threshold   for establishing the  right   to apply a safeguard measure.  Our
reading of the balance struck in the  Agreement on Safeguards   leads us to conclude that this was done
by the Members in concluding the Agreement so that an importing Member may act sooner to takepreventive action when increased imports pose a "threat" of "serious injury" to a domestic industry,
but have not yet caused "serious injury".
 165  And, since a "threat" of "serious injury" is defined as
"serious injury" that is "clearly imminent", it lo gically follows, to us, that "serious injury" is a
condition that is above that  lower threshold   of a "threat".  A "serious injury" is  beyond   a "threat",
and, therefore, is  above   the threshold of a "threat" that is required to establish a right to apply a
safeguard measure.
170. We emphasize that we are dealing here with the first of two inquiries we have previously
mentioned that must be conducted by an interpreter of the  Agreement on Safeguards : 166  whether
there is a right in a particular case to apply a safeguard measure.  The question at issue is whether the
right exists in this particular case.  And, as the right exists if there is a finding by the competent
authorities of a "threat of serious injury" or—something  beyond —"serious injury", then it seems to us
that it is irrelevant,  in determining whether the right exists ,  if there is "serious injury" or only "threat
of serious injury"—so long as there is a determination that there is  at least   a "threat".  In terms of the
rising continuum of an injurious condition of a domestic industry that ascends from a "threat ofserious injury" up to "serious injury", we s ee "serious injury"—because it is something  beyond   a
"threat"—as necessarily  including  the concept of a "threat" and  exceeding   the presence of a "threat"
for purposes of answering the relevant inquiry:  is there a right to apply a safeguard measure?
                                                     
164Appellate Body Report, supra , footnote 38, para. 125.
165During the negotiations on the  Agreement on Safeguards ,  a delegation participating in the
Negotiating Group on Safeguards commented that "if a threat of injury could no longer be a justification for
action under Article XIX, the result would probably be an expansion of the scope and trade effect of safeguard
actions." (Negotiating Group on Safeguards, MTN.GNG/NG9/3/Add.1, 17 November 1987, p. 2)
166Supra , para. 84.WT/DS202/AB/R
Page 55
171. Based on this analysis of the most relevant context of the phrase "cause or threaten to cause"
in Article 2.1, we do not see that phrase as necessarily meaning  one or the other, but not both .
Rather, that clause could also mean  either one or the other, or both in combination .  Therefore, for
the reasons we have set out, we do not see that it matters—for the purpose of determining whether
there is a right to apply a safeguard measure under the  Agreement on Safeguards— whether a
domestic authority finds that there is "serious inju ry", "threat of serious injury", or, as the USITC
found here, "serious injury or threat of serious injury".  In any of those events, the right to apply asafeguard is, in our view, established.
172. We disagree with the Panel that a requirement of a discrete determination of serious injury or
threat of serious injury results from the language of Article 5.1.
 167  The Panel's finding is based on the
assumption that the permissible extent of the measure depends upon one of two objectives:  either ofpreventing the threat of future injury, or of reme dying present injury.  As we explain later in this
Report, the permissible extent of a safeguard measure is defined by the share of serious injury that is
attributed to increased imports, not by the characterization the competent authority ascribes to the
situation of the industry.  For this reason, we be lieve the Panel's reasoning on Article 5.1 does not
resolve or, in fact, pertain to the issue raised in this appeal relating to the textual interpretation ofArticle 2.1.
173. Further, we disagree with the support the Panel finds for its conclusions on this issue in the
context of Article 5.2(b) of the  Agreement on Safeguards .  Article 5.2(b) excludes quota modulation
in the case of threat of serious injury.  It is, in our view, the only provision in the  Agreement on
Safeguards   that establishes a difference in the legal effects of "serious injury" and "threat of serious
injury".  Under Article 5.2(b), in order for an im porting Member to adopt a safeguard measure in the
form of a quota to be allocated in a manner departing from the general rule contained in Article 5.2(a),that Member must have determined that there is "serious injury".  A Member cannot engage in quotamodulations if there is only a "threat of serious injury".  This is an exception that must be respected.But we do not think it appropriate to generalize from such a limited exception to justify a general rule.In any event, this exceptional circumstance is not relevant to the line pipe measure.  We find nothingin Article 5.2(b), viewed as part of the context of  Article 2.1, that would support a finding that, in this
case, the USITC acted inconsistently with the  Agreement on Safeguards   by making a non-discrete
determination in this case.
                                                     
167Panel Report, para. 7.267.WT/DS202/AB/R
Page 56
174. Following the  Vienna Convention   approach, we have also looked to the GATT  acquis   and
to the relevant negotiating history of the pertinent treaty provisions.  We have concluded that our viewis reinforced by the jurisprudence under the GATT 1947.  In the only relevant GATT 1947 case,Report on the Withdrawal by the United States of a Tariff Concession under Article XIX of the
General Agreement on Tariffs and Trade  ("US – Fur Felt Hats
 ") 168, the Working Party established
under the GATT 1947 was required to assess the consistency of a safeguard measure with Article XIXof the GATT 1947.  The Working Party concluded that the available data presented supported theview "that increased imports had caused or thr eatened some adverse effect to United States
producers." 
169  We note that the Working Party conducted a single analysis based on the presence of
serious injury or threat of serious injury, and that it did not consider it necessary to make a discretedetermination of serious injury or of threat of serious injury.
 170  The question of a discrete
determination apparently was not an issue in that case.
175. We also note that the negotiating history of Article XIX of the GATT 1947 and of the
Agreement on Safeguards   does not provide guidance as to whether the Members intended to establish
a requirement of a discrete determination of serious injury or of threat of serious injury. 171
                                                     
168Working Party Report, GATT/CP/106, adopted 22 October 1951.
169Ibid., para. 30.
170Ibid., paras. 13–30.
171As regards Article XIX of the GATT 1947, this provision was discussed during the four negotiation
rounds that took place between 1946 and 1948 and which formed the basis of the Havana Charter.  First, at the
London 1946 negotiations, a Committee was set up specifically to deal with issues of general commercial policy(Committee II).  At the end of these negotiations, the Committee produced a draft provision on EmergencyAction on Imports of Particular Products (United Nations Economic and Social Council, Preparatory Committeeof the International Conference on Trade and Employment, "General Commercial Policy (Restrictions,
Regulations and Discriminations)", Report of Committee II, E/PC/T/30, 24 November 1946, Appendix);
second, negotiations on safeguard rules continued during the course of the Lake Success meetings in early 1947
(see, inter alia , United Nations Economic and Social Council, Drafting Committee of the Preparatory
Committee of the United Nations Conference on Trade and Employment, Summary Record of the TenthMeeting held on 31 January 1947, E/PC/T/C.6/29);  third, safeguard rules were addressed at the Geneva
negotiations in 1947 (see, inter alia , United Nations Economic and Social Council, Second Session of the
Preparatory Committee of the United Nations Conference on Trade and Employment, Commission A, SummaryRecord of the Eleventh Meeting held on 11 June 1947, E/PC/T/A/SR/11;  United Nations Economic and SocialCouncil, Second Session of the Preparatory Committee of the United Nations Conference on Trade andEmployment, Commission A, Summary Record of the 35th Meeting held on 11 August 1947, E/PC/T/A/SR/35;United Nations Economic and Social Council, Second Session of the Preparatory Committee of the United
Nations Conference on Trade and Employment, (Draft) Ge neral Agreement on Tariffs and Trade, E/PC/T/189,
30 August 1947;  and United Nations Economic and Social Council, Second Session of the PreparatoryCommittee of the United Nations Conference on Trade and Employment, Verbatim Report, Twenty-eighthMeeting of the Tariff Agreement Committee held on 24 September 1947, E/PC/T/TAC/PV/28);  and finally, the
Havana negotiations addressed emergency action such as safeguard rules between November 1947 and March1948 (see, inter alia , United Nations Conference on Trade and Employment, Third Committee : Commercial
Policy, Summary Record of the Seventeenth Meeting (III.a) held on 22 December 1947, E/CONF.2/C.3/SR.17;
United Nations Conference on Trade and Employment, Third Committee : Commercial Policy, Report of Sub-Committee D on Articles 40, 41 and 43, E/CONF.2/C.3/37, 28 January 1948;  and United Nations Conferenceon Trade and Employment, Third Committee : Commercial Policy, Summary Record of the Thirty-secondWT/DS202/AB/R
Page 57
176. However, we wish to emphasize that every safeguard measure must comply with Article 5.1,
first sentence, of the  Agreement on Safeguards .  A safeguard measure must be applied "only to the
extent necessary to prevent or remedy serious injury and to facilitate adjustment."  As we explain laterin this Report, the extent of the remedy permitted by Article 5.1, first sentence, is not determined by
the characterization in the determination of the situation of the industry as "serious injury" or "threat
of serious injury", but by the extent to which that  "serious injury" or "threat of serious injury" has
been caused by increased imports.  This will be so regardless of the characterization used in thedetermination of the competent authorities of the WTO Member when applying a measure—whetherit be "serious injury", "threat of serious injury", or, as here, "serious injury or the threat of seriousinjury".
177. Thus, on this issue, we reverse the finding of the Panel in paragraph 7.271 of the Panel Report
that there is a requirement of a discrete determination either of serious injury or of threat of seriousinjury under the  Agreement on Safeguards .
                                                                                                                                                                    
Meeting held on 5 February 1948, E/CONF.2/C.3/SR.32).  The reference to the term "cause or threaten [to
cause] serious injury" appeared as early as in the draft produced by Committee II. (United Nations Economicand Social Council, Preparatory Committee of the International Conference on Trade and Employment,
"General Commercial Policy (Restrictions, Regulati ons and Discriminations)", Report of Committee II,
E/PC/T/30, 24 November 1946, Appendix)  However, the record of those four negotiations does not indicatethat the issue of the requirement of a discrete determination was expressly raised.
During the Uruguay Round, the negotiations on safeguards took place within the framework of the
Negotiating Group on Safeguards.  The early documents prepared by the Negotiating Group on Safeguardssuggest that the participants wanted the terms "serious inju ry" and "threat of serious injury" to be clarified in the
course of the Uruguay Round. (Negotiating Group on Safeguards, "Work Already Undertaken in the GATT on
Safeguards", Note by the Secretariat, MTN.GNG/NG9/W/1 , 7 April 1987, which describes some of the main
points raised in past negotiations and discussions, both formal and informal, on elements enumerated in theMinisterial Declaration on the Uruguay Round)  At an early stage of the negotiations, a proposal supported byBrazil and Egypt to allow for safeguard measures only in  case of "serious injury" was set aside. (Negotiating
Group on Safeguards, MTN.GNG/NG9/W/3, 25 May 1987;  Negotiating Group on Safeguards,
MTN.GNG/NG9/W/9, 5 October 1987;  Negotiating Group on Safeguards, MTN.GNG/NG9/3/Add.1,17 November 1987)  In June 1989, the Chairman of the Negotiating Group on Safeguards presented a first drafttext where "serious injury" was defined as "a severe or  critical overall deterioration in the position of domestic
producers responsible for at least a major proportion of the domestic production of like products or directlycompetitive products" whereas "threat of serious injury" wa s defined as "serious injury that is clearly imminent
and is demonstrated to be a virtual certainty." (Negotiating Group on Safeguards, MTN.GNG/NG9/W/25,
27 June 1989)
After several discussions and revisions a final revised draft was submitted in October 1990.  This draft
further defined "serious injury" as "a significant overall impairment in the position of a domestic industry",
whereas "threat of serious injury" was defined as "serious injury that is clearly imminent …". (NegotiatingGroup on Safeguards, MTN.GNG/NG9/W/25/Rev.3, 31 Oc tober 1990)  This proposal evolved into the
definitions of "serious injury" and "threat of serious injury" contained in Article 4 of the  Agreement on
Safeguards .  Although the Negotiating Group on Safeguards spent much effort on the clarification of the terms
"serious injury" and "threat of serious injury", its deliberations do not provide guidance as to whether thedistinct definitions of "serious injury" and "threat of serious injury" imply a requirement of a discrete finding.WT/DS202/AB/R
Page 58
IX. "Parallelism" Between the Investigation and the Application of the Line Pipe Measure
178. We turn now to the issue of parallelism between  the investigation and the application of the
line pipe measure.
179. The concept of parallelism is derived from the parallel language used in the first and second
paragraphs of Article 2 of the  Agreement on Safeguards .  Article 2 provides as follows:
Conditions
1. A Member1 may apply a safeguard measure to a product only
if that Member has determined, pursuant to the provisions set out
below, that such product is being imported into its territory in such
increased quantities, absolute or relative to domestic production, andunder such conditions as to cause or threaten to cause serious injury
to the domestic industry that produces like or directly competitive
products.
2. Safeguard measures shall be applied to a product being
imported irrespective of its source.
1A customs union may apply a safeguard measure as a single unit or
on behalf of a member State.  When a customs union applies a safeguard
measure as a single unit, all the requirements for the determination ofserious injury or threat thereof under this Agreement shall be based on theconditions existing in the customs union as a whole.  When a safeguard
measure is applied on behalf of a member State, all the requirements for the
determination of serious injury or threat thereof shall be based on theconditions existing in that member State and the measure shall be limited tothat member State.  Nothing in this Agreement prejudges the interpretationof the relationship between Article XIX and paragraph 8 of Article XXIV ofGATT 1994.
180. In  US – Wheat Gluten ,  we explained:
The same phrase – "product … being imported" – appears in  both
… paragraphs of Article 2.  In view of the identity of the language in
the two provisions, and in the absence of any contrary indication in
the context, we believe that it is appropriate to ascribe the  same
meaning to this phrase in both Articles 2.1 and 2.2.  To include
imports from all sources in the determination that increased imports
are causing serious injury, and then to exclude imports from one
source from the application of the measure, would be to give thephrase "product being imported" a  different  meaning in Articles 2.1
and 2.2 of the  Agreement on Safeguards .  In Article 2.1, the phrase
would embrace imports from  all  sources whereas, in Article 2.2, it
would exclude imports from certain sources.  This would be
incongruous and unwarranted.
 172 (original emphasis)
                                                     
172Appellate Body Report, supra , footnote 39, para. 96 .WT/DS202/AB/R
Page 59
181. As we then stated in  US – Wheat Gluten ,  "the imports included in the determinations made
under Articles 2.1 and 4.2 should correspond to the imports included in the application of themeasure, under Article 2.2." 
173  We added that a gap between imports covered under the investigation
and imports falling within the scope of the measure can be justified only if the competent authorities
"establish explicitly" that imports from sources covered by the measure "satisf[y] the conditions for
the application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2 of theAgreement on Safeguards ." 
174  And, as we explained further in  US – Lamb ,  in the context of a claim
under Article 4.2(a) of the  Agreement on Safeguards ,  "establish[ing] explicitly" implies that the
competent authorities must provide a " reasoned and adequate explanation   of how the facts support
their determination". 175
182. Before the Panel, Korea claimed that the United States violated Articles 2 and 4 of the
Agreement on Safeguards   by including Canada and Mexico in the USITC analysis of serious injury
but by excluding Canada and Mexico from the application of the safeguard measure.
183. In response to this claim by Korea, the Panel stated:
… we would only be in a position to  uphold Korea's Claim 7 if it had
established a prima facie case that the United States had excluded
imports from Canada and Mexico from the line pipe measure,
without establishing explicitly that imports from sources other than
Canada and Mexico satisfied the conditions for the application of a
safeguard measure.  To do so, at a minimum Korea would have hadto specifically address, and rebut, the contents of note 168.  We recall
that Korea has made no attempt to do this.  Instead, Korea limited
itself to arguing that note 168 has no legal significance, without
making any attempt to substantiate that argument.  On balance,
therefore, and particularly in light of the contents of note 168, we are
unable to find that Korea has established a prima facie case that the
United States "also violated Articles 2 and 4 of the Agreement onSafeguards by including Mexico and Canada in the analysis of
injurious imports but by excluding Mexico and Canada from the
application of the safeguard measure."  We therefore reject Korea's
Claim 7. 
149
149 In doing so, we do not find that note 168 is sufficient for the
purposes of Articles 2.1 and 4.1.  We merely find that Korea has failed to
establish a prima facie case that the United States violated those
provisions. 176
                                                     
173Appellate Body Report, supra , footnote 39, para. 96.
174Ibid., para. 98.
175Appellate Body Report, supra , footnote 38, para. 103. (original emphasis)
176Panel Report, para. 7.171 and footnote 149 thereto.WT/DS202/AB/R
Page 60
184. Korea appeals this finding.  Korea submits that the Panel imposed a "flawed standard" 177 for
the establishment of a  prima facie  case, committed a "serious error" 178 in its treatment of arguments
and evidence submitted by the parties, and introduced an "arbitrary and flawed" 179 minimum
condition for Korea to establish a  prima facie  case.
185. The United States replies that the Panel correctly found that Korea failed to establish a
prima facie  case of inconsistency with the obligation th at the imports included in the determination
made under Articles 2.1 and 4.2 should correspond to the imports included in the application of themeasure under Article 2.2.  The United States submits that Korea did not demonstrate that the USITCfailed to perform an injury analysis specific to  imports from non-NAFTA sources.  According to the
United States, despite the undisputed existence of an exhaustive discussion of the relevant data onimports from sources other than Canada and Mexico in footnote 168 of the USITC Report, Korea'sclaim rests on the bare assertion that the USITC non-NAFTA analysis has "no legal significance." 
180
The United States contends that the Panel was correct in rejecting this assertion, and in finding that
footnote 168 clearly formed part of the USITC's published determination and contained findings by
the USITC.
186. We observe that the USITC described the scope of its investigation by identifying the product
according to its tariff heading and commercial characteristics 181, with no reference to product origin.
The USITC considered "imports from  all sources  in determining whether imports have increased" 182
and relied on data corresponding to total imports. 183  In considering the injurious effects of increased
imports on the United States domestic industry, the USITC examined the share of the domesticmarket held by United States producers compared to the market share held by imports from all
sources.
 184  When performing its causation analysis, the USITC assessed increased imports 185 and
found that "the surge in imports and consequent shift in market share from the domestic industry toimports occurred at the same time that the domestic industry went from healthy performance to poorperformance." 
186  This conclusion and the preceding analysis of increased imports were based on data
                                                     
177Korea's other appellant's submission, para. 70.
178Ibid., para. 9.
179Ibid., para. 101.
180United States' appellee's submission, para. 70.
181USITC Report, p. I-3, footnote 1.
182Ibid., p. I-14. (emphasis added)
183Ibid., footnote 62, referring to data contained in Table C-1.
184Ibid., p. I-18, footnotes 98–100.
185Ibid., pp. I-23 ff.
186Ibid., p. I-24, third para. and footnotes 145–147.WT/DS202/AB/R
Page 61
contained in Table C-1 of the USITC Report, which includes imports from all sources.  It is clear,
therefore, that, in its investigation, the USITC considered imports from  all sources ,  including
imports from Canada and Mexico.  Nevertheless, exports from Canada and Mexico were excludedfrom the safeguard measure at issue.  Therefore,  there is a gap between imports covered under the
investigation performed by the USITC and imports falling within the scope of the measure.
187. In our view, Korea has demonstrated that the USITC considered imports from all sources in
its investigation.  Korea has also shown that exports from Canada and Mexico were excluded from thesafeguard measure at issue.  And, in our view, this  is  enough to have made a  prima facie   case of the
absence of parallelism in the line pipe measure.  Contrary to what the Panel stated 
187, we do not
consider that it was necessary for Korea to address the information set out in the USITC Report, or inparticular, in footnote 168 in order to establish a  prima facie   case of violation of parallelism.
Moreover, to require Korea to rebut the information in the USITC Report, and in particular, infootnote 168, would impose an impossible burden on Korea because, as the exporting country, Korea
would not have had any of the relevant data  to conduct its own analysis of the imports.
188. Having determined that Korea did establish a  prima facie   case of violation of parallelism of
the line pipe measure, we now examine whether the United States rebutted Korea's argument.  To doso, it would be necessary for the United States to  demonstrate, consistent with our ruling in  US –
 Wheat Gluten ,  that the USITC provided a  reasoned and adequate explanation  that
establishes explicitly   that imports from non-NAFTA sources "satisfied the conditions for the
application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2 of theAgreement on Safeguards ." 
188
189. Before the panel and on appeal, the United States has relied on footnote 168 of the USITC
Report.  In the oral hearing in this appeal, the United States stressed footnote 168, which reads, in itsentirety, as follows:
                                                     
187Panel Report, para. 7.171.
188Appellate Body Report, US – Wheat Gluten , supra , footnote 39, para. 98.WT/DS202/AB/R
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We note that we would have reached the same result had we
excluded imports from Canada and Mexico from our analysis.
Imports from non-NAFTA sources increased significantly over the
period of investigation, in absolute terms and as a percentage of
domestic production.  Non-NAFTA imports fell from *** tons in1994 to *** tons in 1996, but then rose sharply to *** tons in 1997
and *** tons in 1998.  While non-NAFTA imports fell from *** tons
in interim 1998 to *** tons in interim 1999, they remained at a very
high level in interim 1999, exceeding in just 6 months the level of
full year 1995 and 1996 imports.  These imports also increased
significantly in terms of market share at the end of the period of
investigation, rising from *** percent in 1996 to *** percent in 1998,and from *** percent in interim 1998 to *** percent in interim 1999.
Moreover, the non-NAFTA imports were among the lowest-priced
imports.  Except for 1994, the average unit value of imports from
Canada exceeded the average import unit value throughout the period
of investigation, and the volume of imports was relatively small.  Theaverage unit value of imports from Mexico exceeded the average for
all imports in 1998 and interim 1999, the period in which the serious
injury occurred, and the volume of imports from Mexico declined
during this period.  Moreover, in the 244 possible product-specific
price comparisons, non-NAFTA imports undersold domestic linepipe in 194 instances (about 80 percent), and Korean product
accounted for by far the largest number of instances of underselling
(95 of the 194).  Data are based on those in Table C-1 adjusted to
exclude certain imports of Arctic-grade and alloy line pipe.
 189
190. The Panel examined footnote 168 and concluded that:
… note 168 contains  a finding  by the ITC that imports from non-
NAFTA sources increased significantly over the period of
investigation, in absolute terms and as a per centage of domesticproduction.  Note 168 also contains  the basis for a finding  that non-
NAFTA [imports] caused serious injury to the relevant domestic
industry.
 190 (emphasis added)
191. On appeal, Korea argues that the first sentence of footnote 168 indicates that the USITC was
not in a position to  assert   that the result of its investigation would remain "the same" if imports from
Canada and Mexico were excluded.  In Korea's view, the USITC Report is drafted in conditional
terms:  "we  would  have reached the same result  had  we excluded imports from Canada and
Mexico from our analysis." 191  As a consequence, according to Korea, "the footnote has no legal
significance." 192
                                                     
189USITC Report, pp. I-26 and I-27.
190Panel Report, para. 7.170.
191USITC Report, p. I-26, footnote 168. (emphasis added)
192Korea's other appellant's submission, paras. 102 and 108.WT/DS202/AB/R
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192. The flaw in Korea's argument is that the first sentence of footnote 168 is followed by
language indicating that the USITC did, in fact, as the Panel found, consider whether "[i]mports fromnon-NAFTA sources increased significantly over the period of investigation".  Consequently, we donot agree with Korea that the conditional nature of the first sentence of footnote 168 invalidates the
whole footnote and, thus, renders it void of "legal si gnificance".  What we must determine, then, is
whether, as the United States submits, footnote 168 satisfies the requirement of parallelism.
193. As the Panel put it, footnote 168 has two elements:  a " finding " that imports from non-
NAFTA sources increased significantly over  the period of investigation, and the " basis for a finding
 "
that imports from non-NAFTA sources caused serious injury 193 to the relevant domestic industry.
194. Although footnote 168 contains a determinat ion that imports from non-NAFTA sources
increased significantly, footnote 168 does not, as we read it, establish  explicitly   that increased
imports from non-NAFTA sources alone caused serious injury or threat of serious injury.  Nor doesfootnote 168, as we read it, provide a  reasoned and adequate explanation   of how the facts would
support such a finding.  To be explicit, a statement must express distinctly all that is meant;  it must
leave nothing merely implied or suggested;  it must be clear and unambiguous.
195. Footnote 168 does not express distinctly or state clearly and unambiguously how the facts
would support a finding by the USITC that imports  from non-NAFTA sources alone caused serious
injury or threat of serious injury.  Footnote 168 may, as the Panel found, provide a basis for a findingthat imports from non-NAFTA sources, alone, caused serious injury, but this is not enough.Footnote 168 does not establish explicitly that imports from sources covered by the measure "satisf[y]the conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in
Article 4.2 of the  Agreement on Safeguards ."  Footnote 168 does not amount to a " reasoned and
adequate explanation   of how the facts support [the] determination."  Therefore, by referring to
footnote 168, the United States did not rebut the  prima facie   case made by Korea.
196. During the oral hearing, in response to our questioning, the United States referred also to
other parts of the USITC Report addressing the imports from NAFTA countries 
194, and contended
that those parts established explicitly that imports from sources covered by the line pipe measuresatisfied the conditions for the application of the measure.  We have read those pages of the USITCReport with this contention of the United States in mind.  We find that those pages of the USITC
Report likewise do not establish explicitly, through a reasoned and adequate explanation, that
                                                     
193Panel Report, para. 7.170.
194United States' response to questioning at the oral hearing.  See, USITC Report, pp. I-32–I-35 and
I-51–I-54.WT/DS202/AB/R
Page 64
increased imports from non-NAFTA sources by themselves caused serious injury or threat of serious
injury.  Therefore, those pages of the USITC Report do not rebut the  prima facie   case made by
Korea.
197. Therefore, we reverse the Panel's finding in paragraph 7.171 of the Panel Report, that Korea
has not established a  prima facie   case of the absence of parallelism in the line pipe measure.  And,
we find that the United States has violated Articles 2 and 4 of the  Agreement on Safeguards   by
including Canada and Mexico in the analysis of whether increased imports caused or threatened tocause serious injury, but excluding Canada and Mexico from the application of the safeguardmeasure, without providing a reasoned and adequate explanation that establishes explicitly thatimports from non-NAFTA sources by themselves satisfied the conditions for the application of asafeguard measure.
198. In doing so, we do not prejudge whether Article 2.2 of the  Agreement on Safeguards  permits
a Member to exclude imports originating in member states of a free-trade area from the scope of a
safeguard measure.  We need not, and so do not, rule on the question whether Article XXIV of the
GATT 1994 permits exempting imports originating in a partner of a free-trade area from a measure in
departure from Article 2.2 of the  Agreement on Safeguards .
 195  The question of whether Article
XXIV of the GATT 1994 serves as an exception to Article 2.2 of the  Agreement on Safeguards
becomes relevant in only two possible circumstance s.  One is when, in the investigation by the
competent authorities of a WTO Member, the imports that are exempted from the safeguard measureare not considered   in the determination of serious injury.  The other is when, in such an investigation,
the imports that are exempted from the safeguard measure  are considered   in the determination of
serious injury,  and  the competent authorities have  also  established explicitly, through a reasoned
and adequate explanation, that imports from sources outside the free-trade area, alone, satisfied theconditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated inArticle 4.2.  The first of these two possible circumstances does not apply in this case;  it is  not  the
case here that the imports that were exempted from the line pipe measure—those from Canada andMexico—were  not  considered in the determination of serious injury.  It is undisputed that they were
so considered.  The second of these two possible circumstances also does not apply in this case.  Thecompetent authority—in this case, the USITC—has not provided in its determination a  reasoned and
adequate explanation   that "establish[es] explicitly" that  imports from non-NAFTA sources satisfied
the conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in
Article 4.2 of the  Agreement on Safeguards .
                                                     
195In this respect, we recall that Korea appeals several of the Panel's findings referring to the
relationship between Article XXIV of the GATT 1994 and the  Agreement on Safeguards . WT/DS202/AB/R
Page 65
199. Given these conclusions, we need not address the question whether an Article XXIV defence
is available to the United States.  Nor are we required to make a determination on the question of therelationship between Article 2.2 of the  Agreement on Safeguards   and Article XXIV of the
GATT 1994.  We, therefore, modify the findings and conclusions of the Panel relating to these two
questions contained in paragraphs 7.135 to 7.163 and in paragraph 8.2(10) of the Panel Report by
declaring them moot and as having no legal effect.
X. Non-Attribution of the Injurious Effects of Other Factors to Increased Imports
200. We turn now to the issue of whether the United States met the non-attribution requirement of
Article 4.2(b) of the  Agreement on Safeguards .
201. Article 4.2(b) of the  Agreement on Safeguards   provides as follows:
Determination of Serious Injury or Threat Thereof
The determination referred to in subparagraph (a) shall not be made
unless this investigation demonstrates, on the basis of objectiveevidence, the existence of the causal link between increased imports
of the product concerned and serious injury or threat thereof.  When
factors other than increased imports are causing injury to the
domestic industry at the same time, such injury shall not be attributed
to increased imports.
202. Before the Panel, Korea argued that the USITC violated Article 4.2(b) by failing to
demonstrate properly that injury 
196 caused by other factors had not been attributed to increased
imports.  Korea asserted that the USITC did not properly distinguish the injurious effects caused by
the other factors from the injurious effects of increased imports, with the result that the USITC was
not able to assure that it did not attribute injury caused by other factors to increased imports.
203. The United States replied that the USITC properly distinguished the effects of other factors
from the effects of increased imports.  In particular, the USITC examined six factors other thanincreased imports, as the possible contributing causes of serious injury.  Although the USITC foundthat one other causal factor, declining demand in the oil and gas sector, contributed to the seriousinjury experienced by the domestic industry, the USITC also found that the impact of increased
imports was as great or greater than the effect of the downturn in oil and gas sector demand.
                                                     
196In this section, in order to facilitate reading, we mean "serious injury or threat of serious injury" even
where we refer only to "serious injury" or "injury".  Despite the absence of the notion of threat in the second
sentence of Article 4.2(b), the non-attribution requirement also applies to the causes of threat of serious injury.
See, Appellate Body Report, US – Lamb , supra , footnote 38, para. 179.WT/DS202/AB/R
Page 66
204. The Panel found that:
… the ITC in its report did not adequately explain how it ensured that
injury caused to the domestic industry by factors other than increasedimports was not attributed to increased imports.  For this reason, we
find that the United States acted inconsistently with Article 4.2(b) of
the Safeguards Agreement.
 197
205. The United States appeals the Panel's finding on Article 4.2(b).  The United States submits
that the Panel's finding is flawed because it rests on the theory that the USITC, by determining
whether injury caused by any other factor is not greater than the injury caused by the increased
imports, was performing a causation analysis which the Panel ruled "was inherently inconsistent withArticle 4.2(b)." 
198  In addition, the United States argues that, in the course of its analysis, the USITC
expressly explained how it ensured that it did not attribute injury caused by other factors to theincreased imports.
 199
206. On this issue, we begin by recalling that, in its causation analysis, the USITC applied a
standard established by United States law that consists of determining whether the subject product isbeing imported in such increased quantities as to be a "substantial cause" of serious injury or threat ofserious injury.  The United States Trade Act of 1974 defines the term "substantial cause" as "a cause
which is important and not less than any other cause".
 200  Pursuant to statute, the USITC employed
this "substantial cause" standard in the investigation and determination that led to the line pipemeasure.  As we emphasized previously, we are examining the measure as defined in this appeal;  weare not reviewing the "substantial cause" standard in the United States law  per se ,  but rather only its
application in this case.
 201
207. In this investigation, the USITC identified a number of factors, apart from increased imports,
which caused injury or threat of injury to the line pipe industry.  Those factors were:  a decline in linepipe demand resulting from reduced oil and natural gas drilling and production activities;  competitionamong domestic producers;  a decline in export markets in 1998 and interim 1999 
202;  a shift from oil
country tubular goods production to line pipe production; and a decline in raw material costs. 203
Applying the "substantial cause" standard, the USITC analyzed the relative causal importance of these
                                                     
197Panel Report, para. 7.290.
198United States' appellant's submission, para. 52.
199Ibid., para. 56.
200Section 202(b)(1)(B) of the United States Trade Act of 1974, as amended.
201See, supra , paras. 76 and 77.
202January–June 1999.
203Panel Report, para. 7.283.WT/DS202/AB/R
Page 67
factors by determining whether any other factor was a more important cause of injury than increased
imports.  The USITC paid particular attention to the decline in line pipe demand resulting fromreduced oil and natural gas drilling and production activities.  Although recognizing that this declinecontributed to the serious injury sustained by the domestic industry in 1998–1999, the USITC
nevertheless found that the decline in activities related to oil and natural gas was not a greater
contributing factor to the industry's serious injury than the increased imports.
 204  Accordingly, the
USITC concluded that the "substantial cause" standard was met and that a causal link existed betweenincreased imports and serious injury.
208. Article 4.2(b) of the  Agreement on Safeguards   establishes two distinct legal requirements for
competent authorities in the application of a safeguard measure.  First, there must be a demonstrationof the "existence of the causal link between increased imports of the product concerned and seriousinjury or threat thereof ".  Second, the injury caused by factors other than the increased imports mustnot be attributed to increased imports.
209. We have explained, in  US – Wheat Gluten ,  that the causal link required by Article 4.2(b),
first sentence, of the  Agreement on Safeguards   is "a relationship of cause and effect such that
increased imports contribute to 'bringing about',  'producing' or 'inducing' the serious injury." 
205  More
specifically, we said there that "[t]he word 'causa l' means 'relating to a cause or causes', while the
word 'cause', in turn, denotes a relationship between, at least, two elements, whereby the first elementhas, in some way, 'brought about', 'produced' or 'induced' the existence of the second element." 
206  We
also explained that the word "link" indicates "that increased imports have played a part in, orcontributed to, bringing about serious injury so th at there is a causal 'connection' or 'nexus' between
these two elements." 
207  Article 4.2(b) does not require that increased imports be the sole cause of
serious injury.  In addition, we determined in  US – Wheat Gluten   that the causation requirement of
Article 4.2(b) can be met where the serious injury is caused by the interplay of increased imports andother factors.
 208  In other words, to meet the causation requirement in Article 4.2(b), it is not
necessary to show that increased imports alone—on their own—must be capable of causing seriousinjury.
 209
                                                     
204USITC Report, p. I-28.
205Appellate Body Report, supra , footnote 39, para. 67.
206Ibid. (footnote omitted)
207Ibid.
208Ibid., paras. 67 and 68.
209Ibid., para. 70.WT/DS202/AB/R
Page 68
210. We have also had occasion to construe the second sentence of Article 4.2(b), which requires
that the competent authorities not attribute to increased imports injury caused by factors other thanincreased imports.  In  US – Wheat Gluten ,  we stated:
The need to ensure a proper attribution of "injury" under Article
4.2(b) indicates that competent authorities must take account, in their
determination, of the effects of increased imports  as distinguished
from  the effects of other factors.
 210 (original emphasis)
211. In  US – Lamb ,  we reiterated and elaborated on this requirement:
The primary objective of the process we described in  United States –
Wheat Gluten Safeguard   is, of course, to determine whether there is
"a genuine and substantial relationship of cause and effect" between
increased imports and serious injury or threat thereof.  As part of that
determination, Article 4.2(b) states expressly that injury caused to the
domestic industry by factors other than increased imports "shall not
be attributed to increased imports."  In a situation where several
factors  are causing injury "at the same time", a final determination
about the injurious effects caused by  increased imports   can only be
made if the injurious effects caused by all the different causal factors
are distinguished and separated.  Otherwise, any conclusion based
exclusively on an assessment of only one of the causal factors –increased imports – rests on an uncertain foundation, because it
assumes  that the other causal factors are  not  causing the injury
which has been ascribed to increased imports.  The non-attribution
language in Article 4.2(b) precludes such an assumption and, instead,
requires that the competent authorities assess appropriately theinjurious effects of the other factors, so that those effects may be
disentangled from the injurious effects of the increased imports.  In
this way, the final determination rests, properly, on the genuine and
substantial relationship of cause and effect between increased imports
and serious injury.
 211 (original emphasis)
212. Article 3.5 of the  Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994   (the " Anti-Dumping Agreement ") provides, in language similar to that of the
last sentence of Article 4.2(b) of the  Agreement on Safeguards ,  that, with respect to a determination
of injury:  "[t]he authorities shall also examine any known factors other than the dumped imports
which at the same time are injuring the domestic industry, and the injuries caused by these otherfactors must not be attributed to the dumped imports."  In  United States – Anti-Dumping Measures on
Certain Hot-Rolled Steel Products from Japan  ("US – Hot-Rolled Steel
 "), we construed this similar
language in Article 3.5 of the  Anti-Dumping Agreement   when we stated:
                                                     
210Appellate Body Report, supra , footnote 39, para. 70.
211Appellate Body Report, supra , footnote 38, para. 179.WT/DS202/AB/R
Page 69
… investigating authorities must ensure that injuries which are
caused to the domestic industry by known factors, other than dumped
imports, are not " attributed   to the dumped imports." …
The non-attribution language in Article 3.5 of the
Anti-Dumping Agreement   applies solely in situations where dumped
imports and other known factors are causing injury to the domestic
industry  at the same time .  In order that investigating authorities,
applying Article 3.5, are able to ensure that the injurious effects of
the other known factors are not "attributed" to dumped imports, they
must appropriately assess the injurious effects of those other factors.
Logically, such an assessment must involve separating and
distinguishing the injurious effects of the other factors from theinjurious effects of the dumped imports.  If the injurious effects of
the dumped imports are not appropriately separated and distinguished
from the injurious effects of the other factors, the authorities will be
unable to conclude that the injury they ascribe to dumped imports is
actually caused by those imports, rather than by the other factors.Thus, in the absence of such separation and distinction of the
different injurious effects, the investigating authorities would have no
rational basis to conclude that the dumped imports are indeed causing
the injury which, under the  Anti-Dumping Agreement ,  justifies the
imposition of anti-dumping duties.
 212 (original emphasis)
213. We specified in that same appeal that Article 3.5 of the  Anti-Dumping Agreement   requires an
identification of "the nature and extent of the injurious effects of the other known factors" 213 as well
as "a satisfactory explanation of the nature and extent of the injurious effects of the other factors, asdistinguished from the injurious effects of the dumped imports." 
214
214. These statements in  US – Hot-Rolled Steel   provide guidance for us here.  As we noted in that
appeal:  "[a]lthough the text of the  Agreement on Safeguards   on causation is by no means identical to
that of the  Anti-Dumping Agreement ,  there are considerable similarities between the two Agreements
as regards the non-attribution language." 215  We then went on to say that "adopted panel and
Appellate Body reports relating to the non-attribution language in the  Agreement on Safeguards   can
provide guidance in interpreting the non-attribution language in Article 3.5 of the  Anti-Dumping
Agreement ." 216  We are of the view that this reasoning applies both ways.  Our statements in US –
Hot-Rolled Steel   on Article 3.5 of the  Anti-Dumping Agreement   likewise provide guidance in
interpreting the similar language in Article 4.2(b) of the  Agreement on Safeguards .
                                                     
212Appellate Body Report, WT/DS184/AB/R, adopted 23 August 2001, paras. 222 and 223.
213Ibid., para. 227.
214Ibid., para. 226.
215Ibid., para. 230.
216Ibid.WT/DS202/AB/R
Page 70
215. Article 4.2(b), last sentence, requires that, when factors other than increased imports are
causing injury at the same time as increased imports, competent authorities must ensure that injurycaused to the domestic industry by other factors is not attributed to the increased imports.  We havepreviously ruled, and we reaffirm now, that, to fu lfill this requirement, competent authorities must
separate and distinguish the injurious effects of the increased imports from the injurious effects of the
other factors.
 217  As we ruled in  US – Hot-Rolled Steel   with respect to the similar requirement in
Article 3.5 of the  Anti-Dumping Agreement ,  so, too, we are of the view that, with respect to
Article 4.2(b), last sentence, competent authorities are required to identify the nature and extent of theinjurious effects of the known factors other than increased imports, as well as explain satisfactorilythe nature and extent of the injurious effects of those other factors as distinguished from the injuriouseffects of the increased imports.
216. In addition, in  US – Wheat Gluten ,  we stated in the context of parallelism that the competent
authorities must "establish explicitly" that imports from sources covered by the measure "satisf[y] the
conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in
Article 4.2 of the  Agreement on Safeguards ." 
218  We explained further in  US – Lamb ,  in the context
of a claim under Article 4.2(a) of the  Agreement on Safeguards ,  that the competent authorities must
provide a " reasoned and adequate explanation   of how the facts support their determination". 219  We
are of the view that, by analogy, the requirements elaborated in  US – Wheat Gluten   and in US –
Lamb ,  also apply to the exercise contemplated in Article 4.2(b), last sentence, since in all those cases,
the competent authorities are under a procedural obligation to provide an explanation as regards adetermination.
217. Thus, to fulfill the requirement of Article 4.2(b), last sentence, the competent authorities must
establish explicitly, through a reasoned and adequate explanation, that injury caused by factors otherthan increased imports is not attributed to increased imports.  This explanation must be clear andunambiguous.  It must not merely imply or suggest an explanation.  It must be a straightforwardexplanation in express terms.
218. Therefore, the question before us is whether the USITC performed such an analysis and
provided such a reasoned and adequate explanation.  The United States submits that the USITCdid so.  In support of this submission, the United States refers to footnote 56 of its appellant's
                                                     
217Appellate Body Report, US – Wheat Gluten , supra , footnote 39, para. 70;  Appellate Body Report, US
– Lamb , supra , footnote 38, para. 179.  In the context of the  Anti-Dumping Agreement ,  see, Appellate Body
Report, US – Hot-Rolled Steel , supra , footnote 212, para. 222.
218Appellate Body Report, supra , footnote 39, para. 98.
219Appellate Body Report, supra , footnote 38, para. 103.WT/DS202/AB/R
Page 71
submission, which cites paragraphs 112 to 159 of th e United States' first written submission to the
Panel;  paragraphs 55 to 79 of the United States' oral statement at the first Panel meeting;  paragraphs53 to 59 and 92 to 106 of the United States' response to questions posed by the Panel and Korea(7 May 2001);  and paragraphs 47 to 56 of the United States' oral statement at the second Panel
meeting.  The United States also refers to Appendix A to the United States' appellant's submission and
to page I-30 of the USITC Report 
220, more specifically to the following passage:
… Respondents also argued that we may not attribute injury caused
by these factors to the imports. 187  We have not done so.  As required
by the statute, after evaluating all possible causes of injury, we havedetermined that the imports are an important cause of serious injuryand are not less than any other cause.
187    Japanese and Korean Respondents' Prehearing Brief on Injury at 46-49.
219. Korea argues that, although the USITC recognized that the decline in oil and gas drilling and
production caused injury 221, the USITC did not explain the nature and extent of the injurious effects
attributable to decreased oil and gas drilling and did not properly separate and distinguish these
injurious effects from those of the increased imports.  Korea adds that the USITC did not provide "a
reasoned and adequate explanation as to how the facts support such a determination." 222  As for the
various citations in footnote 56 and Appendix A to the United States' appellant's submission, Koreaargues that they are based only on certain limited portions of the USITC Report.
 223  I n  p a r t i c u l a r ,
Korea maintains that page I-30 of the USITC Report does not meet the non-attribution requirementsof Article 4.2(b) of the  Agreement on Safeguards ,  because the focus of the passage is not non-
attribution, but the reaffirmation of the substantial cause methodology.
 224
220. We have examined thoroughly Appendix A to the United States' appellant's submission as
well as the citations contained in footnote 56.  Appendix A and the citations in footnote 56 refer to
certain parts of the USITC Report, which we have likewise examined thoroughly.  Our examination
leads us to conclude that those cited parts of the USITC Report do not  establish explicitly ,  with a
reasoned and adequate explanation ,  that injury caused by factors other than the increased imports
was not attributed to increased imports.  The passage on page I-30 of the USITC Report highlightedby the United States is but a mere assertion that injury caused by other factors is not attributed toincreased imports.  A mere assertion such as this does not  establish explicitly ,  with a  reasoned and
                                                     
220United States' appellant's submission, footnote 36 to para. 56 and footnote 3 to para. 2 of Appendix A.
221Korea's response to questioning at the oral hearing.
222Korea's appellee's submission, para. 64.
223Ibid., para. 62;  Korea's response to questioning at the oral hearing.
224Korea's appellee's submission, para. 68.WT/DS202/AB/R
Page 72
adequate explanation ,  that injury caused by factors other than the increased imports was not
attributed to increased imports.  This brief assertion in the USITC Report offers no reasoning and noexplanation at all, and therefore falls short of what we have earlier described as a reasoned andadequate explanation.
221. Finally, we do not agree with the United States' contention that the Panel "essentially found
that the U.S. causation methodology was inherently inconsistent with Article 4.2(b)." 
225  The Panel
did not make such a finding, either explicitly or implicitly.
222. Therefore, we uphold the Panel's finding, in paragraph 7.290 of the Panel Report, that the
USITC did not adequately explain how it ensured that injury caused to the domestic industry byfactors other than increased imports was not attributed to increased imports, and that, consequently,the United States acted inconsistently with Article 4.2(b) of the  Agreement on Safeguards .
XI. The Application of the Line Pipe Measure:  Express Justification and Permissible
Extent
223. We turn now to the issue of the consistency of the application of the line pipe measure with
Article 5.1 of the  Agreement on Safeguards ,  which states:
Application of Safeguard Measures
A Member shall apply safeguard measures only to the extent
necessary to prevent or remedy serious injury and to facilitateadjustment.  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 seriousinjury.  Members should choose measures most suitable for the
achievement of these objectives.
224. Korea appeals two findings of the Panel relating to Article 5.1, first sentence, and the line
pipe measure.  Korea sees in Article 5.1, first sentence, two obligations for the Member applying asafeguard measure:  a procedural obligation and a substantive obligation.  Korea believes that the twoobligations are different in nature.  According to Korea, the United States violated both of these
obligations, and the Panel erred in not finding that the United States did so.  Korea's two claims areinterrelated, so we deal with them together.
                                                     
225United States' appellant's submission, para. 52. (footnote omitted)WT/DS202/AB/R
Page 73
225. Before taking up the claims relating to this provision, we note that, here, we are dealing with
the second of two basic inquiries that face an interpreter of the  Agreement on Safeguards .  Having
inquired and established, first, that, in a particular case, there is a right to apply a safeguard measure,an interpreter must inquire and establish, second, that the safeguard measure, in that particular case,
has been applied, in the words of Article 5.1, first sentence, "only to the extent necessary to prevent or
remedy serious injury and to facilitate adjustment."  It is this inquiry that is addressed in Article 5.1,first sentence.
A. The Express Justification of the Line Pipe Measure at the Time of Application
226. We start with Korea's first claim, which relates to the procedural obligation Korea discerns in
Article 5.1, first sentence.  The Panel found that the United States was not required to demonstrate, at
the time of its application, that the line pipe measure was "necessary to prevent or remedy serious
injury and to facilitate adjustment".
 226  Korea appeals this Panel finding and claims that the Member
applying a safeguard measure must, as a procedural obligation, "demonstrate its compliance with thefirst sentence of Article 5.1" 
227 at the time of its application.  Korea argues that upholding the Panel's
findings would "seriously undermine the fundamental discipline" 228 on safeguard measures contained
in the first sentence of Article 5.1 of the  Agreement on Safeguards .  According to Korea, this "would
lead to abuse" and "prejudice the rights of WTO Members". 229
227. In reply, the United States argues that there is no such procedural obligation in Article 5.1,
first sentence.  The United States submits that the text of the Agreement confirms the Panel's view
that while Article 5.1 requires a "justification" for certain types of quantitative restrictions, it does not
require a "justification" for safeguard measures in general.  The United States contends that we havealready endorsed this interpretation in  Korea – Dairy .
 230
                                                     
226Panel Report, para. 7.81.
227Korea's other appellant's submission, para. 114.
228Ibid., para. 111.
229Ibid.
230United States' appellee's submission, para. 86.WT/DS202/AB/R
Page 74
228. We discussed Article 5.1 of the  Agreement on Safeguards   extensively in  Korea – Dairy .  In
that case, the panel had found that:
… Members are required, in their recommendations or determinations
on the application of a safeguard measure, to explain how theyconsidered 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.
 231
229. According to the panel in  Korea – Dairy ,  this requirement is applied irrespective of whether
or not the safeguard measure is a quantitative restriction reducing the quantity of imports below theaverage of imports in the last three representative years.  On the basis of this interpretation ofArticle 5.1, the panel concluded that Korea, the respondent there, had not met the requirements ofArticle 5.1.
230. We reversed this finding on appeal 
232, stating with respect to the first sentence of Article 5.1
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 remedying serious injury and of facilitating adjustment.
… [T]his obligation applies regardless of the particular form that a
safeguard measure might take.  Whether it takes the form of aquantitative restriction, a tariff or a tariff rate quota, the measure in
question must be applied "only to the extent necessary" to achieve
the goals set forth in the first sentence of Article 5.1.
 233 (original
emphasis, footnotes omitted)
231. We then addressed the second sentence of Article 5.1:
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 thelast three representative years for which statistics are available.  We
agree with the Panel that this "clear justification" 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 .
 234 (original emphasis)
                                                     
231Panel Report, Korea – Dairy , WT/DS98/R and Corr.1, adopted 12 January 2000, as modified by the
Appellate Body Report, supra , footnote 52, para. 7.109.
232Appellate Body Report, Korea – Dairy , supra , footnote 52, para. 103.
233Ibid., para. 96.
234Ibid., para. 98.WT/DS202/AB/R
Page 75
232. With respect to the need to provide a "clear justification" for measures other than those
specifically described in that second sentence, we stated in the same appeal that:
… 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 restriction
which is consistent with "the average of imports in the last three
representative years for which statistics are available". 235 (original
emphasis)
233. It is clear, therefore, that, apart from one exception, Article 5.1, including the first sentence,
does not oblige a Member to justify, at the time of application, that the safeguard measure at issue isapplied "only to the extent necessary".  The exception we identified in  Korea – Dairy  lies in the
second sentence of Article 5.1.  That exception concerns safeguard measures in the form ofquantitative restrictions, which reduce the quantity of imports below the average of imports in the last
three representative years.  That exception does not apply to the line pipe measure.
234. Thus, our findings in  Korea – Dairy   establish that Article 5.1 imposes a general substantive
obligation, namely, to apply safeguard measures only to the permissible extent, and also a particularprocedural obligation, namely, to provide a clear justification in the specific case of quantitativerestrictions reducing the volume of imports below the average of imports in the last threerepresentative years.  Article 5.1 does not establish a general procedural obligation to demonstratecompliance with Article 5.1, first sentence, at the time a measure is applied.
235. Accordingly, since the line pipe safeguard measure is not a quantitative restriction, we uphold
the Panel's finding in paragraph 7.81 of its Report that "the United States was not required to
demonstrate, at the time of imposition, that the line pipe measure was 'necessary to prevent or remedyserious injury and to facilitate adjustment'."
236. This does not imply, as Korea seems to assert, that the measure may be devoid of justification
or that the multilateral verification of the consistency of the measure with the  Agreement on
Safeguards   is impeded.  The Member imposing a safeguard measure must, in any event, meet several
obligations under the  Agreement on Safeguards .  And, meeting those obligations should have the
effect of clearly explaining and "justifying" the extent of the application of the measure.  Byseparating and distinguishing the injurious effects of factors other than increased imports from those
caused by increased imports, as required by Article 4.2(b), and by including this detailed analysis in
                                                     
235Appellate Body Report, Korea – Dairy , supra , footnote 52, para. 99.WT/DS202/AB/R
Page 76
the report that sets forth the findings and reasoned conclusions, as required by Articles 3.1 and 4.2(c),
a Member proposing to apply a safeguard measure should provide sufficient motivation for thatmeasure.  Compliance with Articles 3.1, 4.2(b) and 4.2(c) of the  Agreement on Safeguards   should
have the incidental effect of providing sufficient "justification" for a measure and, as we will explain,
should also provide a benchmark against which the permissible extent of the measure should be
determined.
B. The Permissible Extent of the Line Pipe Measure
237. We turn next to Korea's second claim, which relates to the general substantive obligation
contained in Article 5.1, first sentence, to apply a safeguard measure "only to the extent necessary toprevent or remedy serious injury and to facilitate adjustment". The Panel found that Korea failed to
make a  prima facie  case demonstrating that the United States violated Article 5.1, first sentence, by
applying a measure that exceeds what is "necessary to prevent or remedy serious injury and tofacilitate adjustment".
 236  On appeal, Korea claims that the Panel erred, and puts forward three
arguments to sustain the claim.  However, we find it necessary to consider only one of Korea'sarguments to come to a conclusion on this claim.
238. Korea argues that there is a link between the causation analysis that resulted in the
determination to apply the line pipe measure and the permissible extent of the line pipe measure.
 237
Korea contends that the extent of the measure should be confined to the amount of the "serious injury"that can be attributed to increased imports.
 238  Korea maintains that the USITC failed to ensure that
injury caused to the domestic industry by factors other than increased imports was not attributed to
increased imports, and that, as a consequence, the United States could not ensure that the measure wasapplied only to the extent of the injury that can be attributed to increased imports.  Korea argues thatthe burden of establishing a  prima facie   case on this claim was satisfied by Korea's identification of
this inconsistency.
 239
239. In reply, the United States asserts that the line pipe measure did not attempt to address the
injurious effects caused by factors other than increased imports.  The United States argues further that,in any event, a safeguard measure need not be limited to addressing the injury that can be attributed to
                                                     
236Panel Report, para. 7.111.
237Korea's other appellant's submission, paras. 155 and 158–160.
238Panel Report, para. 7.107.
239Korea's other appellant's submission, para. 155.WT/DS202/AB/R
Page 77
increased imports 240, but can cover also the injury caused by other factors. 241  The United States
seeks support for this argument in our Report in  US – Wheat Gluten  242, where we stated:
The need to ensure a proper attribution of "injury" under Article
4.2(b) indicates that competent authorities must take account, in theirdetermination, of the effects of increased imports  as distinguished
from  the effects of other factors.  However, the need to distinguish
between the effects caused by increased imports and the effects
caused by other factors does  not  necessarily imply, as the Panel
said, that increased imports  on their own  must be capable of causing
serious injury, nor that injury caused by other factors must be
excluded  from the determination of serious injury.
 243 (original
emphasis)
240. The Panel did not make a finding on the merits of this argument by Korea.  The Panel noted
that "Korea has failed to identify any aspect of the line pipe measure which would suggest that it was
intended to address the injurious effects of the decline in the oil and gas industry." 244  Moreover, the
Panel added, "even assuming for the sake  of argument" that the remedy recommended by the USITCwas intended to so do, this did not mean that the line pipe measure that was eventually applied by theUnited States, and that "differed substantially" 
245 from the remedy recommended by the USITC, was
intended to do so.  The Panel said, furthermore, that there was "certainly no evidence before us thatmight prompt us to assume that this was the case."  On this basis, the Panel concluded that "[s]inceKorea has failed to establish any factual basis for its argument, it is not necessary for us to considerthe substantive issue of whether or not safeguard measures should be confined to addressing the
injurious effects of imports." 
246
241. The Panel, thus, did not reach the crucial legal question raised by Korea's claim, which is
whether the permissible  extent of a safeguard measure is limited to the injury that can be attributed to
increased imports, or whether a safeguard measure may also address the injurious effects caused byother factors .
242. We begin our analysis of this issue by observing that the United States is mistaken in its
characterization of our finding in paragraph 70 of our Report in  US – Wheat Gluten .  As we have
                                                     
240United States' appellee's submission, para. 120.
241Panel Report, para. 7.108.
242United States' appellee's submission, para. 120 and footnote 100 thereto;  United States' response to
questioning at the oral hearing.
243Appellate Body Report, supra , footnote 39, para. 70.
244Panel Report, para. 7.110.
245Ibid., footnote 243 to para. 7.313.
246Ibid., para. 7.110.WT/DS202/AB/R
Page 78
said, two basic inquiries are relevant to the process of determining whether, in the circumstances of a
particular case, a safeguard measure is consistent with the rules set out in the  Agreement on
Safeguards :  first,  it must be determined that the conditions have been met for applying a safeguard
measure;  second, if it is established that such a right exists, then it must be determined whether the
measure has been applied "only to the extent necessary to prevent or remedy serious injury and to
facilitate adjustment." 247  Paragraph 70 of our Report in  US – Wheat Gluten  addressed the first of
these two inquiries.  In stating that Article 4.2(b) should not be read as necessarily implying thatincreased imports,  on their own ,  must be capable of causing serious injury, or that injury caused by
other factors must be  excluded  from the determination of serious injury, we were addressing the
question of whether there is a right to apply a safeguard measure;  we were not addressing thepermissible extent of the application of a safeguard measure.
243. The United States is, therefore, mistaken in maintaining that our ruling in  US – Wheat
Gluten   supports the proposition that Article 5.1, first sentence, permits a Member to apply a
safeguard measure to prevent or remedy "the  entirety  of the serious injury experienced by the
domestic industry".
 248  The United States submits that because we "decided that in accordance with
Article 4.2(a) serious injury was the entirety of the condition of the industry" 249, it follows that the
serious injury to which Article 5.1, first sentence, refers must be the "entirety" of the serious injury.But, our ruling in  US – Wheat Gluten   makes no mention of the permissible extent to which a
safeguard measure may be applied, nor of the "entirety" of serious injury as it relates to thatpermissible extent.  The permissible extent of a safeguard measure is the subject of Article 5.1, firstsentence.  The meaning of Article 5.1, first sentence, was not at issue in  US – Wheat Gluten ;  it is at
issue here.
244. With this in mind, we look now at the text of Article 5.1, first sentence.  We are, as always,
guided by Article 31(1) of the  Vienna Convention ,  which codifies the fundamental rule of treaty
interpretation, and which provides that a treaty shall be interpreted in good faith in accordance withthe ordinary meaning of its terms, in their contex t and in the light of the object and purpose of the
treaty.
245. We observe, first of all, that the words of Article 5.1, first sentence, state that a safeguard
measure may be applied " only to the extent necessary to prevent or remedy serious injury and to
facilitate adjustment
 ". (emphasis added)  This phrase sets the maximum permissible extent for the
                                                     
247Supra , para. 84.
248United States' appellee's submission, para. 120. (emphasis added)
249United States' response to questioning at the oral hearing.WT/DS202/AB/R
Page 79
application of a safeguard measure under the  Agreement on Safeguards .  To address this claim by
Korea, we must discern the meaning of certain terms found in this phrase.
246. We note the presence of the words "only to the extent necessary".  We see these words as
indicating that this provision has a limited objective.  We see them also as drawing the outer boundary
of that limited objective—the maximum permissible " extent " to which a safeguard measure may be
applied.  These words instruct WTO Members to focus on what is " necessary " to fulfill that limited
objective, which is "to prevent or remedy serious injury and to facilitate adjustment."
247. The limited objective of this provision is founded in the determination of "serious injury" that
justifies the application of a safeguard measure.  For this reason, a key to understanding the nature ofthe objective, and thus to determining whether a measure has been applied "only to the extentnecessary" to achieve that objective, is the "serious injury" to which this phrase in the first sentence of
Article 5.1 refers.
248. To what "serious injury" does this phrase refer?  The Panel did not answer this question
because the Panel did not reach the substantive issue of the meaning of Article 5.1, first sentence.  For
the reasons we will set out, we believe that we must do so in order to address the issue raised in thisappeal.
249. In our view, the "serious injury" to which Article 5.1, first sentence, refers is, in any particular
case, necessarily the same "serious injury" that has been determined to exist by competent authorities
of a WTO Member pursuant to Article 4.2.  We think it reasonable to assume that, as the Agreementprovides only one definition of "serious injury", and as the Agreement does not distinguish the"serious injury" to which Article 5.1 refers from the "serious injury" to which Article 4.2 refers, the
"serious injury" in Article 5.1 and the "serious injury" in Article 4.2 must be considered as one and the
same.  On this, we agree with the United States.  But, contrary to what the United States argues, thefact that these two provisions refer to the same "serious injury" does not necessarily lead to theconclusion that a safeguard measure may address the "entirety" of the "serious injury", including thepart of the "serious injury" that is attributable to factors other than increased imports.
250. This is because Article 5.1, first sentence, sets out the maximum permissible extent to which a
safeguard measure may be applied.  With its emphasis on the "entirety" of the "serious injury", theUnited States seems to read the word "all" as if it were between the word "remedy" and the words"serious injury" in this provision, so that the phrase would be "remedy  all  serious injury".  But theWT/DS202/AB/R
Page 80
word "all" is not there.  And, as we have said more than once, words must not be read into the
Agreement that are not there. 250
251. We do not see the text of Article 5.1, first sentence, alone, as indicating one certain meaning.
Therefore, in keeping with our customary approach, we must seek the meaning of the terms of this
provision in their context and in the light of the object and purpose of the Agreement.
252. We observe here that the non-attribution language of the second sentence of Article 4.2(b) is an
important part of the architecture of the  Agreement on Safeguards   and thus serves as necessary context
in which Article 5.1, first sentence, must be interprete d.  In our view, the non-attribution language of the
second sentence of Article 4.2(b) has two objectives.  Fi rst, it seeks, in situations where several factors
cause injury at the same time, to prevent inves tigating authorities from infe rring the required "causal
link" between increased imports and serious injury or threat thereof on the basis of the injurious effects
caused by factors other than increased imports.  Second, it is a benchmark for ensuring that only an
appropriate share of the overall injury is attributed to increased imports.  As we read the Agreement, this
latter objective, in turn, informs the permissible ex tent to which the safeguard measure may be applied
pursuant to Article 5.1, first sentence.  Indeed, as we s ee it, this is the only possible interpretation of the
obligation set out in Article 4.2(b), last sentence, that ensures its consistency with Article 5.1, first
sentence.  It would be illogical to require an inves tigating authority to ensure that the "causal link"
between increased imports and serious injury not be based on the share of injury attributed to factors
other than increased imports while, at the same time, permitting a Member to apply a safeguard measureaddressing injury caused by all factors.
253. This interpretation of this important context of Article 5.1 is further reinforced if we look at
Article 5.1 from an overall perspective of the  WTO Agreement .  We found, in  United States –
Transitional Safeguard Measure on Comb ed Cotton Yarn from Pakistan ("US – Cotton Yarn
 "), with
respect to Article 6.4, second sentence, of the  Agreement on Textiles and Clothing  (the " ATC"), that
                                                     
250Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products , WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9, para. 45;  Appellate Body Report, India –
Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products , WT/DS90/AB/R, adopted
22 September 1999, para. 94;  Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135, para. 181.  See also,
Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from
India , WT/DS141/AB/R, adopted 12 March 2001, para. 83;  Appellate Body Report, European Communities –
Customs Classification of Certain Computer Equipment , WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R,
adopted 22 June 1998, para. 83;  and Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products , WT/DS69/AB/R, adopted 23 July 1998, para. 146.WT/DS202/AB/R
Page 81
"the part of the total serious damage attributed to an exporting Member must be proportionate to the
damage caused by the imports from that Member." 251
254. In support of this conclusion, we pointed there to Article 22.4 of the DSU, which provides:
The level of the suspension of concessions or other obligations
authorized by the DSB shall be equivalent to the level of the
nullification or impairment.
255. We noted there that:
…  Article 22.4 of the DSU stipulates that the suspension of
concessions shall be equivalent to the level of nullification or
impairment.  This provision of the DSU has been interpretedconsistently as not justifying punitive damages.
 252 (footnotes omitted)
256. We concluded:
It would be absurd if the breach of an international obligation were
sanctioned by proportionate countermeasures, while, in the absence
of such breach, a WTO Member would be subject to a
disproportionate and, hence, "punitive", attribution of seriousdamage not wholly caused by its exports.   In our view, such an
exorbitant derogation from the principle of proportionality in respect
of the attribution of serious damage could be justified only if the
drafters of the  ATC  had expressly provided for it, which is not the
case.
 253 (emphasis added)
257. We think the same reasoning applies here.  If the pain inflicted on exporters by a safeguard
measure were permitted to have effects beyond the share of injury caused by increased imports, thiswould imply that an exceptional remedy, which is no t meant to protect the industry of the importing
country from unfair or illegal trade practices, could be applied in a more trade-restrictive manner than
countervailing and anti-dumping duties.  On what basis should the  WTO Agreement   be interpreted to
limit a countermeasure to the extent of the injury caused by unfair practices or a violation of the treatybut not so limit a countermeasure when there has not even been an allegation of a violation or anunfair practice?
                                                     
251Appellate Body Report, WT/DS192/AB/R, adopted 5 November 2001, para. 119.
252Ibid., para. 120.  See also, Decision by the Arbitrators, European Communities – Regime for the
Importation, Sale and Distribution of Bananas – Recourse to Arbitration by the European Communities underArticle 22.6 of the DSU ,  where the Arbitrators  stated that "there is nothing in Article 22.1 of the DSU, let alone
in paragraphs 4 and 7 of Article 22, that could be read as a justification for counter-measures of a  punitive  
nature" (WT/DS27/ARB, 9 April 1999, para. 6.3) (original emphasis);  and, Decision by the Arbitrators, Brazil –
Export Financing Programme for Aircraft – Recourse to Arbitration by Brazil under Article 22.6 of the DSU and
Article 4.11 of the SCM Agreement , WT/DS46/ARB, 20 August 2000, para. 3.55.
253Appellate Body Report, US – Cotton Yarn, supra , footnote 251, para. 120.WT/DS202/AB/R
Page 82
258. The object and purpose of the  Agreement on Safeguards   support this reading of the context
of Article 5.1, first sentence.  The  Agreement on Safeguards   deals only with  imports .  It deals only
with measures that, under certain conditions, can be applied to  imports .  The title of Article XIX of
the GATT 1994 is "Emergency Action on  Imports   of Particular Products". (emphasis added)  It
seems apparent to us that the object and purpose of both Article XIX of the GATT 1994 and the
Agreement on Safeguards   support the conclusion that safeguard measures should be applied so as to
address only the consequences of  imports .  And, therefore, it seems apparent to us as well that the
limited objective of Article 5.1, first sentence, is limited by the consequences of  imports .
259. We note as well the customary international law rules on state responsibility, to which we
also referred in  US – Cotton Yarn . 254  We recalled there that the rules of general international law on
state responsibility require that countermeasures in re sponse to breaches by States of their international
obligations be proportionate to such breaches.  Article 51 of the International Law Commission's
Draft  Articles on Responsibility of States for Internationally Wrongful Acts provides that
"countermeasures must be commensurate with the injury suffered, taking into account the gravity of
the internationally wrongful act and the rights in question". 255  Although Article 51 is part of the
International Law Commission's Draft Articles, which do not constitute a binding legal instrument assuch, this provision sets out a recognized  principle of customary international law.
 256  We observe
also that the United States has acknowledged this principle elsewhere.  In its comments on theInternational Law Commission's Draft Articles, the United States stated that "under customaryinternational law a rule of proportionality applies to the exercise of countermeasures".
 257
                                                     
254Appellate Body Report, supra , footnote 251, para. 120.
255Draft articles on Responsibility of States for internationally wrongful acts adopted by the
International Law Commission at its fifty-third session (2001). (United Nations International Law Commission,Report on the work of its fifty-third session (23 April–1 June and 2 July–10 August 2001), General Assembly,Official Records, Fifty-fifth Session, Su pplement No. 10 (A/56/10), chapter IV.E.1).
256See, Case Concerning Military and Paramilitary Activities in and against Nicaragua  (Nicaragua v.
United States of America), Merits, Judgment of 27 June 1986, (1986) I.C.J. Rep., p. 14, at p. 127, para. 249;
and, Case Concerning the Gabcikovo-Nagymaros Project (Hungary v. Slovakia), ( 1997) I.C.J. Rep., p. 7, at
p. 220.
257See, Draft Articles on State Responsibility:  Comments of the Government of the United States of
America , dated 22 October 1997, in response to the United Nations Secretary General's request of 12 February
1997 for comments and observations on the draft articles on State responsibility adopted provisionally on firstreading by the International Law Commission, reprinted in, M. Nash, "Contemporary Practice of the UnitedStates Relating to International Law",  American Journal of International Law ,  Vol. 92, No. 2 (1998), p. 251, at
pp. 252 and 254.
The United States has also acknowledged this principle before the Arbitral Tribunal established by the
Compromis of 11 July 1978 in the Case Concerning the Air Services Agreement of 27 March 1946
(United States vs. France) .  See, Reply of the United States to the Memorial Submitted by France, excerpted in
M. Nash, Digest of United States Practice in International Law 1978  (Office of the Legal Adviser, Department
of State, 1980), at p. 776.WT/DS202/AB/R
Page 83
260. For all these reasons, we conclude that the phrase "only to the extent necessary to prevent or
remedy serious injury and to facilitate adjustment" in Article 5.1, first sentence, must be read asrequiring that safeguard measures may be applied only to the extent that they address serious injuryattributed to increased imports.
261. Having reached this conclusion, we must consider now whether the Panel erred in concluding
that Korea did not make a  prima facie   case that the United States had not fulfilled this substantive
obligation in Article 5.1, first sentence.  On this, we conclude that, by establishing that theUnited States violated Article 4.2(b) of the  Agreement on Safeguards ,  Korea has made a  prima
facie   case that the application of the line pipe measure was not limited to the extent permissible under
Article 5.1.  In the absence of a rebuttal by the United States of this  prima facie   case by Korea, we
find that the United States applied the line pipe measure beyond the "extent necessary to prevent orremedy serious injury and to facilitate adjustmen t".  Therefore, we reverse the Panel's finding in
paragraph 7.111 of its Report that Korea failed to make a  prima facie   case that the United States
violated Article 5.1, first sentence, by imposing a measure that exceeds what is "necessary to prevent
or remedy serious injury and to facilitate adjustment".
262. We note that, had the Panel found differently, the United States might have attempted to rebut
the presumption raised by Korea in successfully es tablishing a violation of Article 4.2(b) of the
Agreement on Safeguards ,  that the United States had also violated Article 5.1.  For even if the USITC
failed to separate and distinguish the injurious effect s of the increased imports from the injurious effects
of the other factors, it is still possible that the sa feguard measure may have been applied in such a
manner that it addressed only a portion of the identifi ed injurious effects, namely, the portion that is
equal to or less than the injurious effects of increased imports.  The United States did not rebut Korea's
prima facie  case by showing that this was so.  We offer this observation only to emphasize that we are
not stating that a violation of the last sentence of Article 4.2(b) implies an  automatic   violation of the
first sentence of Article 5.1 of the  Agreement on Safeguards .WT/DS202/AB/R
Page 84
XII. Findings and Conclusions
263. For the reasons set out in this Report, the Appellate Body:
(a) upholds, albeit for different reasons, the Panel's finding, in paragraph 8.1(7) of the
Panel Report, that the United States acted inconsistently with its obligation underArticle 12.3 of the  Agreement on Safeguards   by failing to provide an adequate
opportunity for prior consultations with Korea, a Member having a substantial interestin exports of line pipe;
(b) upholds the Panel's finding, in paragraph 8.1(8) of the Panel Report, that the
United States acted inconsistently with its obligation under Article 8.1 of theAgreement on Safeguards   to endeavour to maintain a substantially equivalent level of
concessions and other obligations;
(c) upholds the Panel's finding, in paragraph 8.1(5) of the Panel Report, that the
United States did not comply with its obligation under Article 9.1 of the  Agreement
on Safeguards   that safeguard measures shall not be applied against a product
originating in a developing country Member as long as its imports do not exceed theindividual and collective thresholds in that provision;
(d) reverses the Panel's finding, in paragraph 8.1(3) of the Panel Report, that the
United States acted inconsistently with its obligations under Articles 3.1 and 4.2(c) ofthe  Agreement on Safeguards   by failing to include in its published report a finding or
reasoned conclusion either (1) that increased imports have caused serious injury, or
(2) that increased imports are threatening to cause serious injury;
(e) reverses the Panel's finding, in paragraph 8.2(9) of the Panel Report, that the
United States did not violate its obligations under Articles 2 and 4 of the  Agreement
on Safeguards   by exempting Canada and Mexico from the line pipe measure;
(f) modifies the Panel's finding, in paragraph 8.2(10) of the Panel Report, that the
United States did not violate its obligations under Articles I, XIII:1 and XIX ofGATT 1994 by exempting Canada and Mexico from the line pipe measure, declaringit moot and as having no legal effect;
(g) upholds the Panel's finding, in paragraph 8.1(4) of the Panel Report, that the
United States acted inconsistently with its obligation under Article 4.2(b) of theWT/DS202/AB/R
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Agreement on Safeguards  by failing to establish a causal link between the increased
imports and the serious injury or threat thereof;
(h) upholds the Panel's finding, in paragraph 7.81 of the Panel Report, that the
United States was not required by Article 5.1, first sentence, of the  Agreement on
Safeguards  to demonstrate, at the time of imposition, that the line pipe measure was
necessary to prevent or remedy serious injury and to facilitate adjustment;
(i) reverses the Panel's finding, in paragraph 8.2(2) of the Panel Report, that Korea failed
to make a  prima facie  case that the United States violated its obligation under
Article 5.1, first sentence, of the  Agreement on Safeguards , by imposing a measure
that exceeds what is "necessary to prevent or remedy serious injury and to facilitateadjustment", and finds that the United States applied the line pipe measure beyond the"extent necessary to prevent or remedy serious injury and to facilitate adjustment".
264. The Appellate Body  recommends   that the DSB request the United States to bring the line
pipe measure, which has been found in this Report, and in the Panel Report as modified by this
Report, to be inconsistent with the obligations of the United States under the  Agreement on
Safeguards  and the GATT 1994, into conformity with its obligations under those Agreements.
Signed in the original at Geneva this 31st day of January 2002 by:
_________________________
Julio Lacarte-Muró
Presiding Member
_________________________ _________________________
James Bacchus Georges Abi-Saab
Member Member