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4. Product-specific allegations
(a) CCFRS
7.1802  Japan, Brazil and the European Communities submit that the USITC did not conduct any
specific evaluation of non-NAFTA imports as required by parallelism.  Rather, it evaluated NAFTA
imports, concluding that the exclusion of NAFTA impor ts would not change its findings of injury and
causation as to total imports.4225  In doing do, it repeated the very same mistakes previously
highlighted by the Appellate Body.  It is remarkab le that the USITC even resorted to its unsupported
conclusion that it "would have reached the same result" in justifying the exclusion NAFTA countries
from the recommended measure.  This was the very same language the Appellate Body found to failthe parallelism requirement in US – Line Pipe .
4226  The statement does not meet the obligation to
explain how the facts support a finding that non-NAFTA imports alone caused serious injury or threat
of serious injury.4227  Providing a handful of numbers with no meaningful analysis accomplishes little
more.  The USITC's analysis of non-NAFTA imports, therefore, did not meet the Appellate Body's
parallelism standard as set forth in US – Line Pipe , which requires a "reasoned and adequate
explanation that establishes explicitly" that such imports alone caused serious injury to the domestic
industry.  To be explicit, the USITC "must express distinctly all that is meant; it must leave nothing
merely implied or suggested; it must be clear and unambiguous".4228  It accomplished none of this.  It
failed to establish that non-NAFTA imports alone caused serious injury; its conclusions about the
causal link between non-NAFTA imports and serious injury were vague; and it merely implied orsuggested why non-NAFTA imports alone caused serious injury.  The USITC's analysis therefore did
not satisfy the parallelism requirement.
4229
7.1803  China submits that the USITC Supplementary Report does not evaluate the share of the
domestic market taken by non-NAFTA imports, does not evaluate other factors relevant to the
situation of the industry concerned, does not make any finding on the relationship between themovements in imports (volume and market share) and the movements in injury factors, and does not
indicate explicitly whether "the causal link" exists between increased imports and serious injury, and
whether this causal link involves a genuine and substantial relationship of cause and effect between
these two elements.  China considers that the USIT C Supplementary Report for this product "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'  [and ] does not amount to a 'reasoned and adequate explanation  of how
the facts support [the] determination'",  in accordance with the Appellate Body's interpretation.
4230
7.1804  Korea also argues that a review of the additional investigation demonstrates that the USITC
failed to provide a "reasoned and adequate" explanation as required by the Agreement on Safeguards.
                                                     
4225 Japan's first written submission, para. 312; Brazil's first written submission, para.231, European
Communities first written submission, para. 621. Remarkably, the USITC actually found in several cases thatimports from NAFTA countries contributed importantly to the serious injuries of the domestic industry!  For
example, in the USITC's flat-rolled steel analysis, the USITC found that imports from NAFTA accounted for a
substantial share of total imports and Mexican imports contributed importantly to the serious injury caused byimports.  USITC  Report Vol. I at 66 (Exhibit CC-6).  Similarly, in its hot-rolled bar and cold-finished bar
analysis, the USITC found that Canadian imports represented a substantial share of total imports and contributedimportantly to serious injury caused by imports. Ibid.  at 100, 107.
4226 Appellate Body Report, US – Line Pipe , para. 194.
4227 Ibid., at para. 195.
4228 Ibid., at para. 194.
4229 Japan's first written submission, paras. 312-315; Brazil's first written submission, paras. 231-233.
4230 China's first written submission, paras. 592–594.WT/DS248/R, WT/DS249/R,
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With respect to the increase in imports, the USITC argues that there was an increase in non-NAFTA
imports absolutely and relatively between 1996 and 2000.  It does not demonstrate how such anincrease meets the standard of "recent enough, sudden enough, sharp enough and significant enough,
both quantitatively and qualitatively, to cause or threaten to cause 'serious injury'".
4231  With respect to
serious injury and causation, the USITC's supplemental discussion is narrowly focused upon the price
gap between non-NAFTA imports and domestic products and simply asserts, without substantiation,
that increased imports from non-NAFTA sources are the substantial cause of serious injury. 4232  The
cursory investigation conducted by the USITC for non-NAFTA imports is far from the strict standards
established by the Appellate Body in numerous cases involving this issue.  More importantly, theUSITC fails to explain how it was able to segr egate the impact of non-NAFTA imports from NAFTA
imports since it also had determined that:  Mexico was one of the top five sources of flat-rolled steel;
Mexico's import volume increased 26.9% during the 1996-2000 period;  Mexico's rate of increase was
higher than the rate of increase of non-NAFTA  imports; and Mexico's AUV for flat-rolled was
consistently below the AUVs of other imports.  Korea argues that in spite of these specific findingswith respect to the serious injury arising from Mexican imports, the USITC failed to separate that
injury arising from NAFTA imports from the injury it attributed to non-NAFTA imports.
 4233
7.1805  Similarly, the European Communities, Japan and Brazil submit with regard to the USITC's
analysis of total imports and non- NAFTA imports of flat-rolled steel4234 that the USITC's initial
analysis on import trends found that total imports and Canadian imports increased absolutely as ashare of domestic consumption, and that Canadian imports declined but remained a substantial share
of total imports.
4235  The analysis of non-Canada flat-rolled steel imports was limited to whether the
volume increase and the decline in  AUVs were significant.4236  The USITC did not specifically
establish causation between non-NAFTA imports and the domestic industry's serious injury.  The
general discussion of causation, and the role of alternative causes, never once mentioned the role ofnon-NAFTA imports as distinguished from all imports.
4237  This was followed by the response to
USTR, in which the USITC merely stated that non-NAFTA imports increased absolutely and as a
share of domestic production.  As for prices, the USITC merely informed USTR that "exclu[sion] of
imports from Canada and Mexico from the database does not appreciably change import pricing
trends".4238  The USITC's treatment of injury and causation was even more perfunctory and
inadequate.  The USITC only noted that "we would have reached the same result had we excluded
imports from Canada from our injury analysis".4239  Yet, the general discussion of causation, and the
role of alternative causes, never once mentioned the role of non-NAFTA imports as distinguished
from all imports.4240  No attempt at factual  analysis for non-NAFTA imports was ever made.  The
response to USTR was no better.  Again, no factual analysis, only the simple statement  that  "the same
considerations that led us to conclude that increased imports of CCFRS are a substantial cause of
serious injury to the domestic industry are also applicable  to increased imports of CCFRS from all
                                                     
4231 See Argentina – Footwear (EC), para 131.
4232 Korea's first written submission, paras. 185, 187, 188, 189, 190, 191
4233 USITC  Report, Vol. I , pp. 66-67 (Exhibit CC-6).
4234 This product category consists of slabs, plate, hot-rolled steel, cold-rolle d steel, and coated steel.
4235 USITC Report, Vol. I, pp. 66-67 footnote 319 (Exhibit CC-6).
4236 Ibid., pp. 66-67, footnote 319.
4237 Ibid., pp. 55-65.
4238 USITC's 4 February Letter at 5  (Exhibit CC-11).
4239 USITC Report, Vol. I, at 67 footnote 319 (Exhibit CC-6).  The USITC found that "imports from
Canada did not contribute importantly to the serious injury suffered by the domestic industry."  (Ibid., p. 66),
and thus implicitly acknowledged some contribution to injury by Canadian imports.  The USITC never analysedcarefully the extent of Canada's contribution.
4240 Ibid.  at 55-65.WT/DS248/R, WT/DS249/R,
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sources other than Canada and Mexico".4241  The USITC focused on non-NAFTA import volumes and
average unit volumes to the exclusion of causation.4242 4243
7.1806  Japan adds that even if one were to accept the USITC statements as accurate, the comparison
demonstrates that the USITC's analysis is inadequate, particularly with respect to Canada which the
USITC itself identified as "one of the top five suppliers of CCFRS imports during the [period of
investigation]".4244 4245  The European Communities considers that there is no correct increased
imports finding for non-FTA imports and that the USITC failed to acknowledge cumulated imports
from FTA sources as "other factor" causing injury and failed to ensure non-attribution.4246
7.1807  The United States contends that the USITC's analysis of non-NAFTA imports, read in
conjunction with its discussion of other pertinent issues contained in the analysis of all imports,
demonstrates that the USITC specifically considered all issues relating to imports of CCFRS from
non-NAFTA sources.  In its analysis of non- NAFTA imports, the USITC found that non-NAFTA
imports increased at a rate similar to all imports.  Non-NAFTA imports of CCFRS increased by
46.8% between 1996 and 1998, and non-NAFTA imports in 2000 were still well above 1996levels.
4247  The USITC also considered the change in non-NAFTA import volume relative to domestic
production.  Non-NAFTA imports were equivalent to a higher share of domestic production in 2000
than in 1996.4248 4249 Consequently, the European Communities' argument that the USITC Report
provided insufficient information concerning the nature and significance of the increases in non-
NAFTA imports is wrong.  The European Communities is also wrong to criticize the USITC forfailing to find that the increase was "recent, sudden, sharp, and significant", and for failing to use full-
year 2001 data
4250, because these are not the relevant criteria.4251
7.1808  The United States further argues that in its analysis of non-NAFTA imports, the USITC found
that each of the causal link elements was applicable to non-NAFTA imports.  The USITC found a
moderate to high degree of substitutability between domestically-produced CCFRS and importedCCFRS, and there was little difference between purchaser appraisals of non-NAFTA imports and all
imports.
4252  Non-NAFTA imports followed the same volume trends as did all imports.  Non-NAFTA
imports followed the same pricing trends as did imports from all sources, generally peaking in 1997
and then falling notably in 1998 and 1999.4253  In fact, non-NAFTA imports actually undersold the
domestic products in a greater share of direct quarterly comparisons and by greater margins than did
imports from either NAFTA country.4254 Consequently, the USITC's analysis of non-NAFTA imports,
when read in conjunction with the analysis of all imports, establishes that the considerations thatestablish the existence of a genuine and substantia l causal link between the increased imports and the
                                                     
4241 USITC's 4 February Letter, p. 5 (Exhibit CC-11).
4242 Ibid., pp. 5-11.
4243 Japan's first written submission, paras. 310-311; Brazil's first written submission, para. 229-230.
4244 USITC Report, p. 66, (Exhibit CC-6).
4245 Japan's first written submission, para. 309.
4246 European Communities' first written submission, paras. 622-626; European Communities' second
written submission, paras. 478-483.  The detailed arguments are set out in the product-specific section on non-
attribution (H.3(b)).
4247 USITC Second Supplementary Report, p. 5.
4248 USITC Second Supplementary Report, p. 5.
4249 United States' first written submission, paras. 789-791.
4250 European Communities' first written submission, paras. 622-623.
4251 United States' first written submission, para. 792.
4252 USITC Report, p. 58; USITC Memorandum INV-Y-212, pp. 15-19 (US-39).
4253 USITC Second Supplementary Report, p. 5.
4254 USITC Report, Table FLAT-77.WT/DS248/R, WT/DS249/R,
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serious injury were the same whether all imports were examined or whether only imports from non-
NAFTA sources were examined.  In addition, the USITC's analysis of the effects, if any, attributableto other factors that increased imports was also equally applicable to non-NAFTA imports.  Thus, the
USITC's analysis of non-NAFTA imports, when read in conjunction with its analysis of all imports,
also establishes that the USITC did not attribute to non-NAFTA imports any effects due to factors
other than imports.  As discussed above, in its consideration of non-NAFTA imports the USITC did
not need to conduct a separate non-attribution analysis for NAFTA imports.
 4255
7.1809  China argues that the United States wrongly considers that for each product analysed in the
report, the USITC properly established that in creased imports from non-NAFTA countries caused
serious injury to the domestic industry.4256  Imports from Mexico increased significantly between
1996 and 2000 at a rate that was higher than the rate of increase for total imports (13.7%) as shown in
the USITC Report at page 66.  Indeed, when total imports increased by 18.4 million tons in 1996 to
20.9 million short tons in 2000 (i.e. an increase of 2.5 million tons or 13.7%), Mexican imports, for
their part, increased during the same period by almost 27%. In the same section of the USITC Report,one can also read that average unit values for CCFRS imports from Mexico were consistently below
the average unit value for other imports.
4257  However, at no time has the USITC analysed the extent
to which those specific characteristics of the Mexican imports could have a specific impact on the
injury caused to the United States industry, different from the one attributable to non-NAFTA
imports.  Accordingly, China considers that the methodology used by the United States prevented itfrom establishing that the USITC did not attribute to non-NAFTA imports any effects due to NAFTA
imports (in this particular case, Mexican imports), as other factors.
4258
7.1810  New Zealand submits that the United States' assertion that "reasoned and adequate
explanation" is constituted by "the USITC's analysis of non-NAFTA imports , read in conjunction
with its discussion of other pertinent issues contained in the analysis of all imports "4259 is nothing
more than an acknowledgement by the United States that the USITC Second Supplementary Report
fails to provide the necessary adequate and reasone d explanation.  The attempt to somehow 'save' this
situation with reference to the analysis contained in the USITC Report on all imports fails for the very
reason that it simply cannot be assumed that an analysis applicable to "all imports" provides the
necessary information required for one relating specifically to non-NAFTA imports.  The United
States seeks to convert the requirement of parallelism to a less onerous enquiry in which the
competent authority merely has to assert that its conclusions would not have changed if the non-FTAimports had been excluded from the determination.  However, this ex post facto  justification of an
earlier pre-judgment begs the very question that the Appellate Body sought to underline.
4260  T h e
USITC's belated attempt to satisfy the parallelism requirement in its Second Supplementary Report
fell well short of the requirement to "establish explicitly" that the imports covered by the measure
satisfy the conditions for the imposition of a safe guard measure. Indeed, in relation to CCFRS, the
initial determination of the USITC in relation to NAFTA imports, which concluded that imports from
both Canada and Mexico represented a substantial share and imports from Mexico "contributed
                                                     
4255 United States' first written submission, paras. 793-804.
4256 China's second written submission, para. 326.
4257 Incidentally, this statement can hardly be reconciled with the statement of the USITC
Supplementary Report (p. 5) according to which " excluding imports from Canada and Mexico from the
database does not appreciably change import pricing trends during the period examined".
4258 China's second written submission, paras. 326-328.
4259 United States' first written submission., paras. 789, 796, and 804 (emphasis added).
4260 New Zealand's second written submission, paras. 3.148-3.149.WT/DS248/R, WT/DS249/R,
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importantly" to the injury, casts even further doubt on any claim that imports, minus the increases
attributable to NAFTA, could satisfy the  requirements of the Agreement on Safeguards.4261
(b) Tin mill products
7.1811  The European Communities and China submit that neither the USITC Report nor the USITC
Supplementary Report contain any particular findings establishing "explicitly" that increased imports
from non-NAFTA sources satisfy the conditions set out in Article 2.1 and elaborated in Article 4.2 of
the Agreement on Safeguards.  The European Communities adds that the finding that this product
does not "contribute importantly to the serious injury or threat thereof" in the USITC Report of
October 2001 is not sufficient.  For these reasons, the European Communities and China consider thatthe United States, for this product, failed to respect its obligation under Articles 2.1 and 4.2 of the
Agreement on Safeguards.
4262
7.1812  Korea argues that the USITC did not conduct any investigation on non-NAFTA imports
alone, either in the original investigation or in response to a request of the USTR.  Commissioner
Miller found that imports of tin mill products from Canada were significant, and had doubled over theperiod with a higher rate of growth than imports from non-NAFTA countries.  She also found that
Canada's AUVs declined to their lowest point in 1999, when imports surged.
4263  Commissioner
Miller was the only Commissioner to vote affirmatively with respect to injury to the domestic industry
from tin mill products.  In the first place, there was no basis whatsoever for the imposition of
safeguard measures on imports of tin mill products.  However having determined that such measureswere appropriate, the United States was obliged to provide a reasoned explanation concerning how the
serious injury caused by non-NAFTA imports was segregated and identified.  The United States was
also obliged to establish explicitly that the serious injury suffered by the domestic industry was due to
non-NAFTA imports alone.  The United States did neither.  Thus, the United States is in violation of
the parallelism between the scope of investigation and the scope of the measure with respect to tinmill products.
4264
7.1813  Similarly, Norway notes that, concerning tin mill products, neither the increased imports
section nor the serious injury section of the (first) report itself mentions products from these countries
specifically.  There is also no mention of tin mill products in the Second Supplementary Report.  The
dissenting Commissioner Miller, who analysed tin mill products separately did, however, make
explicit findings with respect to imports from Canada.  She found that imports from Canada
accounted for a substantial share of total imports and contribute importantly to the serious injury4265
(and therefore also recommended a tariff on such imports4266).  Her statement is somewhat
ambiguous, as it is connected to a footnote 29 where she – in passing – states "I further note that I
would have found imports of tin mill products to be a substantial cause of serious injury had I
excluded imports from Canada".4267  She also states in footnote 28 on the same page that "I note that
in my analysis of whether increased imports as a whole are a substantial cause of serious injury, Iwould have reached the same result had I excluded imports from Mexico".  Norway does not consider
that these statements of Commissioner Miller, even considering her individually, complies with the
                                                     
4261 New Zealand's written reply to Panel question No. 59 at the second substantive meeting.
4262 China's first written submission, paras. 614-615; European Communities' first written submission,
paras. 614-615.
4263 USITC  Report, Vol. I , pp. 309-310 (Exhibit CC-6).
4264 Korea's first written submission, para. 193-194.
4265 USITC Report, Vol. I, p. 310 (Exhibit CC-6).
4266 USITC Report, Vol. I, p. 527 (Exhibit CC-6).
4267 USITC Report, Vol. I, p. 310 (Exhibit CC-6).WT/DS248/R, WT/DS249/R,
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standards set out by the Appellate Body, as there is no finding that products from other sources alone,
excluding imports from all the excluded countries, fulfil the requirements of Articles 2.1 and 4.  Asfor the final determinations of the United States for tin mill products, where the President did not
follow the recommendations of Commissioner Mi ller, there is nowhere any particular finding
establishing "explicitly" that increased imports from non-NAFTA sources satisfy the conditions as set
out in Article 2.1 and elaborated in Article 4.2 of  the Agreement on Safeguards and, thus, no findings
the President can rely upon in support of his determination.  For this reason, the United States, for this
product, has failed to respect its obligation under Articles 2.1 and 4.2 of the Agreement on
Safeguards.
4268
7.1814  The United States asserts that both Commi ssioner Miller and Commissioner Bragg provided
separate analyses of non-NAFTA imports relating to tin mill products.  These analyses, read in
conjunction with each Commissioner's discussion of ot her pertinent issues contained in her analysis of
all imports, demonstrate that the analyses specifically considered all issues relating to imports from
non-NAFTA sources.  Commissioner Miller's analysis is found in footnotes 28 and 29 of her separateopinion analysing all tin mill  imports.  In footnote 28, she observes that tin mill exports from Mexico
were minuscule, never exceeding 286 tons in any calendar year.
4269  In footnote 29, she notes that she
would have found increased imports of tin mill  to be a substantial cause of serious injury if she had
excluded imports from Canada.4270  Given the minuscule volumes of imports from Mexico cited in
footnote 28, the analysis Commissioner Miller pr ovides in footnote 29 is clearly applicable when
imports from both Canada and Mexico are excl uded.  Commissioner Miller's footnote was not an
ambiguous statement made "in passing", as asserted by Norway.4271  Instead, it demonstrates that she
specifically considered all issues relating to imports of tin mill  from imported sources, including
increased imports and causal link.  In her analysis, Commissioner Miller observed that imports from
non-NAFTA sources increased by 22.4% from 1996 to 2000.4272  The greatest annual percentage
increase in non-NAFTA imports occurred between 1998 and 1999, the same year imports from all
sources increased by the greatest percentage.4273  Commissioner Miller's analysis also demonstrated
that there were imports "in such increased quantities ... and under such conditions as to cause or
threaten to cause serious injury" by demonstrating the genuine and substantial causal link between
non-NAFTA imports and the serious injury experienced by the domestic tin mill  industry.  The nature
of that serious injury was discussed in great detail in Commissioner Miller's analysis of all imports.
Each of these elements was applicable for non-NAFTA imports as well.  Commissioner Miller hadobserved in her analysis of all imports that purchasers generally considered imported and domestically
produced tin mill products to be substitutable.
4274  Because the questionnaire data indicated that non-
NAFTA imports were not different from all imports in this respect, there was no need for
Commissioner Miller to discuss this factor further in her analysis of non-NAFTA imports.4275
Commissioner Miller's analysis of non-NAFTA impor ts, when read in conjunction with her analysis
of all imports, establishes that the considerations that establish the existence of a genuine and
substantial causal link between the increased imports and the serious injury were the same whether all
imports were examined or whether only imports  from non-NAFTA sources were examined. Miller's
analysis of non-NAFTA imports, when read in co njunction with her analysis of all imports, also
establishes that the she did not attribute to non-NAF TA imports any effects due to factors other than
                                                     
4268 Norway's first written submission, paras. 381-386.
4269 USITC Report, p. 310, footnote 28.
4270 USITC Report, p. 310, footnote 29.
4271 Norway's first written submission, para. 392.
4272 USITC Report, p. 310, footnote 29.
4273 USITC Report, Table FLAT-C-8.
4274 USITC Report, p. 307.
4275 USITC Memorandum INV-Y-209, p. 20 (US-33).WT/DS248/R, WT/DS249/R,
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imports.  In her consideration of non-NAFTA impor ts Commissioner Miller did not need to conduct a
separate non-attribution analysis for NAFTA imports.4276
7.1815  The United States further argues that Commissioner Bragg performed her analysis of non-
NAFTA tin mill imports in the context of her like product analysis encompassing CCFRS.
Commissioner Bragg first examined the increase in import volume.  She found that non-NAFTA
imports of carbon and alloy flat products including tin mill  increased by 16.2% between 1996 and
2000.   The largest single year increase occurred between 1997 and 1998, but an additional increase
occurred between 1999 and 2000.4277  Commissioner Bragg also noted that non-NAFTA imports
accounted for a substantial majority of all imports.4278 Commissioner Bragg demonstrated a genuine
and substantial causal link between non-NAFTA imports and the serious injury experienced by the
domestic industry.  The nature of that serious injury was discussed in her analysis of all imports.4279 In
her analysis of all imports, Commissioner Bragg specifically examined several other factors alleged to
be the cause of serious injury. Commissioner Bragg rejected each of these factors as a cause of injury.
Because Commissioner Bragg's analysis of all imports contained the requisite discussion of theseother factors to satisfy Article 4.2(b) of the Agreement on Safeguards, and she rejected the other
factors as causes of injury, she was not obliged to discuss these factors further in her analysis of non-
NAFTA imports, as she had not attributed any of the serious injury suffered by the domestic industry
to any of these other factors.
4280 4281
7.1816  China points out that for tin mill products, Commissioner Miller, at page 309, made clear that
the quantity of imports from Canada doubled over the period (+ 50%), while the growth rate of
imports from non-NAFTA countries increased only by 22.4% over the period.  In the same report,
Commissioner Miller indicated that the average unit values of imports from Canada declined overall
from 1996 to 2000 and were lowest in 1999, when imports generally surged and the United States
industry's condition worsened.4282  However, at no moment, did the USITC analyse the extent to
which those specific characteristics of the Canadian imports could have a specific impact on the injury
caused to the United States industry, different from the one attributable to non-NAFTA imports.
Accordingly, China considers that the methodology used by the United States prevented it from
establishing that the USITC did not attribute to non-NAFTA imports any effects due to NAFTA
imports (in this particular case, Canadian imports), as other factors.4283
(c) Hot-rolled bar
7.1817  China submits that the USITC Supplementary Report does not evaluate the share of the
domestic market taken by non-NAFTA imports, does not evaluate other factors relevant to the
situation of the industry concerned, does not make any finding on the relationship between the
movements in imports (volume and market share) and the movements in injury factors, and does not
indicate explicitly whether "the causal link" exists between increased imports and serious injury, and
whether this causal link involves a genuine and substantial relationship of cause and effect betweenthese two elements.  China considers that the USIT C Supplementary Report for this product "does not
establish explicitly that imports from sources covered by the measure 'satisf[y] the conditions for the
                                                     
4276 United States' first written submission, paras. 807-818.
4277 USITC Second Supplementary Report, p. 15.
4278 USITC Second Supplementary Report, p. 17, footnote 87.
4279 See USITC Report, pp. 282-283.
4280 USITC Second Supplementary Report, p. 17, footnote 87.
4281 United States' first written submission, paras. 819-823.
4282 China's second written submission, paras. 324, 229.
4283 China's second written submission, para. 330.WT/DS248/R, WT/DS249/R,
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application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2 of the
Agreement on Safeguards'  [and ] does not amount to a 'reasoned and adequate explanation  of how the
facts support [the] determination'",  in accordance with the Appellate Body's interpretation.4284
7.1818  The United States asserts that the USITC's analysis of non-NAFTA imports, read in
conjunction with its discussion of other pertinent issues contained in the analysis of all imports,
demonstrates that the USITC specifically considered  all issues relating to imports of hot-rolled bar
from non-NAFTA sources, including increased imports and causal link.  In its analysis of non-NAFTA imports, the USITC found that non-NAFTA imports of hot-rolled bar increased at a greater
rate than imports from all sources.  Non-NAFTA imports increased by 107.9% from 1996 to 2000,
and had major increases from 1997 to 1998 (when they increased by 70.4% ) and from 1999 to 2000
(when they increased by 31.2%).  In its analysis, th e USITC also provided information concerning the
annual evolution of non-NAFTA import volumes.
4285  Consequently, the European Communities'
argument that the USITC Report provided insufficient information concerning the nature and
significance of the increases in non-NAFTA imports is wrong.  The European Communities is also
wrong to criticize the USITC for failing to find that the increase was "recent, sudden, sharp, and
significant", and for failing to use full-year 2001 data4286, because, as already argued, these are not the
relevant criteria.4287
7.1819  The United States further argues that the USITC's analysis of all imports also described the
causal link between all imports and the serious injury  in considerable detail.  The USITC determined
that through price-based competition increased imports caused domestic hot-rolled bar producers to
lose market share at the same time prices were falling.  Thus, there were three basic elements of the
finding of causal link relating to all imports: (1) price-based competition between imports and the
domestically produced product; (2) imports gaining market share at the expense of the domestically
produced product; and (3) declining prices.  These elements collectively led to the hot-rolled barindustry's declines in production, sales volumes and revenues, and employment, as well as its poor
financial performance during the latter portion of the period of investigation. In its analysis of non-
NAFTA imports, the USITC found that each of these three causal link elements was applicable for
such imports.  First, the non-NAFTA imports were even more competitive on price with the
domestically-produced product than were all imports, inasmuch as their prices were lower than thosefor all imports.  The USITC found that the non-NAFTA imports undersold the domestically produced
product by substantial margins during the principal period it examined in its causal link analysis –
1998 through 2000.
4288  Second, the non-NAFTA imports gained market share at the expense of the
domestic industry.  In its analysis of causal link for all imports, the USITC emphasized the domestic
industry's loss of market share to imports in 1998 and 2000 and explained why this period wasgermane to its analysis.  In its analysis of non-NAFTA imports, the USITC found that those imports
were responsible for most of this loss, as they gained 3.7 of the 4.1 percentage points of market share
the domestic industry lost from 1997 to 1998, and gained even more market share than the domestic
industry lost from 1999 to 2000.
4289  Third, the USITC found that the value of the non-NAFTA
imports fell by an even greater proportion during the period of investigation than did imports from allsources.
4290 Consequently, the USITC's analysis of non-NAFTA imports, when read in conjunction
with the analysis of all imports, establishes that the considerations that establish the existence of a
                                                     
4284 China's first written submission, paras. 595–597.
4285 USITC Second Supplementary Report, p. 5.
4286 European Communities' first written submission, paras. 622-623.
4287 United States' first written submission, paras. 825-827.
4288 USITC Second Supplementary Report, p. 6.
4289 USITC Second Supplementary Report, p. 6; USITC Report, Table LONG-C-3.
4290 USITC Second Supplementary Report, p. 6.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 609
genuine and substantial causal link between the increased imports and the serious injury were the
same whether all imports were examined or wh ether only imports from non-NAFTA sources were
examined.  The USITC did not reach this conclusion by "jump[ing] into some generalizations", as
alleged by the European Communities.4291  Instead, the USITC reached its conclusions on the basis of
an objective, fact-based analysis of volume and pricing data specifically pertaining to non-NAFTA
imports.4292
7.1820  The United States finally argues that in its analysis of all imports the USITC examined four
factors other than increased imports alleged to be causes of serious injury to the domestic hot-rolled
bar industry.  It found that three of the four other factors (intra-industry competition, "inefficient"domestic producers, and changes in demand) did not cause the injury it observed. The fourth factor,
relating to the domestic industry's input costs, rela ted exclusively to domestic industry data which also
did not change depending on which imports were being examined.  Consequently, there was also no
need for the USITC to discuss this factor further in its analysis of non-NAFTA imports.
4293
7.1821  In response to the Panel's question about how the USITC conducted a causation analysis that
isolated the effects of non-NAFTA imports from those of NAFTA imports, the United States
responds, taking hot-rolled bar as an example, th at the USITC's methodology for isolating the effects
of non-NAFTA imports encompassed several steps.  First, in its analysis of non-NAFTA imports, the
USITC distinguished import volumes from non-NAFTA sources from import volumes from Canada
and Mexico.  Thus, for hot-rolled bar, the USITC specifically discussed the volume of imports fromnon-NAFTA sources, the rate of increase of that volume, and the ratio of that volume to United States
production.
4294  Second, in its analysis of all imports, the USITC made findings concerning the
conditions of competition in the pertinent domestic industry.  These findings were not related to either
the characteristics or the data relating to imports from specific countries, so no further isolation of
imports from particular sources was necessary.  Third, the USITC made findings, in its analysis of allimports, concerning the condition of the pertinent domestic industry.  This analysis did not concern
why the industry was seriously injured, but whether  it was seriously injured.  Consequently, no further
isolation or discussion was necessary for the non-NAFTA imports.  Fourth, the USITC conducted a
particularized causation analysis for the non-NAFTA imports.  The USITC's causation analysis for all
imports for each of the pertinent products reflected findings concerning five factors.  These were: (1)
import volume patterns; (2) the conditions of compe tition; (3) the domestic industry's condition; (4)
import volume and pricing patterns; and (5) other alleged causes of serious injury.  For each product,the USITC analysed the particularized data for non-NAFTA import volume and non-NAFTA import
pricing.  Thus, for hot-rolled bar, the USITC found that average unit values of non-NAFTA imports
declined from 1996 to 2000 and that this decline was greater than that for imports from all sources.  It
engaged in a particularized examination of pricing data for 1998 and the first half of 2000.  These
periods were of particular significance to its causation analysis because they were periods when bothnon-NAFTA imports and all imports surged and the dom estic industry lost market share.  The USITC
found that during these periods the non-NAFTA imports undersold domestically produced hot-rolled
bar by substantial margins.  Consequently, based on its analysis of the particularized non-NAFTA
import data, the USITC concluded that the same considerations that supported a finding of causal link
for all imports – namely, that through price-based competition increased imports caused the domesticindustry to lose market share while prices were falling – supported a finding of causal link for non-
                                                     
4291 European Communities' first written submission, para. 625; China raises a similar objection.
China's first written submission, para. 595.
4292 United States' first written submission, paras. 828-833.
4293 United States' first written submission, para. 834.
4294 USITC Second Supplementary Report, pp. 5-6.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 610
NAFTA imports.4295  Again, by considering only non-NAFTA imports, the USITC isolated the
volume and pricing effects of non-NAFTA imports fr om those for the NAFTA imports.  An isolation
analysis was not necessary with respect to conditions of competition or the condition of the domestic
industry.  An isolation analysis also was not necessary for the other alleged causes of serious injury.
For example, with respect to hot-rolled bar, three of the four alleged other causes were not in fact
causes of serious injury and the fourth (relating to changes in the domestic industry's input costs)
pertained exclusively to domestic industry data.4296  Consequently, the USITC conducted a causation
analysis that isolated for non-NAFTA  imports those factors it needed to isolate, and incorporated from
the all imports analysis those factors that were unchanged regardless of which imports were analysed.Based on these factors, it explained why its conclusions on causation for all imports were also
applicable to non-NAFTA imports viewed in isolation.
4297
7.1822  The European Communities notes that the United States justifies its "increased imports"
finding by reference to the USITC Second Supplementary Report.  However, the "increased imports"
finding of 22 October 2001 is clearly based on import data from all countries.4298  So is the relevant
Commission determination.4299  The USITC approach underlying the determinations of 22 October
2001 reflects that followed in the  United States measures at issue in US – Line Pipe , and analysed by
the Appellate Body who held that the USITC made  "no reference to product origin.  The USITC
considered 'imports from  all sources  in determining whether imports have increased' and relied on
data corresponding to total imports".4300  In the present case, and in respect of hot-rolled bar the
USITC expressly concluded that "our affirmative determination [that is "increased imports" and
"serious injury" and "causation"] for hot-rolled bar encompasses imports from Canada".4301  T h e
European Communities submits that three irrelevant determinations in the USITC Report do not
however make one relevant one.  In other words, the fact that, in addition to the increased imports and
serious injury findings based on imports from all sources, the USITC made separate determinations onimports from Canada
4302 and Mexico4303 respectively, does not change the content of the first one and
does not turn it into an "all imports minus Canada and/or Mexico" one.  Nor does the fact that the
Commission determination  on hot-rolled bar on p. 18 of the USITC Report's Vol. I is followed by two
determinations on Canada and Mexico respectively4304 means that the first is turned into a
determination on "all imports minus Canada and/or Mexico".  The Appellate Body has already
rejected this type of "shortcut" in US – Line Pipe .4305  
7.1823  The European Communities submits that the USIT C failed to separate and distinguish the
impact of excluded imports and not attribute them to the imports covered by the measures.  With
regard to hot-rolled bar, Canada and Mexico respec tively represented the first and the third or fourth
                                                     
4295 USITC Second Supplementary Report, p. 6.
4296 United States' first written submission, para. 834.
4297 United States' written reply to Panel question No. 95 at the first substantive meeting.
4298 USITC Report, Vol. I, p. 92, referring to Volume II, p. LONG 9, TABLE LONG-5.  The import
data referred to on p. 92 are taken from the "all imports" rows.  Specifically, imports from Canada were foundby the USITC to "account for a substantial share of tota l imports" (USITC Report, Vol. I, p. 100).  Indeed,
according to USITC data Canada supplied 46.0% of the quantity of all imports in 1998, 50.6% in 1999 and
45.6% in 2000 (USITC Report, Vol. I, p. 100, referring to USITC Report, Vol. II, Table LONG 5).
4299 USITC Report, Vol. I, p. 18.
4300 Appellate Body Report, US – Line Pipe , para. 186.
4301 USITC Report, Vol. I, p. 100
4302 USITC Report, Vol. I, p. 100.
4303 USITC Report, Vol. I, pp. 100-101.
4304 USITC Report, Vol. I, p. 18, column 2 from the left of the "Carbon & Alloy Long Products"
column, rows 8 to 10 of the column respectively.
4305 European Communities' second written submission, paras. 445-448.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 611
supplying country in the most recent three years considered.4306  They also contributed one third of the
increase in imports over the period 1996-2000.  Thus, it simply cannot be that the their exclusionmade no difference to the causation finding.  Assuming  that imports caused injury, it is far from clear
that a finding of a genuine and substantial causal link could be made once the injurious effects of
Canadian and Mexican imports have been subjected to  a non-attribution analysis.  At the very least
the United States authorities should have explained why the exclusion of certain imports from the
increased imports base did not change at all the result.
4307
7.1824  China argues that the United States wrongly considers that for each product analysed in the
report, the USITC properly established that in creased imports from non-NAFTA countries caused
serious injury to the domestic industry.4308  As it appears from the USITC Report at page 92 et seq. ,
the situation of the United States industry worsened in 1999 in terms of domestic production and
increased capacity.  At page 97 of the same Report, it is said that in 1999 domestic producers
restricted their loss of market share to three-tenths of a percentage point. On page 92, the USITC
Report indicates that imports from all sources increased slightly from 1998 to 1999, by 1%, while, atthe same time, imports from Canada alone increased by almost 5%.  However, at no time has the
USITC analysed the extent to which those specific characteristics of the Canadian imports could have
a specific impact on the injury caused to the United States industry, different from the one attributable
to non-NAFTA imports.  Accordingly, China considers that the methodology used by the United
States prevented it from establishing that the USITC did not attribute to non-NAFTA imports anyeffects due to NAFTA imports (in this particular case, Canadian imports), as other factors.
4309
(d) Cold-finished bar
7.1825  China submits that the USITC Supplementary Report merely contains an indication of loss of
revenues for the United States domestic industry.  It does not evaluate the share of the domestic market
taken by non-NAFTA imports, it does not contain specific elements regarding the injury to the USindustry caused by non-NAFTA imports, it does not eval uate other factors relevant to the situation of
the industry concerned, it does not make any finding on the relationship between the movements in
imports (volume and market share) and the movements in injury factors and it does not indicate
explicitly whether "the causal link" exists between increased imports and serious injury, and whether
this causal link involves a genuine and substantial relationship of cause and effect between these two
elements.  The European Communities considers that there is no correct increased imports finding for
non-FTA imports and that the USITC failed to acknowledge cumulated imports from FTA sources as"other factor" causing injury and failed to ensure non-attribution.
4310  On the basis of the foregoing,
the European Communities and China considers that the USITC Supplementary Report for this
product "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'  [and ] does not amount to a 'reasoned and adequate
explanation  of how the facts support [the] determination'",  in accordance with the Appellate Body's
interpretation.4311
                                                     
4306 USITC Report, Vol. I, p. 100.
4307 European Communities' second written submission, paras. 483-484.
4308 China's second written submission, para. 326.
4309 China's second written submission, paras. 331-332.
4310 European Communities' first written submission, paras. 622-626; European Communities' second
written submission, paras. 478-483. The detailed arguments are set out in the product-specific section on non-attribution (H.3(b)).
4311 China's first written submission, paras. 598–600.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 612
7.1826  The United States asserts that the USITC's report contains a reasoned and adequate
explanation of how the facts supported its conclusion that increased imports from non-NAFTAcountries caused serious injury to the domestic cold-finished bar industry.  This analysis, according to
the United States, satisfies all requirements of Articles 2.1 and 4.2 of the Agreement on
Safeguards.
4312 In its analysis of non-NAFTA imports, th e USITC found that non-NAFTA imports of
cold-finished bar increased at a greater rate than did imports from all sources both from 1999 to 2000
and over the entire period examined.  Non-NAFTA imports increased by 51.0% from 1999 to 2000,
the year that imports from all sources increased most sharply.  In its analysis, the USITC also
provided information concerning the annu al evolution of non-NAFTA import volumes.4313
Consequently, the European Communities' argument that the USITC Report provided insufficient
information concerning the nature and significance of the increases in non-NAFTA imports is wrong.
The European Communities is also wrong to criticiz e the USITC for failing to find that the increase
was "recent, sudden, sharp, and significant", and for failing to use full-year 2001 data4314, because
these are not the relevant criteria.  The USITC's analysis of all imports also described the causal linkbetween all imports and the serious injury in c onsiderable detail.  The USITC determined that
aggressive pricing by the imports during the latter portion of the period of investigation caused the
domestic industry to lose market share and revenues.  This resulted in serious injury, most particularly
the industry's poor performance in 2000. The USITC found that each of two causal link elements that
were applicable for all imports – aggressive pricing and increased market share – were also applicablefor non-NAFTA imports.  Consequently, the USITC's analysis of non-NAFTA imports, when read in
conjunction with the analysis of all imports, establishes that the considerations that establish the
existence of a genuine and substantial causal link between the increased imports and the serious injury
were the same whether all imports were examined or whether only imports from non-NAFTA sources
were examined.  The USITC did not reach this conclusion by "jump[ing] into some generalizations",as alleged by the European Communities.
4315  Instead, the USITC reached its conclusions on the basis
of an objective, fact-based analysis of volume and pricing data specifically pertaining to non-NAFTA
imports.  In its analysis of all imports the USIT C examined two factors other than increased imports
alleged to be causes of serious injury to the domestic cold-finished bar industry.  It found that one of
these factors (the performance of domestic producer RTI) did not cause the injury it observed.  The
USITC satisfied its obligation to perform a non-attribution analysis of the other factor, demand
patterns, by focusing on domestic industry data for 2000, a year in which demand for cold-finishedbar increased.  Thus the USITC's analysis of non-NAFTA imports, when read in conjunction with its
analysis of all imports, also establishes that the USITC did not attribute to non-NAFTA imports any
effects due to factors other than imports.  In its consideration of non-NAFTA imports the USITC did
not need to conduct a separate non-attribution analysis for NAFTA imports.
4316
7.1827  China argues that the United States wrongly considers that for each product analysed in the
report, the USITC properly established that in creased imports from non-NAFTA countries caused
serious injury to the domestic industry.4317  At page 107 of the USITC Report, it is said that the
quantity of imports from Canada from 1998 to 2000 was 63.7% greater than the quantity of all
imports from the second largest source, and Canada accounted for at least 25.5% of the quantity of all
imports during each year in this period.  The USITC Report also says at page 107 that Canada was thetop supplier of cold-finished bar to the United States for each of the last three years in the period
                                                     
4312 United States' first written submission, para. 847.
4313 USITC Second Supplementary Report, pp. 6-7.
4314 European Communities' first written submission, paras. 622-623.
4315 European Communities' first written submission, para. 625.  China raises a similar objection, see
China's first written submission, para. 598.
4316 United States' first written submission, paras. 838-846.
4317 China's second written submission, para. 326.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 613
examined.  At the same time, the USITC Report at page 105 indicates that the record indicates that
price is an important factor in purchasing decisions for cold-finished bar.  Purchasers listed pricesecond most-frequently, after quality, as the top factor in purchasing decisions, and listed price most
frequently as the number two factor.  Most purchasers evaluated the imports and domestically-
produced cold-finished bar as comparable with respect to product consistency and product quality.
However, at no time has the USITC analysed the extent to which those specific characteristics of the
Canadian imports could have a specific impact on the injury caused to the United States industry,
different from the one attributable to non-NAFTA imports.  Accordingly, China considers that the
methodology used by the United States prevented it from establishing that the USITC did not attributeto non-NAFTA imports any effects due to NAFTA imports (in this particular case, Canadian imports),
as other factors.
4318
(e) Rebar
7.1828  The European Communities and China submit that neither the USITC Report nor the USITC
Supplementary Report contain any particular findings establishing "explicitly" that increased importsfrom non-NAFTA sources satisfy the conditions set out in Article 2.1 and elaborated in Article 4.2 of
the Agreement on Safeguards.  The European Communities adds that the finding that this product
does not "contribute importantly to the serious injury or threat thereof" in the USITC Report of
October 2001 is not sufficient.  For these reasons, the European Communities and China consider that
the United States for this product failed to respect its obligation under Articles 2.1 and 4.2 of theAgreement on Safeguards.
4319
7.1829  The United States asserts that the USITC's report contains a reasoned and adequate
explanation of how the facts supported its conclusion that increased imports from non-NAFTA
countries caused serious injury to the domestic rebar industry.  This analysis satisfies all requirements
of Articles 2.1 and 4.2 of the Agreement on Safeguards.4320  The European Communities and China
overlook footnote 704 of the USITC's analysis of all imports, which provides a detailed analysis of
non-NAFTA rebar imports.  In that footnote, the USITC expressly found that "the conclusions we
have made concerning the effects of increased imports are equally applicable whether or not imports
from Canada and Mexico are included among the imports evaluated".4321  The meaning of this
sentence is unambiguous: it is an USITC finding that increased imports from non-NAFTA sources
caused serious injury to the United States rebar industry.  Moreover, the USITC expressly
incorporated into its analysis of non-NAFTA imports the pertinent portions of its analysis for allimports.  Because the USITC expressly made this finding in its analysis of imports from all sources,
there was no need for the Trade Representative to request the USITC to make supplemental findings
on this issue. In its analysis of non-NAFTA  imports, the USITC emphasized that non-NAFTA
imports of rebar increased by 434.8% from 1996 to 2000, by 183.5% from 1997 to 1998, and by
50.2% from 1998 to 1999.  Each of these increases was greater than that for all imports for theapplicable time period.  In its analysis, the USITC also provided information concerning the annual
evolution of non-NAFTA import volumes.
4322 The USITC's analysis also demonstrated that there
were imports "in such increased quantities … and un der such conditions as to cause or threaten to
cause serious injury" by demonstrating the genuine and substantial causal link between non-NAFTA
imports and the serious injury experienced by the domestic rebar industry.  The nature of that serious
                                                     
4318 China's second written submission, paras. 333-334.
4319 China's first written submission, paras. 601-602;  European Communities' first written submission,
paras. 614-615.
4320 United States' first written submission, para. 859.
4321 USITC Report, p. 116, footnote 704.
4322 USITC Report, p. 116, footnote 704.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 614
injury was discussed in great detail in the USITC's analysis of all imports.  The USITC's analysis of
non-NAFTA imports, when read in conjunction with the analysis of all imports, therefore, establishesthat the considerations that establish the existence of a genuine and substantial causal link between the
increased imports and the serious injury were the same whether all imports were examined or whether
only imports from non-NAFTA sources were examined.  The USITC reached its conclusions on the
basis of an objective, fact-based analysis of volume and pricing data specifically pertaining to non-
NAFTA imports.  The USITC's report also establishes that the USITC did not attribute to non-
NAFTA imports any effects due to factors other than imports.  As discussed above, in its
consideration of non-NAFTA imports the USITC did not need to conduct a separate non-attributionanalysis for NAFTA imports.
4323
(f) Welded pipe
7.1830  Switzerland considers that the United States has failed to fulfil its obligation of parallelism
provided by Articles 2.1 and 4.2 of the Agreement on Safeguards.  More particularly, China submits
that the USITC Supplementary Report does not evaluate the share of the domestic market taken bynon-NAFTA imports, does not evaluate other factors relevant to the situation of the industry
concerned, does not make any finding on the relationship between the movements in imports (volume
and market share) and the movements in injury factors, and does not indicate explicitly whether "the
causal link" exists between increased imports and serious injury, and whether this causal link involves
a genuine and substantial relationship of cause and effect between these two elements.  China andSwitzerland consider that the USITC Supplementar y Report for this product "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'  [and ] does not amount to a 'reasoned and adequate explanation  of how
the facts support [the] determination'",  in accordance with the Appellate Body's interpretation.
4324
7.1831  The European Communities submits that the USITC failed to carry out a proper increased
imports and causation analysis for non-FTA imports.  In particular, the USITC failed to separate and
distinguish the impact of excluded imports and to ensure that these are not attributed to the imports
covered by the safeguard measure.  The import data in the USITC Report reveals that the shares of
NAFTA imports in total imports were significant, reaching up to 50% in the case of certain tubularproducts.
4325 4326
7.1832  Korea submits that the USITC's supplementary discussion of threat of serious injury from
non-NAFTA imports with respect to other welded pi pe was perfunctory and far from complying with
the standard set by the Appellate Body in previous safeguard cases.  The additional information of the
USITC narrowly focuses on the price gap between non-NAFTA imports and domestic products.Then, the USITC states conclusively that "excluding Canada and Mexico from the data base does not
appreciably alter projections for foreign production, capacity, and exports to the United States.
Indeed, capacity, production, and exports to the United States from non-NAFTA countries are all
projected to reach new peaks during the period 2001-2002".
4327  This conclusive statement was made
                                                     
4323 United States' first written submission, paras. 848-858.
4324 China's first written submission, paras. 603–605; Switzerland's first written submission,
paras. 356-357.
4325 USITC Report, Vol. II, Table TUBULAR-6.
4326 European Communities' first written submission, paras. 622-627. The detailed arguments are set
out in the product-specific section on non-attribution (H.3(b)).
4327 USITC Response to USTR Request For Additional Information, (Questions 1 and 3) (4 February
2002), p.10 (Exhibit CC-11).WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 615
without any substantiation other than a footnote to a few tables in the USITC Report.  Moreover, the
tables do not support conclusions for which they are cited by the USITC.  For example, the USITCasserted that the non-NAFTA capacity is projected to reach a new peak during the period 2001-2002.
The analysis of the tables cited by the USITC shows that the non-NAFTA capacity stood at
17,383,373 tons in 1998 and 17,064,937 tons in 1999, while, according to the USITC table, it was
projected to drop to 16,988,276 tons in 2001 and 17,074,446 tons in 2002, respectively.
4328  T h e
perfunctory discussion of the impact of non-NAFTA  imports is far from the Appellate Body's stated
requirements of a "reasoned and adequate explanation" of how the facts support their injury
determination by conducting a substantive evaluation of the "bearing", or the "influence" or "effect"or "impact" that the relevant factors have on the situation of the domestic industry.
4329  M o r e
importantly, the USITC failed to even acknowledge, much less explain, how it segregated the threat
of injury it had determined to be caused by the largest single supplier to the United States market– i.e.,
Canada–from all other imports.  According to the USITC:  Canada was the largest single supplier for
the three most recent years;  the quantity of imports from Canada between 1999-2000 was 141%greater than the quantity from the second largest supplier;  between 1998-2000, Canada accounted for
at least 35% of the imports;  and imports from Canada increased their market share from 10.8% in
1999 to 14.2% in 2000.
4330  Korea concludes that the USITC clearly did not segregate the threat
caused by imports from Canada from the threat caused by non-NAFTA imports.  Therefore, the
USITC failed to provide "reasoned and adequate explanation" that establishes explicitly that non-NAFTA imports, by themselves, satisfy the conditio ns 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.
4331 4332
7.1833  The United States asserts that the USITC's report contains a reasoned and adequate
explanation of how the facts supported its conclusion that increased imports from non-NAFTA
countries threatened to cause serious injury to the domestic industry producing welded pipe.  Thisanalysis satisfies all requirements of Articles 2.1 and 4.2 of the Agreement on Safeguards.
4333 In its
analysis of non-NAFTA imports, the USITC f ound that non-NAFTA imports increased by 80.7%
from 1996 to 2000, and had major increases of 20-30% in every year of the period examined except
1999.4334  Non-NAFTA imports of welded pipe increased at a greater rate than imports from all
sources.4335 Consequently, the European Communities' argument that the USITC Report provided
insufficient information concerning the nature  and significance of the increases in non-NAFTA
imports is wrong.  The European Communities is also  wrong to criticize the USITC for failing to find
that the increase was "recent, sudden, sharp, and significant", and for failing to use full-year 2001
data4336, because, as already argued, these are not the relevant criteria. USITC's analysis of all imports
also described the causal link between all imports an d the threat of serious injury in considerable
detail.  The USITC determined that, through price-based competition, increased imports caused
domestic producers of welded pipe to lose market share at the same time prices were falling.  TheUSITC also determined that increases in exports to the United States market resulting from increases
in foreign capacity would continue unabated in the imminent future.  These elements collectively led
to the domestic industry's continuing declines in production, sales volumes and revenues, and
                                                     
4328 USITC Response to USTR Request For Additional Information, (Questions 1 and 3) (4 February
2002), p.10 (Exhibit CC-11).
4329Appellate Body Report,  US – Lamb , paras. 103 and 104 (emphasis in original).
4330 USITC Report, Vol. I , pp. 166-167 (Exhibit CC-6).
4331 Appellate body Report, US – Lamb , para. 103;  Appellate Body Report, US – Wheat Gluten ,
para. 98.
4332 Korea's first written submission, paras. 195-199.
4333 United States' first written submission, para. 871.
4334 USITC Second Supplementary Report, p. 10.
4335 USITC Report, Table TUBULAR-C-4.
4336 European Communities' first written submission, paras. 622-623.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 616
employment, as well as declines in its performance during the period of investigation, and would
likely continue to cause serious injury to the domes tic industry in the imminent future, if these trends
continued unabated. In its analysis of non-NAFTA imports, the USITC found that each of these three
causal link elements was applicable for such imports.  First, the non-NAFTA imports undersold the
domestically produced product in all but one quarter (32 of 33 quarters) for which data were available,
and the prices for such imports declined over the period examined including during the most recent
quarters.4337  The value of the non-NAFTA imports fell by an even greater amount during the period
of investigation than did imports from all sources.4338  Second, the non-NAFTA imports gained
market share at the expense of the domestic industry.  In its analysis of causal link for all imports, theUSITC emphasized the domestic industry's loss of market share to imports, particularly between 1999
and 2000.  In its analysis of non-NAFTA imports, the USITC found that market share for non-
NAFTA imports increased from 13.1% in 1996 to 19.8% in 2000.
4339  Non-NAFTA imports gained
6.7 of the 10.5 percentage points of market share the domestic industry lost from 1996 to 2000.4340
Third, the USITC found that foreign capacity, production, and exports to the United States from non-
NAFTA countries are all projected to reach new peaks during the period 2001-2002, and thus
projections regarding these factors for all imports were not appreciably altered by considering only
non-NAFTA imports.4341  In its analysis of all imports the USITC examined three factors other than
increased imports alleged to be causes of the threat of serious injury to the domestic welded pipe
industry.  It found that these other factors (changes in demand, increased domestic capacity, and non-import difficulties of a particular producer) did not cause the injury it observed.  Because the USITC's
analysis of all imports contained the requisite discussion of these other factors to satisfy Article 4.2(b)
of the Agreement on Safeguards, and its conclusions were not based upon the particular set of imports
it examined, the USITC was not obliged to discuss these factors further in its analysis of non-NAFTA
imports.
4342
7.1834  China argues that the United States wrongly considers that for each product analysed in the
report, the USITC properly established that in creased imports from non-NAFTA countries caused
serious injury to the domestic industry.4343  It is stated at page 167 of the USITC Report that Canada
was the top supplier of welded non-OCTG products to the United States for each of the most recent
three years in the period examined.  The Report then goes on to state that the quantity of imports from
Canada from 1998 to 2000 was 141% greater than the quantity of imports from the second largest
source during this three-year period.  From 1998 to 2000, Canada also accounted for at least 35% ofthe quantity of all imports during each year in this period.  In addition, imports from Canada increased
their market share by value from 10.8% in 1999 to 14.2% in 2000. At the same time, it is worth noting
that certain United States producers are integrated with Canadian producers and that no domestic
producer of welded pipe products took a posit ion regarding NAFTA exclusions during the injury
phase of the investigation.  Furthermore, at page 167, it is evident that Mexico was among the top fivesuppliers of welded non-OCTG products to the United States in each of the most recent three years in
the period examined.  Mexico was also the fourth largest supplier each year during 1998-2000 and the
quantity of imports from Mexico increased by 94.7% from 1996 to 2000.  However, at no time has the
USITC analysed the extent to which those specific characteristics of the Canadian and Mexican
imports could have a specific impact on the injury caused to the United States industry, different fromthe one attributable to non-NAFTA imports.  Accord ingly, China considers that the methodology used
                                                     
4337 USITC Second Supplementary Report, p. 10.
4338 USITC Report, Table TUBULAR-C-4.
4339 USITC Second Supplementary Report, p. 10; USITC Report, Table TUBULAR-C-4.
4340 USITC Report, Table TUBULAR-C-4.
4341 USITC Second Supplementary Report, p. 10; USITC Report, Tables TUBULAR-30-32.
4342 United States' first written submission, paras. 861-870.
4343 China's second written submission, para. 326.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 617
by the United States prevented it from establishing that the USITC did not attribute to non-NAFTA
imports any effects due to NAFTA imports, as other factors.4344
(g) FFTJ
7.1835  China submits that the USITC supplemental finding on non-NAFTA import prices does not
evaluate the share of the domestic market taken by non-NAFTA imports, it does not contain specific
elements regarding the injury to the US industr y caused by non-NAFTA imports, it does not evaluate
other factors relevant to the situation of the indu stry concerned, it does not make any finding on the
relationship between the movements in imports (volume and market share) and the movements in
injury factors, and it does not indicate explicitly whether "the causal link" exists between increasedimports and serious injury, and whether this causal link involves a genuine and substantial
relationship of cause and effect between these two elements.  The European Communities submits
that the USITC failed to carry out a proper increased imports and causation analysis for non-FTA
imports.  In particular, the USITC failed to separate and distinguish the impact of excluded imports
and to ensure that these are not attributed to the imports covered by the safeguard measure.  TheEuropean Communities and China consider that the USITC Supplementary Report for this product
"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'  [and ] does not amount to a 'reasoned and adequate
explanation of how the facts support [the] determination'",  in accordance with the Appellate Body's
interpretation.
4345
7.1836  The United States asserts that the USITC's report contains a reasoned and adequate
explanation of how the facts supported its conclusion that increased imports from non-NAFTA
countries caused serious injury to the domestic FFTJ industry.  This analysis satisfies all requirements
of Articles 2.1 and 4.2 of the Agreement on Safeguards.4346  In its analysis of non-NAFTA imports,
the USITC found that non-NAFTA imports of FFTJ increased during the period of investigation.
Non-NAFTA imports increased from 76,079 short tons in 1996 to 100,592 short tons in 2000; there
were annual increases during each year of the period of investigation except 1997.  The ratio of non-
NAFTA imports to United States production also increased during each year of the period of
investigation except 1997, rising from 37.1% in 1996 to 51.8% in 2000.4347  Consequently, the
European Communities' argument that the USITC Report provided insufficient information
concerning the nature and significance of the increases in non-NAFTA imports is wrong.  The
European Communities is also wrong to criticize the USITC for failing to find that the increase was
"recent, sudden, sharp, and significant", and for failing to use full-year 2001 data4348, because these
are not the relevant criteria.  The USITC's analysis of all imports described the causal link between allimports and the serious injury in considerable detail.  The USITC emphasized that the increasing
presence of imports in the United States market from 1997 to 2000 coincided with declines in the
domestic industry's sales, production, capacity utilization, employment, and profitability.  The USITC
also emphasized that, for the butt-weld pipe fitting product for which it collected pricing data, imports
                                                     
4344 China's second written submission, paras. 335-336.
4345 China's first written submission, paras. 606–608; European Communities' first written submission,
paras. 622-626; European Communities' second written submission, paras. 478-483. The detailed arguments areset out in the product-specific section on non-attribution (H.3(b)).
4346 United States' first written submission, para. 883.
4347 USITC Second Supplementary Report, p. 8.  The USITC also found that non-NAFTA import
volume, both on an absolute basis and relative to United States production, was higher in interim 2001 than ininterim 2000.  Ibid.
4348 European Communities' first written submission, paras. 622-623.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 618
consistently undersold the domestically produced product, with the highest margins of underselling
occurring at the conclusion of the period of invest igation. In its analysis of non-NAFTA imports, the
USITC found that the first of the three causal link elements on which it relied in its analysis of all
imports – increasing import presence in the United States market – was applicable for non-NAFTA
imports.  The USITC specifically noted the increases in market share for non-NAFTA imports during
its period of investigation.  Indeed, non-NAFTA imports were responsible for 7.7 of the 8.8
percentage points of market share the domestic industry lost between 1997 and 2000.4349  The second
element in the USITC's analysis of causal link for all imports focused on domestic industry
performance data.  Because these data did not change depending on which imports were beingexamined, there was no need for the USITC to discuss this factor further in its analysis of non-
NAFTA imports. The third element of the causal link analysis – underselling – was also applicable to
non-NAFTA imports, as the USITC found.  Non-NAFTA imports undersold domestically-produced
products by margins in excess of 20% for every quarter in the period of investigation after the third
quarter of 1999.
4350  Consequently, the USITC's analysis of non-NAFTA imports, when read in
conjunction with the analysis of all imports, establishes that the considerations that establish the
existence of a genuine and substantial causal link between the increased imports and the serious injury
were the same whether all imports were examined or whether only imports from non-NAFTA sources
were examined.  The USITC did not reach this conclusion by "jump[ing] into some generalizations",
as alleged by the European Communities.4351  Instead, the USITC reached its conclusions on the basis
of an objective, fact-based analysis of volume and pricing data specifically pertaining to non-NAFTA
imports.  In its analysis of all imports, the USITC examined five factors other than increased imports
alleged to be causes of serious injury to the domestic FFTJ industry.  It found that four of the five
other factors (demand for oil and gas related products, increased capacity, industry inefficiency, and
worker shortages) did not cause the injury it observed. Its analysis of the remaining factor, relating topurchaser consolidation, focused exclusively on dom estic industry data which also did not change
depending on which imports were being examined.  Consequently, there was also no need for the
USITC to discuss this factor further in its analysis of non-NAFTA imports.
4352
7.1837  China argues that the United States wrongly considers that for each product analysed in the
report, the USITC properly established that in creased imports from non-NAFTA countries caused
serious injury to the domestic industry.4353  As stated in the USITC Re port at page 179, Canada was
the third largest supplier of FFTJ in each of the three recent years and thus was among the top fivesuppliers.  The USITC Report also indicates that imports from Canada have accounted for an
increasing share of total imports.  Since 1998, imports  from Canada have increased more than twice
as fast (39.4%) as imports from all sources (15.6%) and Canada has accounted for 24.8% of the total
increase in imports from all sources since 1998.  At the same time, Mexico has been one of the top
five suppliers of the product concerned and that imports had surged to an exceptionally high level in1998 (46% higher than the next highest year during 1996-2000). At the same time (Page 172 of the
USITC Report), it is indicated that in 1998 the domestic industry experienced several plant closures,
and idle fitting and flange capacity.  However, at no time has the USITC analysed the extent to which
those specific characteristics of the Canadian and Mexican imports could have a specific impact on
the injury caused to the United States industry, different from the one attributable to non-NAFTAimports.  Accordingly, China considers that the methodology used by the United States prevented it
                                                     
4349 USITC Second Supplementary Report, p. 8; USITC Report, Table TUBULAR-C-6.
4350 USITC Second Supplementary Report, p. 8; USITC Report, Table TUBULAR-61.  The USITC
also made this finding in its analysis of all imports.  USITC Report, p. 176.
4351 European Communities' first written submission, para. 625; China raises a similar objection.
China's first written submission, para. 606.
4352 United States' first written submission, paras. 873-882
4353 China's second written submission, para. 326.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 619
from establishing that the USITC did not attribute to non-NAFTA imports any effects due to NAFTA
imports, as other factors.4354
(h) Stainless steel bar
7.1838  China submits that the USITC Supplementary Report does not evaluate other factors relevant
to the situation of the industry concerned, does not make any finding on the relationship between the
movements in imports (volume and market share) and the movements in injury factors, and does not
indicate explicitly whether "the causal link" exists between increased imports and serious injury, and
whether this causal link involves a genuine and substantial relationship of cause and effect between
these two elements.  The European Communities submits that the USITC failed to carry out a properincreased imports and causation analysis for non-FTA imports.  In particular, the USITC failed to
separate and distinguish the impact of excluded impor ts and to ensure that these are not attributed to
the imports covered by the safeguard measure.  The European Communities and China consider that
the USITC Supplementary Report for this product "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'  [and ] does not
amount to a 'reasoned and adequate explanation of how the facts support [the] determination'",  in
accordance with the Appellate Body's interpretation.
4355
7.1839  The United States asserts that the USITC's report contains a reasoned and adequate
explanation of how the facts supported its conclusion that increased imports from non-NAFTAcountries caused serious injury to the domestic stainless steel bar industry.  This analysis satisfies all
requirements of Articles 2.1 and 4.2 of the Agreement on Safeguards.
4356  In its analysis of non-
NAFTA imports, the USITC found that non-NAFTA imports increased by 61.1% from 1996 to 2000,
and while the quantity of such imports fluctuated somewhat during the period of investigation, the
largest single increase occurred from 1999 to 2000 (when they increased by 42.1%).4357  Non-NAFTA
imports of stainless steel bar increased at a greater rate than imports from all sources from 1996 to
2000 and from 1999 to 2000.4358  Consequently, the European Communities' argument that the USITC
Report provided insufficient information concerning the nature and significance of the increases in
non-NAFTA imports is wrong.  The European Communities is also wrong to criticize the USITC for
failing to find that the increase was "recent, sudden, sharp, and significant", and for failing to use full-year 2001 data
4359, because these are not the relevant criteria. The analysis of all imports also
described the causal link between all imports and the serious injury in considerable detail.  The
USITC determined that, through price-based competition, increased imports caused domestic stainless
steel bar producers to lose market share, particularly in the latter half of the period of investigation.
Thus, the basic elements of the finding of causal link relating to all imports were: (1) price-basedcompetition between imports and the like product; and (2) imports gaining market share at the
expense of the domestically produced product.  These elements collectively led to the stainless steel
bar industry's declines in production, sales volumes and revenues, and employment, as well as its poor
financial performance. In its analysis of non-NAFTA imports, the USITC found that each of the
causal link elements was applicable for such imports.  First, the non-NAFTA imports were even more
                                                     
4354 China's second written submission, paras. 337-338.
4355 China's first written submission, paras. 609–611; European Communities' first written submission,
paras. 622-626 and European Communities' second written submission, paras. 478-483. The detailed argumentsare set out in the product-specific section on non-attribution (H.3(b)).
4356 United States' first written submission, para. 894.
4357 USITC Second Supplementary Report, pp. 8-9.
4358 USITC Report, Table STAINLESS-C-4.
4359 European Communities' first written submission, paras. 622-623.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 620
competitive on price with the domestically-produced product than were all imports, inasmuch as the
percentage of price comparisons in which underselling occurred during the period was greater fornon-NAFTA imports than for all imports.  The USITC found that the non-NAFTA imports undersold
the domestically produced product by margins of up to 51%.
4360  The average unit values of the non-
NAFTA imports fell by an even greater amount during the period of investigation than did imports
from all sources.4361  Second, the non-NAFTA imports gained market share at the expense of the
domestic industry.  In its analysis of causal link for all imports, the USITC emphasized the domestic
industry's loss of market share to imports.  In its analysis of non-NAFTA imports, the USITC found
that those imports were responsible for all of this loss, as they gained all 11 percentage points of
market share the domestic industry lost from 1996 to 2000.4362  Consequently, the USITC's analysis of
non-NAFTA imports, when read in conjunction with the analysis of all imports, establishes that the
considerations that establish the existence of a genuine and substantial causal link between the
increased imports and the serious injury were the same whether all imports were examined or whether
only imports from non-NAFTA sources were examined.  The USITC did not reach this conclusion by"jump[ing] into some generalizations", as alleged by the European Communities.
4363  Instead, the
USITC reached its conclusions on the basis of an objective, fact-based analysis of volume and pricing
data specifically pertaining to non-NAFTA imports.
7.1840  The United States further argues that the USITC examined three factors other than increased
imports alleged to be causes of serious injury to the domestic stainless steel bar industry.  It found thatthese other factors (changes in demand during late 2000 and 2001, increases in energy costs, and the
poor operating results of two producers during the period) did not cause the injury it observed.
Because the USITC's analysis of all imports contained the requisite discussion of these other factors
to satisfy Article 4.2(b) of the Agreement on Safeguards, and its conclusions were not based upon the
particular set of imports it examined, the USITC was not obliged to discuss these factors further in itsanalysis of non-NAFTA imports.  Moreover, the third factor, relating to two producers' performance,
related exclusively to domestic industry data which also did not change depending on which imports
were being examined.  Consequently, there was also no need for the USITC to discuss this factor
further in its analysis of non-NAFTA imports.  Thus, the USITC's analysis of non-NAFTA imports,
when read in conjunction with its analysis of all imports, also establishes that the USITC did not
attribute to non-NAFTA imports any effects due to factors other than imports.  As discussed above, in
its consideration of non-NAFTA imports the USITC did not need to conduct a separate non-attribution analysis for NAFTA imports.
4364
7.1841  China argues that the United States wrongly considers that for each product analysed in the
report, the USITC properly established that in creased imports from non-NAFTA countries caused
serious injury to the domestic industry.4365  As indicated in the USITC Report, Canada was one of the
five largest suppliers of stainless steel bar during the last three full years of the period of investigation.The Report further states that Canada's growth rate in interim 2001 was 20.4% while the growth rate
for all imports was a negative 17.1%.  The USITC Report also notes that imports of Canadian
stainless steel bar undersold domestic merchandise in seven out of ten possible price comparisons.
However, at no time has the USITC analysed the extent to which those specific characteristics of the
Canadian imports could have a specific impact on the injury caused to the United States industry,
                                                     
4360 USITC Second Supplementary Report, p. 9.
4361 USITC Report, Table STAINLESS-C-4.
4362 USITC Second Supplementary Report, p. 9; USITC Report, Table STAINLESS-C-4.
4363 European Communities' first written submission, para. 625.  China raises a similar objection.
China's first written submission, para. 609.
4364 United States' first written submission, paras. 885–893.
4365 China's second written submission, para. 326.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 621
different from the one attributable to non-NAFTA imports.  Accordingly, China considers that the
methodology used by the United States prevented it from establishing that the USITC did not attributeto non-NAFTA imports (in this particular case, Canada) any effects due to NAFTA imports, as other
factors.
4366
(i) Stainless steel wire
7.1842  The Europoean Communities and China submit that neither the USITC Report nor the USITC
Supplementary Report contain any particular findings establishing "explicitly" that increased imports
from non-NAFTA sources satisfy the conditions set out in Article 2.1 and elaborated in Article 4.2 of
the Agreement on Safeguards.  The European Communities adds that the finding that this productdoes not "contribute importantly to the serious injury or threat thereof" in the USITC Report of
October 2001 is not sufficient.  For these reasons, the European Communities and China consider that
the United States, for this product, failed to respect its obligation under Articles 2.1 and 4.2 of the
Agreement on Safeguards.
4367
7.1843  The United States asserts that the European Co mmunities is incorrect in complaining that the
USITC did not make a finding that non-NAFTA imports of stainless steel wire fulfilled the necessary
conditions for applying a safeguard measure.4368  Both Chairman Koplan and Commissioner Bragg
provided separate analyses of non-NAFTA imports relating to stainless steel wire.  These analyses,
read in conjunction with each Commissioner's discussion of other pertinent issues contained in his or
her analysis of all imports, demonstrate that the analyses specifically considered all issues relating toimports from non-NAFTA sources.  In his analysis of non-NAFTA imports, Chairman Koplan found
that Canada and Mexico together accounted for a small and declining share of apparent domestic
consumption over the period of investigation, while non-NAFTA imports accounted for an increasing
share, with a particularly notable increase occurring between the interim periods.
4369  These were the
same import volume trends he had identified in his analysis of all imports.4370  Chairman Koplan thus
found that the conclusions he had made concerning the effects of increased imports were equally
applicable for non-NAFTA imports.4371  Consequently, China's argument that the USITC Report
provided no particular findings establishing serious injury by non-NAFTA imports is wrong.4372
Chairman Koplan provided the necessary analys is by demonstrating an increase in non-NAFTA
imports in the latter portion of the period and by further demonstrating the genuine and substantial
causal link between non-NAFTA imports and the serious injury which threatened the domestic
stainless steel wire industry.  The nature of that threat of serious injury was discussed in great detail inChairman Koplan's analysis of all imports.  Chairm an Koplan's analysis of all imports described the
causal link between all imports and the threat of serious injury in some detail.  Chairman Koplan
established a direct correlation between the signific ant increase in the market share of all imports in
interim 2001 and the substantial decline in the industry's condition in that period.
4373  In his analysis of
non-NAFTA imports, Chairman Koplan found this causal link was applicable to non-NAFTAimports.  Chairman Koplan specifically found that imports from Canada and Mexico did not account
for substantial shares of all imports during the period of investigation.  He further specifically found
                                                     
4366 China's second written submission, paras. 339-340.
4367 China's first written submission, paras. 616-617; European Communities' first written submission,
paras. 614-615.
4368 European Communities' first written submission, para. 614; China makes a similar objection.
China's first written submission, para. 616.
4369 USITC Report, p. 260, footnote 36.
4370 USITC Report, p. 259.
4371 USITC Report, p. 260, footnote 36.
4372 China's first written submission, paras. 616-617.
4373 USITC Report, p. 258-259.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 622
that non-NAFTA imports increased late in the period , with a particularly notable increase occurring
between the interim periods, at the time the domestic industry's performance deteriorated.4374
Chairman Koplan specifically found that non-NAFTA  imports gained market share at the expense of
the domestic industry.  In his analysis of all imports, Chairman Koplan emphasized the loss of market
share late in the period of investigation.  In his analysis of non-NAFTA imports, Chairman Koplan
found that non-NAFTA imports were responsible for this loss.4375  Consequently, Chairman Koplan's
analysis of non-NAFTA imports, when read in conjunction with his analysis of all imports,
establishes that the considerations that establish the existence of a genuine and substantial causal link
between the increased imports and the threat of serious injury were the same whether all imports wereexamined or whether only imports from non-NAFTA sources were examined.  Chairman Koplan
examined the decline in demand as a factor other than increased imports alleged to be a cause of the
threat of serious injury facing the domestic stainless steel wire industry.  Chairman Koplan found,
however, that the declines in the domestic industry's production and shipments were greater than the
total decline in apparent domestic consumption, and the volume of imports increased despite thedecline in demand.
4376  Non-NAFTA imports accounted for all of that increase.  Therefore, Chairman
Koplan was not obliged to discuss this factor further in his analysis of non-NAFTA imports.  Thus,
Chairman Koplan's analysis of non-NAFTA imports, wh en read in conjunction with his analysis of all
imports, also establishes that he did not attribut e to non-NAFTA imports any effects due to factors
other than imports.  In his consideration of non-NAFTA imports Chairman Koplan did not need toconduct a separate non-attribution analysis for NAFTA imports.
4377
7.1844  The United States further argues that Commissioner Bragg performed her analysis of non-
NAFTA stainless steel wire imports in the context of her like product encompassing stainless steel
wire and stainless steel wire rope.  Commission er Bragg found that non-NAFTA imports increased
significantly, both in terms of import levels and trends.  Commissioner Bragg found that non-NAFTA
imports increased by 35.2% between 1996 and 2000.  She further found that non-NAFTA imports
accounted for a larger share of the domestic market in 2000 than in 1996, and that their market share
was larger in interim 2001 than in interim 2000.  By interim 2001 non-NAFTA imports accounted for
31.1% of the United States market.4378 Commissioner Bragg's analysis also demonstrated that there
were imports "in such increased quantities . . . and under such conditions as to cause or threaten to
cause serious injury" by demonstrating the genuine and substantial causal link between non-NAFTA
imports and the threat of serious injury facing the domestic stainless steel wire products industry.  Thenature of that threat was discussed in detail in Commissioner Bragg's analysis of all imports.
Commissioner Bragg's analysis of all imports also described the causal link between all imports and
the threat of serious injury in considerable detail.  Commissioner Bragg found that increased imports
at declining prices prevented domestic producers from taking advantage of increased consumption
and threatened the domestic industry with serious injury.
4379 Commissioner Bragg found that this
analysis was applicable for non-NAFTA imports as well.  She found that prices for non-NAFTA
imports declined between 1996 and 2000, and non-NAFTA imports undersold domestic products in
the majority of quarterly comparisons.  She also  emphasized that non-NAFTA imports took market
share away from the domestic industry.4380  Consequently, Commissioner Bragg's analysis of non-
NAFTA imports, when read in conjunction with her analysis of all imports, establishes that theconsiderations that establish the existence of a genuine and substantial causal link between the
                                                     
4374 USITC Report, pp. 259-260, footnote36.
4375 USITC Report, p. 260, footnote 36.
4376 USITC Report, p. 259.
4377 United States' first written submission, paras. 907-916
4378 USITC Second Supplementary Report, pp. 22-23.
4379 USITC Report, pp. 301-302.
4380 USITC Second Supplementary Report, p. 23.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 623
increased imports and the serious injury were the same whether all imports were examined or whether
only imports from non-NAFTA sources were examined. In her analysis of all imports, CommissionerBragg examined three factors other than increased imports alleged to be causes of the threat of serious
injury to the stainless steel wire products domestic industry.  Commissioner Bragg examined the
general downturn in the economy, raw material costs, and the appreciation of the United States
dollar.
4381  Commissioner Bragg's findings concerning these factors were based on a combination of
overall United States marketplace data and domestic industry data, neither of which changed
depending on which imports were being examined.  Thus, there was no need for her to discuss these
factors further in her analysis of non-NAFTA imports.  Consequently, Commissioner Bragg's analysisof non-NAFTA imports, when read in conjunction with her analysis of all imports, establishes that the
considerations that establish the existence of a genuine and substantial causal link between the
increased imports and the serious injury were the same whether all imports were examined or whether
only imports from non-NAFTA sources were examined.  Her analysis also establishes that she did not
attribute to non-NAFTA imports any effects due to factors other than imports.  In her consideration ofnon-NAFTA imports Commissioner Bragg did not need to conduct a separate non-attribution analysis
for NAFTA imports. The analyses of non-NAFTA imports of both Chairman Koplan and
Commissioner Bragg, when read in conjunction with  the analysis of all imports, establish that the
considerations that establish the existence of a genuine and substantial causal link between the
increased imports and the threat of serious injury were the same whether all imports were examined orwhether only imports from non-NAFTA sources were examined.  Chairman Koplan and
Commissioner Bragg reached their conclusions on the basis of an objective, fact-based analysis of
volume and pricing data specifically pertaining to non-NAFTA imports.
4382
(j) Stainless steel rod
7.1845  The European Communities and China submit that neither the USITC Report nor the USITC
Supplementary Report contain any particular findings establishing "explicitly" that increased imports
from non-NAFTA sources satisfy the conditions set out in Article 2.1 and elaborated in Article 4.2 of
the Agreement on Safeguards.  The European Communities adds that the finding that this product
does not "contribute importantly to the serious injury or threat thereof" in the USITC Report of
October 2001 is not sufficient.  For these reasons, the European Communities and China consider that
the United States, for this product, failed to respect its obligation under Articles 2.1 and 4.2 of the
Agreement on Safeguards.4383
7.1846  The United States asserts that the USITC's report contains a complete and detailed analysis
establishing that increased imports from non-NAFTA countries caused serious injury to the domestic
industry producing stainless steel rod.  This analysis satisfies all requirements of Articles 2.1 and 4.2
of the Agreement on Safeguards.4384  The European Communities and China overlook footnote 1437
of the USITC's analysis of all imports.  In that  footnote, the USITC found that imports from Canada
and Mexico accounted for an extremely small percentage of total imports during the investigation
period.4385  In no single year of the period of investigation did combined imports from NAFTA
sources exceed 0.08% of total imports.4386  Exclusion of this volume of imports had no effect on the
USITC's increased import determination, as the timi ng and the rate of the changes in import volume
                                                     
4381 USITC Report, p. 302.
4382 United States' first written submission, paras. 917-924.
4383 China's first written submission, paras. 612-613; European Communities' first written submission,
paras. 614-619.
4384 United States' first written submission, para. 906.
4385 USITC Report, p. 223, footnote 1437.
4386 USITC Memorandum INV-Y-180, Table G26 (US-40).WT/DS248/R, WT/DS249/R,
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were essentially unchanged.  Consequently, the European Communities' argument that the USITC
Report provided insufficient information concerning the nature and significance of the increases innon-NAFTA imports is wrong.
4387  Additionally, the appropriate consideration under the Agreement
on Safeguards is not whether the increase in imports was "recent, sudden, sharp, and significant" in
the abstract, but whether there were imports "in such increased quantities...and under such conditions
as to cause or threaten to cause serious injury".  The USITC provided this analysis by demonstrating
the causal link between non-NAFTA imports and the serious injury experienced by the domestic
industry producing stainless steel rod.  The nature of that injury was discussed in great detail in the
USITC's analysis of all imports. USITC's analysis of  all imports described the causal link between all
imports and the serious injury in considerable detail.  The USITC determined that the increased
quantities of imports caused domestic producers first to lose market share, then to lose revenue as they
attempted to bring domestic prices into line with low-priced imports.  There were several basic
elements to the causal link finding: (1) high substitutability between imports and domestic
merchandise in a market where price was an important consideration; (2) import increases during aperiod of stable demand; (3) persistent underselling by imports; and (4) consequent losses by the
domestic industry of market share, production, ship ments, net commercial sales and net commercial
revenues.  The USITC found a "clear and direct correlation" between changes in import volumes and
the overall condition of the industry.
4388  In its analysis of non-NAFTA imports, the USITC found that
each of these causal links was applicable to non-NAFTA imports.  The USITC found specifically thatexclusion of imports from Canada and Mexico did not change its volume or pricing analysis in any
significant way.
4389  Non-NAFTA imports exhibited the same trends in import volume and in
underselling as did imports from all sources.  Consequently, the USITC's analysis of non-NAFTA
imports, when read in conjunction with the analysis of all imports, establishes that the considerations
that establish the existence of a genuine and substantial causal link between the increased imports andthe serious injury were the same whether all imports were examined or whether only imports from
non-NAFTA sources were examined.  In its analysis of all imports the USITC examined several
factors other than increased imports alleged to be causes of serious injury to the domestic industry
producing stainless steel rod.  The USITC specifically examined: (1) demand declines late in the
period; (2) energy cost changes late in the peri od; and (3) the "aberrational" performance of one
domestic producer.  The USITC identified and discussed in detail the nature and extent of any adverse
effects attributable to each of these factors during the period of investigation and thus ensured it didnot attribute to imports any injury caused by another factor.  The USITC's analysis of what effects, if
any, were attributable to those other factors is also equally applicable to non-NAFTA imports.  In its
discussion of all imports, the USITC distinguished from the serious injury attributable to imports any
effects attributable to declines in demand.  It noted that demand declines only occurred late in the
period under investigation.
4390  By contrast, the domestic industry had experienced declines in market
share, production volumes, sales, employment, and profitability before the decline in demand began
but after import volumes had increased.4391  As the USITC noted in its analysis of non-NAFTA
imports, the volume and pricing of non-NAFTA imports followed the same trend over the period of
investigation as did imports from all sources; indeed, non-NAFTA imports accounted for essentially
all imports and all underselling observations.4392  Thus the USITC's conclusion regarding the nature
and extent of injury attributable to increased imports was unchanged, and the USITC was not obliged
to further discuss demand declines in its analysis of non-NAFTA imports. The examination of the
remaining two factors – increased energy costs and the poor performance of one domestic producer
                                                     
4387 European Communities' first written submission, para. 614.
4388 USITC Report, pp. 220-221.
4389 USITC Report, p. 223, footnote 1437.
4390 USITC Report, p. 221.
4391 USITC Report, p. 221.
4392 USITC Second Supplementary Report, p. 5.WT/DS248/R, WT/DS249/R,
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during the period of investigation – pertained exclusively to domestic industry data which did not
change depending on which imports were being examined.  Consequently, there was also no need forthe USITC to discuss these factors further in its analysis of non-NAFTA imports.  Thus, the USITC's
analysis of non-NAFTA imports, when read in conjunction with its analysis of all imports, also
establishes that the USITC did not attribute to non-NAFTA imports any effects due to factors other
than imports.  As discussed above, in its consideration of non-NAFTA imports the USITC did not
need to conduct a separate non-attribution analysis for NAFTA imports.
4393
L. ARTICLE  5.2 OF THE AGREEMENT ON SAFEGUARDS AND ARTICLE  XIII OF GATT  1994
1. Basis for determining overall quota level
7.1847  China argues that the basis upon which the United States allocated the shares of the quota for
slab in setting the tariff rate quota for that product is unclear.4394  In particular, China argues that
taking into account the official United States statistics, the overall quota for the first year (5.4 million
short tonnes) was fixed at a very low level in light of former trade.4395  China argues that, except for
the six first months of 2001 and for 1997 (5.3 million tons), imports in the United States were alwayshigher than 5.3 million tons.  For the other years (1996, 1999 and 2000), the volume of imports was
very large (6.2 million tons, 7.3 million t ons and 7.2 million tons respectively).
4396  China argues that,
therefore, it was not possible to fix an overall quo ta at 5.4 million tons.  According to China, this
fixation should be considered a violation of Article 5.2 of the Agreement on Safeguards and
Article XIII of the GATT 1994.4397
7.1848  In response, the United States argues that it based the total quota amount of 5.4 million tons
on imports of slab during 2000, exclusive of FTA imports that were not subject to the safeguard
measures.4398  The United States submits that the year 2000 happened to be the year with the highest
import levels of slab during the USITC's investigation period.4399
2. Allocation of shares of tariff rate quotas and "substantial interest"
7.1849  China also notes that it has not been granted any specific quota in respect of the safeguard
measure for slab and is included in the volume allocated to "all other" countries.4400  China points to
Article 5.2 of the Agreement on Safeguards and argues that pursuant to this Article, a Member shall
allot shares of the tariff rate quota to Members "having a substantial interest".  The same terminology
also exists in Article XIII of the GATT 1994, which provides that "the contracting party concerned
shall allot to contracting parties having a substant ial interest in supplying the product shares based
upon the proportions".4401
7.1850  China argues that following the approach of the Panel in the EC – Bananas III  case, a
Member having a "substantial interest" may be defined as a Member with a share of at least 10% of
the total imports in the country concerned.  For countries with a share between 5% and 10%, a case by
                                                     
4393 United States' first written submission, paras. 895–905.
4394 China's first written submission, para. 628.
4395 China's first written submission, para. 629.
4396 China's first written submission, para. 630.
4397 China's first written submission, para. 631.
4398 United States' first written submission, para. 1216.
4399 United States' first written submission, paras. 1215 and 1226.
4400 China's first written submission, para. 632.
4401 China's first written submission, para. 634.WT/DS248/R, WT/DS249/R,
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case analysis should be conducted.  For countries with a share between 0% and 5%, it should be
concluded a priori  that these countries do not have a substantial interest.4402
7.1851  China submits that it does not seem to reach a sufficient percentage for slabs imports in order
to have a "substantial interest" since China's share accounts for less than 1% during the period).4403
However, China argues that even if it has no "substantial interest" for slabs imports, the United Statesshould still not be allowed to discriminate between WTO Members.
4404  China notes in particular that
in the EC – Bananas III  case, the Appellate body confirmed that the non-discrimination principle
applies to the allocation of shares in a tariff ra te quota, and implies, in particular, that a Member
cannot "allocate tariff quota shares to some Members not having a substantial interest while not
allocating shares to other Members who likewise do not have a substantial interest" .4405  In this
regard, China submits that, in the present case, the United States allotted shares of the tariff quota to
certain Members not having a "substantial interest" for slabs.  For example, China notes that the
market shares of certain countries were far belo w 5% (Ukraine and Japan).  Moreover, China submits
that for Russia (7.45%) and Australia (6.38%), the assessment of their "substantial interest" washighly questionable.
4406
7.1852  China argues that, therefore, it appears that the United States allotted shares of the tariff quota
to WTO Members (at least Japan and Ukraine) not having a "substantial interest" for slabs, while they
did not do the same for other Members (such as China).4407  China, therefore, considers that the
safeguard measure on slabs must be regarded as incompatible with Article 5.2 of the Agreement onSafeguards and Article XIII of the GATT 1994.
4408  In this regard, China further argues that the Panel
in US – Line Pipe  established that Article 5 of the Agreement on Safeguards and Article XIII of the
GATT 1994 may be relied upon simultaneously to analyse a safeguard measure.4409  C h i n a  f u r t h e r
notes that, according to Article XIII.5, these requirements also apply to tariff rate quotas.  In
particular, China argues that Article XIII.2(d), whose wording is identical to Article 5.2(a) of theAgreement on Safeguards, applies to the allocation of shares of a tariff rate quota in the context of a
safeguard measure.
4410
7.1853  With regard to the argument that the tariff allocation system is inconsistent with Article 5.2
and Article XIII because it provided allotments to some Members that were not substantial suppliers
while failing to provide allotments to other Memb ers, including China, that were not substantial
suppliers, the United States relies upon the Panel decision in US – Line Pipe  to argue that Article 5.2,
which applies to quantitative restrictions, does not apply to safeguard measures that take the form of atariff rate quota.
4411 The United States submits in response to the assertion by China that the Panel in
US – Line Pipe  decided that Article 5 and Article XIII could apply simultaneously to analyse a
safeguard measure, that the Panel actually reached  the opposite conclusion with regard to safeguard
measures in the form of a tariff rate quota.4412  It notes that the Panel found that "[w]e do not consider
that tariff quotas are ‘quantitative restriction[s]' w ithin the meaning of Article 5" and that "[s]ince we
have already found that a tariff quota is not a ‘quantitative restriction' (a broader category including
                                                     
4402 China's first written submission, para. 635.
4403 China's first written submission, para. 636.
4404 China's first written submission, para. 637.
4405 China's first oral statement, para 8.
4406 China's first written submission, para. 638.
4407 China's first written submission, para. 639.
4408 China's first written submission, para. 640.
4409 China's first written submission, para. 621.
4410 China's first oral statement, para 5.
4411 United States' first written submission, para. 1220.
4412 United States' first written submission, para. 1221.WT/DS248/R, WT/DS249/R,
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quota) within the meaning of Article 5.1, it cannot constitute a ‘quota' (a narrower category of
quantitative restriction) within the meaning of Article 5.2(a)."4413  However, the United States does
agree that Article XIII:2 applies to the allotment of shares under a tariff rate quota in accordance with
Article 5 of the Agreement on Safeguards.4414
7.1854  China responds by referring to the following language in the EC – Bananas III  case: "As
provided in paragraph 5, Article XIII also applies to tariff quotas.  Article XIII:1 sets out a basic
principle of non-discrimination in the administration of both quantitative restrictions and tariff
quotas".  China submits that, as a consequence, Article XIII:2(a) whose wording is identical to
Article 5.2(a) of the Agreement on Safeguards, shall apply to the allocation of shares of a tariff ratequota in the context of a safeguard measure.  China asserts that, therefore, should Article 5.2 of the
Agreement on Safeguards not apply, as the United States claims, to safeguard measures that take the
form of a tariff rate quota, the allocation of shares in this tariff rate quota should remain subject to
Article XIII.2 (a) of the GATT 1994, which imposes the same requirements as those formulated in
Article 5.2(a), on a Member applying a safeguard measure.  China argues that, nonetheless,Article 5.2(a) whose wording is identical to Article XIII.2(a), should apply to the allocation of shares
of a tariff rate quota.
4415
7.1855  The United States notes that China ascribes to the Panel in EC – Bananas III  an "approach"
under which a Member with at least 10% of total im ports is automatically a substantial supplier, a
Member with less than 5% of total imports is automatically not a substantial supplier, and a case-by-case analysis is applied to Members with between 5% and 10% of total imports.
4416  In deriving a
numerical test from the EC – Bananas III  Panel Report, the United States submits that China does
exactly what the Panel stated it would not do.  A ccording to the United States, the Panel not only
rejected precise numerical thresholds in general, but specifically rejected the 10% threshold proposed
by the complainants.4417  The United States submits that the Panel's finding in that case that it was not
unreasonable for the European Communities to conclude that Colombia and Costa Rica were the only
contracting parties that had a substantial interest in supplying the European Communities banana
market in terms of Article XIII:2(d) was tightly circumscribed and conditioned on the "particular
circumstances" of the case.  According to the United States, that finding cannot be read to create a set
of presumptions as to what share of imports gives a supplier a "substantial interest in supplying the
product" in the meaning of Article XIII:2(d).  Acco rdingly, the US approach of setting a two-percent
threshold for treatment as a substantial supplier in light of the conditions of the slab market, ratherthan using numerical thresholds based on the market for a different product, was consistent with
Article XIII:2(d).
4418
7.1856  China argues that although it is true that the Panel, in the EC – Bananas III  case, also stated
that "a determination of substantial interest might well vary somewhat based on the structure of the
market", it should be underlined that a "substantial interest" cannot be determined arbitrarily andcannot correspond to negligible amounts.  According to  China, this analysis may entail a comparative
exercise that is based on the structure of the market.  This involves an assessment of the position of
the different suppliers of the product concerned on this market.  This, argues China, is confirmed by
                                                     
4413 United States' first written submission, para. 1220, citing Panel Report, US – Line Pipe , paras. 7.69
and 7.73-7.74.
4414 United States' written reply to Panel question No. 64 at the second substantive meeting.
4415 China's second written submission, paras. 348-351.
4416 United States' first written submission, para. 1222.
4417 United States' first written submission, para. 1223.
4418 United States' first written submission, paras. 1224-1225.WT/DS248/R, WT/DS249/R,
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the reasoning of the Panel in the EC – Bananas III case, which based its conclusions regarding the
identification of Members having a substantial interest on the level of their market shares.4419
7.1857  China submits that, in this particular case, it is clear that a 2% threshold cannot be considered
as corresponding to a "substantial" interest in the supply of slabs.  According to China, this is
particularly true considering the shares of imports of the main suppliers as determined by the United
States.  Based on the total of imports for 2001, Brazil's share is 39.20%, Mexico's is 23.52% and
Russia's is 18.83%.  Based on the total of non-NAFTA imports for 2001, Brazil's share is 51.84% and
Russia's is 24.90%.  In comparison to these data, China submits that it seems unreasonable to consider
that Members with a share of only 2% of imports have the same "substantial" interest as these majorsuppliers.
4420 Accordingly, it seems reasonable to consider that the thresholds identified by the Panel
in the EC – Bananas III  case and which, in China's understanding, reflect the common practice of
WTO Members, should also apply in the present case.4421
7.1858  China further asserts that although, according to the data provided by the United States related
to the top ten suppliers, there were three countries (Canada, Venezuela and China) below the 2%level, imports from those countries were not treated in the same way, and that indeed while imports
form Canada and Venezuela were finally excluded from the scope of the safeguard measures, imports
from China were fully subject to the import restricti ons on slabs without any specific allocation in the
tariff rate quota.
4422
7.1859  The United States counter argues that China has failed to meet its burden of proof in objecting
that the 2% threshold chosen by the United States is too low.  According to the United States, China
appears to make the argument that a Member cannot have a substantial interest if any other source
accounts for a significantly greater share of imports, which is not the standard applied by Article XIII.
The United States argues that Article XIII simply states that a Member is entitled to an allotment of a
tariff rate quota it is has a "substantial interest in supplying the product" and does not imposeobligations regarding how a Member applying tariff rate quotas determine whether another Member
has a substantial interest and so the United States was entitled to base its compliance with Article XIII
solely on the volume of another Member's shipments, on its share of imports, or any other information
that would establish that the other Member has a substantial interest in supplying the product.  The
United States argues that elsewhere even China seems to argue for an absolute rule that countries
accounting for at least 10% of imports must be treated as having a substantial interest. This would
mean that a Member could thereby meet this threshold regardless of whether another source accountsfor a significantly greater share of imports.
4423
7.1860  The United States argues as regards the suggestion that it treated differently Members with
less than a 2% market share, that except for developing countries and FTA partners that were
excluded entirely from the safeguard measure, the United States did treat these Members in the same
manner.4424
                                                     
4419 China's written reply to Panel question No. 63 at the second substantive meeting.
4420 China's second written submission, paras. 356-357.
4421 China's first oral statement, paras. 10-12.
4422 China's written reply to Panel question No. 66 at the second substantive meeting.
4423 United States' written reply to Panel question No. 63 at the second substantive meeting.
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3. Period for determining "substantial interest"
7.1861  The United States submits that it considered the one-year period of 2001 to be a recent,
representative period for shares of imports.  Therefore, the USITC based the identification of
substantial suppliers and allotments of the duty-free quantity among substantial suppliers on shares of
total imports in 2001.  In so doing, the United States argues that it complied fully with the obligation
under Article XIII:2(d) to provide allotments to substantial supplying Members "based upon the
proportions, supplied by such Members during a previous representative period".4425  T h e  U n i t e d
States submits that it decided that in light of the size of the US market for slab and the large quantity
of imports, 2% of total imports was an appropriate threshold in this case.  Consistent with theseconsiderations, the United States treated as substantial suppliers all countries that exceeded 2% of
total imports in 2001
4426, and provided specific allocations only to those countries that it considered to
have a substantial interest.4427  The United States notes in this regard that, with the exception of Brazil
and Mexico, the share of total imports held by each source fluctuated to a large degree from year to
year.  The use of 2001 import share data had the additional benefit of treating as substantial suppliersonly countries that had consistently supplied more than 2% of imports.  Thus, according to the United
States, the identification of substantial suppliers was not based on temporary fluctuations in import
shares.
4428  China argues that based on full-year imports data for 2001 there would be a cluster of
countries with a market share above 18%, and a cluster of countries with a market share below 6%,
being understood that no other country is to be found between these two threshol ds.  According to the
same logic, but based on the supplied quantities, on would identify a cluster of countries that have
supplied over 1,000,000 tons, and a cluster of countries that have supplied less than 400,000 tons.
According to China, those are also clear dividing lines.4429  China noted that the United States based
its determinations of substantial suppliers on data concerning the full year 2001, i.e. data that were
supposed not to be available by the time of the adoption of the safeguard measure.  However, thisimplies that the justifications given by the United States in its first written submission and in its
answers to the questions of China are based on data that were included neither in the USITC report
nor in the proclamation and therefore have not been communicated to the interested parties.
4430
7.1862  The United States also argues that its use of data for the year 2001 for determination of
"substantial interest" was not inconsistent with the USITC's analysis of whether imports increased.
According to the United States, the ""substantial in terest"" standard arises under Article XIII:2(d),
which provides that a Member allocating a TRQ among other Members must allot shares to Members"having a substantial interest in supplying the product . . . based upon the proportions, supplied by
such [Members] during a previous representative period, of the total quantity or value of imports of
the product".  The United States argues that, however, Article XIII provides no guidance for
determining what constitutes a "previous representative period", and the Agreement on Safeguards
does not require that the period used be cotermi nous with or subsumed within the investigation
period.  The United States submits that there can be no question that 2001 was "recent" at the time of
the safeguard measures.  Data for that year was also representative of import patterns.  The United
States asserts that it was, therefore, entirely cons istent with Article XIII:2 for the President to use
2001 as the recent representative period.
4431
                                                     
4425 United States' first written submission, para. 1215.
4426 United States' first written submission, para. 1216.
4427 United States' written reply to Panel question No. 67 at the second substantive meeting.
4428 United States' first written submission, para. 1217.
4429 China's second written submission, paras. 366-368.
4430 China's second written submission, para. 359.
4431 United States' written reply to Panel question No. 65 at the second substantive meeting.WT/DS248/R, WT/DS249/R,
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M. ARTICLE  9.1 OF THE AGREEMENT ON SAFEGUARDS (SPECIAL AND DIFFERENTIAL TREATMENT )
1. Identification of developing countries for the purposes of Article 9.1
7.1863  China argues that the United States unilaterally and arbitrarily links developing country status
of Article 9.1 of the Agreement on Safeguards with the United States' Generalised System of
Preferences.  In this regard, China points out that within the context of the GSP – a unilateral
instrument – the donor country has clear discretion in deciding the list of beneficiaries.4432   China
further points out that there may be GSP schemes (including the United States GSP) that include
criteria for country eligibility, which are unrelated to the level of development.  Accordingly, if a
country is excluded from the United States GSP, this does not necessarily mean that this country isnot a developing country.
4433 The application of such criteria would allow a WTO Member to exclude
countries, which level of development would qualify them under the generally accepted term of
"developing country" from the benefit of GSP Schemes for reasons other than considerations based on
the level of development, and that such criteria would allow a country to select their GSP
beneficiaries and to discriminate between countries  whose level of development would allow them to
be objectively considered as "developing countries".4434 Further in China's view, it is not possible that
a single Member be considered a developing country by, say, the United States and not the European
Communities and others in respect of the same dispute or the same provision.  To proceed otherwise
would deprive WTO developing country Members from all legal certainty as far as their rights and
obligations under WTO Agreements are concerned.  To proceed otherwise would also be incontradiction with the need for a multilateral approach of the "special and differential treatment"
provisions within the WTO.
4435
7.1864  In response, the United States argues that it is possible that a single Member be considered a
developing country by, say the United States, and not the European Communities and others in
respect of the same dispute or the same provision.  By way of example, the United States notes that ittreated Albania, Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Kyrgyzstan, Latvia,
Lithuania, Moldova, Romania, Slovakia, Slovenia, Hungary, Poland, and Turkey as developing
country Members in the application of its steel safeguard measures whereas the European
Communities treated none of these Members as developing countries when it applied its own
safeguard measures on steel.
4436  The United States argues that China itself has accepted this principle
by agreeing in its Protocol of Accession to developing country treatment in some areas, and non-
developing country treatment in others.4437  The United States argues further that these differences
arise from the text of Article 9.1, which does not indicate how a Member must comply with its
obligations under that Article.  Since it is an obligation relating to application of a safeguard measure,
it falls to the Member applying a measure to iden tify, in the first instance, Members eligible for
treatment as developing countries for purposes of Article 9.1.  Since different Members may apply
different procedures, they may reach different results.4438
7.1865  The United States acknowledges that, for each of the ten safeguard measures, it identified
developing country Members in keeping with its list of countries eligible for the its GSP, a program of
                                                     
4432 China's first written submission, para. 655.
4433 China's first written submission, para. 656.
4434 China's first oral statement, paras. 24 and 25.
4435 China's written reply to Panel question No. 127 at the first substantive meeting.
4436 United States' written reply to Panel question No. 127 at the first substantive meeting.
4437 United States' written reply to Panel question No. 126 at the first substantive meeting.
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benefits for developing countries.4439  The United States notes in this regard that the WTO Agreement
does not define the term "developing country" nor does it establish a procedure or method fordetermining when a Member qualifies for that status.
4440  The United States argues that, therefore, in
assessing this claim, the Panel need not address the procedure used by the United Sates for identifying
developing country Members as a general matter.4441  According to the United States, under
Article 9.1, it is the Member applying a safeguard measure that has the obligation to identify the
developing country Members not subject to application of the measure.  This conclusion, argues the
United States, derives from the ordinary meaning of Article 9.1 and its context within the Agreement
on Safeguards and WTO Agreement.4442  The United States further argues that this conclusion is
confirmed by the requirement in footnote 2 to Arti cle 9.1 that "[a] Member shall immediately notify
an action taken under paragraph 1 of Article 9 to the Committee on Safeguards".  Neither the footnote
nor the Article 12 rules for making notifications provides any role in this process for exporting
Members, indicating that the importing Member alone has the obligation to identify which Members
are developing country Members and which of those to exclude.  The United States submits that thestructure of Article 12 supports this conclusion.  Under that article, the Member that makes a decision
or takes an action with respect to a safeguard measure is the party that provides notification of such
decision or action.
4443  The United States asserts that the Appellate Body confirmed this interpretation
in US – Line Pipe , when it stated, "[w]e agree with the United States that Article 9.1 does not indicate
how a Member must comply with this obligation".4444   Therefore, according to the United States, the
Article 9.1 requirement that the Member taking a safeguard measure notify any exclusion of
developing country Members demonstrates that it is the Member taking the measure that has the
obligation to decide which countries qualify for exclusion.4445
7.1866  The United States asserts further that since the obligation falls upon the application of the
measure, it is the Member applying the measure that must determine how to comply.  Article 9.1assigns no obligation concerning or role in this identification process to exporting Members,
developing country or otherwise.
4446  According to the United States, this approach will seldom create
difficulties because, in most cases, Members have not disagreed as to the treatment they will afford
each other.4447  The United States argues that since the Member applying the measure is responsible
for compliance with Article 9.1, it must identify which Members are developing countries for the
purposes of the Agreement on Safeguards, and whether imports from those sources are below the 3%
threshold.4448
7.1867  The United States also notes that development status factors into the first, second, and third
criteria for GSP eligibility under section 502(c) of the Trade Act of 1974. The United States argues
that these development criteria are introduced by the phrase "shall take into account", which
demonstrates that they are required criteria.4449  Moreover, under section 502(b)(1) of the Trade Act,
                                                     
4439 United States' first written submission, para. 1258.
4440 United States' first written submission, para. 1261.
4441 United States' first oral statement, para. 81.
4442 United States' first written submission, para. 1259.
4443 United States' first written submission, para. 1264.
4444 United States' first written submission, para. 1263.
4445 United States' first written submission, para. 1264.
4446 United States' first written submission, para. 1260.
4447 United States' first written submission, para. 1262.
4448 United States' first written submission, para. 1261.
4449 United States' second oral statement, para 151.WT/DS248/R, WT/DS249/R,
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Page 632
specific developed countries – Australia, Canada, EU member states, Iceland, Japan, Monaco, New
Zealand, Norway, and Switzerland – may not be designated as GSP beneficiaries.4450
7.1868  China however counter-argues that the criteria under the first second and third criteria Section
502 (c) are discretionary.  Further, there are a number of other discretionary criteria  which have
nothing to do with development status such as Section 502 (c) (4), which deals with access to markets
and export practices.  China submits that there are also seven4451 other mandatory criteria which are
unrelated to development status, contained in Section 502 (b), which excludes for instance a country
from GSP beneficiary status if it is dominated or controlled by international communism.4452  China
argues that allowing the United States to base their decision on the GSP–eligible beneficiaries listmeans that the United States would have the possibility to exclude China from the benefit of
Article 9.1 for this safeguard case, or any future case, for reasons that have nothing to do with
development.  China argues that it is in acknowle dgement of this problem that President Bush issued
the 3 July Proclamation allowing the USTR to add developing countries to the United States GSP
List.
4453
7.1869  China notes that, in the present case, the US Pr esident affirmed that "For purposes of the
safeguard measures established under the Proclamation, I determine that the beneficiary countries
under the Generalized System of Preferences are developing countries".4454  China argues that this
statement establishes a clear link between the United States GSP and the developing country status
under Art 9.1 of the Agreement on Safeguards.  According to China, the United States confirmed thislink by stating that:"…the Presiden t determined that the GSP list of countries encompasses all the
countries eligible for treatment as developing country Member under Article 9.1,……and that the list
in subdivision (d)(i) contains all developing countries that are also WTO Members". China argues that
there would seem to be a contradiction between this statement and the text of a presidential
proclamation of 3 July 2002.  Indeed, paragraph 1 of this proclamation states that: "The USTR isauthorized, upon publication of a notice in the Federal Register of his determination that it is
appropriate to add WTO member developing countries to the list of countries in subdivision (d)(i) of
Note 11, to add such countries to that list". According to China, this clearly demonstrates that the list
in subdivision (d)(i) did not necessarily cover all the developing countries that are WTO Members.
4455
China argues that such a determination is not acceptable as far as China is concerned.  Indeed, the factthat a WTO Member is excluded from the United States GSP cannot be a reason, in itself, to consider
that it is not a developing country within the meaning of Article 9.1 of the Agreement onSafeguards.
4456
7.1870  China notes in this context that, in the past, opposition had already been voiced in the WTO
over the manner in which the United States had excluded a developing WTO Member from eligibility
under Article 9.1 of the Agreement on Safeguards on the grounds that the developing Member was
not included in the preference-giving piece of legislation.  China relies upon statements made by twoMembers in meetings of the Committee on Safeguards, to the effect, inter alia , that "it had been
                                                     
4450 United States' written reply to Panel question No. 126 at the first substantive meeting.
4451 China's second oral statement, para. 25.
4452 China's second written submission, para. 398, China's second oral statement, para. 24.
4453 China's second written submission, paras. 399-400.
4454 China's first written submission, para. 653.
4455 China's first oral statement, paras. 18-20.
4456 China's first written submission, para. 654.WT/DS248/R, WT/DS249/R,
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longstanding GATT practice that developing country st atus was self-elected, and that this practice had
not changed since the coming into force of the WTO". 4457
7.1871  With respect to the argument that the long-standing practice under the GATT and the WTO
has been that the determination of a Member's development status is by self-selection, the United
States submits that China provides no evidence of such a practice in defining or interpreting the rights
and obligations of Members.  Instead, China has offered, in support, a statement representing the
views of two Members.  China fails to establish the legal relevance of such a practice even if it
existed, since that "practice" would not contribute to the definition of a developing country Member
but only indicate individual Members who considered that they met the definition.  The United Statessubmits that the statements referred to by China are not an authoritative, or even indicative, statement
of the practice of the Members.  According to the United States, in fact, the WTO does not even have
an established procedure for Members to register their claim to be a developing country Member.
Under China's reasoning any and all WTO Members could claim benefits intended for developing
countries which would effectively read out of Article 9.1 the term "developing".
4458
7.1872  The United States also argues that China has not established that its identification of
developing country members in keeping with the GSP list is inconsistent with the Agreement on
Safeguards.  In this regard, the United States argues that it applied Article 9.1 in keeping with the list
of developing countries that are eligible for special and differential treatment under the US GSP.  The
United States asserts that there is nothing about th e US GSP list that establishes an inconsistency with
Article 9.1.4459
7.1873  China argues that the US President affirmed that:  "For purposes of the safeguard measures
established under the Proclamation, I determine that the beneficiary countries under the Generalized
System of Preferences are developing countries".4460  China notes that the US President did not say
that, "for the purposes of the safeguard measures established under the Proclamation, "developingcountries" within the meaning of Article 9.1 of the Agreement on Safeguards are the beneficiary
countries under the GSP".
4461  China argues that such a particularly convoluted wording from the
United States authorities reveals that a WTO Member that is not a beneficiary country under the
United States GSP may still be classified as developing country in the context of Article 9.1 of the
Agreement on Safeguards.4462
7.1874  China also notes that the "positive list" of developing countries excluded from the application
of the United States measures is given, in subdivision d(i) of point 11 of the Annex to the PresidentialProclamation, with the following statement: "… the following developing countries that are members
of the World Trade Organization shall not be subject to the rates of duty and tariff-rate quotas
provided for therein".
4463  China asserts that this statement also reveals that not all the developing
countries that are Members of the WTO are excluded from the United States' measures.4464
7.1875  The United States argues that the relevant documents do not support China's claim that the
United States failed to exclude members that the United States considered to be developing country
members.  China notes that the introductory text to subdivision (d)(i) states that "the following
                                                     
4457 China's first written submission, para. 658.
4458 United States' first written submission, para. 1261.
4459 United States' first written submission, para. 1270.
4460 China's first written submission, para. 661.
4461 China's first written submission, para. 662.
4462 China's first written submission, para. 663.
4463 China's first written submission, para. 664.
4464 China's first written submission, para. 665.WT/DS248/R, WT/DS249/R,
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Page 634
developing countries that are members of the Worl d Trade Organization shall not be subject to the
rates of duty and tariff-rate quotas provided therein".  China considers that the use of "the following"in this statement indicates that the list does not contain all developing country WTO Members.  The
United States submits that this is incorrect.  The statement merely reflects that the subsequent list
represents a subset of the group of all developing countries, namely, those developing countries that
are also WTO Members.  Indeed, not all beneficiary countries under the US GSP program are WTO
members.
4465  The United States argues that the President determined that the GSP list of countries
encompasses all the countries eligible for treatment as developing country Members under Article 9.1,
and that the list in subdivision (d)(i) contains all developing countries that are also WTO Members.4466
7.1876  The United States argues that none of the Complainants have established a prima facie case of
inconsistency with the Safeguards Agreement.  In order to do so, they would have had to show that
the safeguard measures were applied to a developing country Member accounting for less than three
percent of total imports, when total imports from such countries did not exceed nine percent of total
imports.  Neither China nor Norway has met this threshold requirement.  Norway does not identifyany developing country Member that it believes was improperly subjected to a safeguard measure.
China, for its part, argues only that it has designated itself a developing country Member for purposes
of Article 9.1.
4467
7.1877  In response to a question posed by the Panel, the United States acknowledged that the United
States GSP is not always the basis upon which the United States identifies developing countries forthe purposes of provisions on special and differential treatment contained in other WTO Agreements.
The United States also acknowledged that the GSP list did not represent developing countries for
WTO purposes.  By way of explanation, the United St ates notes that some of the countries on the GSP
list – such as Comoros, Equatorial Guinea, and Ethiopia – are not WTO Members.  Nevertheless, the
United States notes that there is no list of developing countries in the WTO against which to compareits GSP list.
4468
2. Qualification of China as a developing country
7.1878  According to China, self-designation should apply and entitle that Member to benefit of the
WTO special and differential treatment provisions available for developing countries as long as this
right is not challenged specifically by another Member on the basis of an adequate and reasoned
explanation.4469  China notes that its claim that it qualifies as a developing country for the purposes of
Article 9.1 is based on the self-designation by China as a developing country for the purposes of theWTO Agreements.
4470 China argues that this situation is reflected in the report of the Working Party
on the accession of China, as well as in the Protocol of Accession.4471
7.1879  China argues that by referring to documents related to its Protocol of Accession, it is clear
that China has provided sufficient evidence that it has met its burden of proof that the United States
failed to comply with Article 9.1 of the Agreement on Safeguards.4472  China also notes that the
reports of the Working Party have been accepted and adopted by WTO Members, including the
                                                     
4465 United States' first written submission, para. 1275.
4466 United States' first written submission, para. 1276.
4467 United States' first oral statement, paras. 82-83.
4468 United States' written reply to Panel question No. 124 at the first substantive meeting.
4469 China's written reply to Panel question No. 121 at the first substantive meeting.
4470 China's written reply to Panel question No. 121 at the first substantive meeting.
4471 China's written reply to Panel question No. 121 at the first substantive meeting.
4472 China's second written submission, para. 378.WT/DS248/R, WT/DS249/R,
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Page 635
United States. China argues that, consequently, all these documents are an integral part of the WTO
Agreement.4473
7.1880  With regard to China's self-designation as a developing country, China notes that although
important achievements have been made in its economic development, China is still a developing
country and, therefore, should have the right to enjoy all the differential and more favourable
treatment accorded to developing country Member s pursuant to the WTO Agreement.  Accordingly,
some WTO Members felt the need to address China's specific situation through a pragmatic and
"tailored" approach . This approach, says China, is reflected in China's Protocol of Accession.  China
submits that this reflects the agreement reached between China and other WTO Members that China,for certain specific WTO Agreements, would not benefit from certain WTO provisions available only
to developing countries.  China submits that this underlines the fact that WTO Members
acknowledged that China is a developing country and was entitled to benefit from the special and
differential treatment provisions contained in the WTO Agreements and available only to developing
countries but also, that the benefits linked to this status should simply be excluded for certain WTOAgreements. These specific Agreements included those related to agriculture, TRIMs and subsidies.
China notes that, however, there was no specific provision in the Accession Protocol related to the
Agreement on Safeguards and the application of Article 9.1 and that, unlike the other three specific
areas, nobody questioned the fact that China could benefit from special and differential treatment in
other areas , during China's accession process.
4474
7.1881  China submits that this is particularly true in the context of Article 9.1 of the Agreement on
Safeguards.  More particularly, China submits that such a conclusion is all the more understandable
that Article 9.1 should be considered as being pragmatic enough.  Indeed, if a developing country is
above the 3% threshold, that country will not benefit from Article 9.1.  Accordingly, accepting the
status of developing country for China in the context of Article 9.1 has limited consequences, sincethe de minimis  test acts as a "safety net" for the Member applying the measure.
4475 China submits that
China's self-designation should, therefore, have rema ined valid in the context of this Agreement.  In
any event, the United States should have provided a reasoned and adequate explanation as to why it
was possible to exclude China from the benefit of Article 9.1.4476
7.1882  The United States submits that China's sole argument in support of its claim to be a
developing country Member is the assertion that it is, and has always claimed to be, a developing
country Member, especially when it acceded to the WTO.  The United States argues that althoughChina may consider itself a developing country Member, its Protocol of Accession to the WTO
clearly indicates that Members took a different view of China's situation.  Members indicated that
because of significant size, rapid growth and transitional nature of the Chinese economy, a pragmatic
approach needed to be taken in determining China's need for recourse to transitional periods and other
special provisions in the WTO Agreement availa ble to developing country WTO members.  "Each
agreement and China's situation should be carefully considered and specifically addressed".   This is
precisely the approach taken throughout China's accession documents.
4477  The United States asserts
that in particular instances, under certain WTO agreements, China has explicitly abandoned any
claims to treatment as a developing country.4478  The United States contends that China has admitted
that the Protocol does not specifically address treatment under the Safeguards Agreement.  Thus, in
                                                     
4473 China's second written submission, para. 389.
4474 China's second written submission, para. 386.
4475 China's second written submission, para. 387.
4476 China's written reply to Panel question No. 122 at the first substantive meeting.
4477 United States' first written submission, para. 1267.
4478 United States' first written submission, para. 1268.WT/DS248/R, WT/DS249/R,
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Page 636
the United States' view, the only possible conclusion is that the Protocol and Working Party Report do
not establish China's entitlement to treatment as a developing country for purposes of Article 9.1.4479
7.1883  The United States submits that these commitmen ts demonstrate that China is not invariably
treated as a developing country Member for purposes of the covered agreements.  Thus, it cannot rely
on a pattern of developing country treatment to support a claim for that status.  Since it has provided
no other basis for asserting developing country status, the United States submits that China has not
met its burden of proof to establish that the US was required under the Agreement on Safeguards to
exclude exports from China from the United States' safeguard measures.4480
7.1884  In this regard, the United States notes that it has not taken a position in this dispute as to how
any other Member would establish that it would be entitled to treatment as a developing country under
Article 9.1.  Nor is it necessary to resolve that question, as no other Member has claimed to be a
developing country Member that has been subject to the steel safeguard measures in a manner
inconsistent with Article 9.1.4481
3. Qualification of China under the de minimis  test
7.1885  China argues, in response to a question posed by the Panel, that although it was not primarily
up to China to apply the de minimis  test, it appears, on the basis of preliminary calculations and of
USITC statistics available to the United States' President, that China had a share of imports into the
United States accounting for less than 3%, with the de minimis exporting developing country
Members collectively accounting for no more than 9% of total imports, for at least the followingproducts: slab, hot-rolled steel sheets, coated steel, hot-rolled bar, cold-rolled bar, rebar, tin mill
products, stainless steel bar and stainless steel rod.
4482  China argues that, therefore, for a large number
of products, China should have been excluded from the scope of application of the safeguard measure.
China alleges that the necessary statistical data were available to the USITC at the time of the
adoption of the measures from which the United States failed to draw the proper conclusions.4483 The
fact that the de minimis  test was not alleged is due to the fact that, as a first step, the United States
denied China's right to be a "developing country" within the meaning of Article 9.1 and that,
therefore, there was no need to examine the second step (i.e. the de minimis test) when the United
States denied the right to benefit from the first step.4484
4. Relationship between Articles 9.1 and 3.1 of the Agreement on Safeguards
7.1886  China argues that Article 9.1 of the Agreement on Safeguards needs to be read in connection
with Article 3.1 of the Agreement, which provides that: "The competent authorities shall publish a
report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and
law".4485 China is of the opinion that Article 3.1 of the Agreement on Safeguards covers the elements
of Article 9.1 because Article 3.1 contains both a requirement of "due process" (rights of interested
parties, access to non-confidential files…), which might be limited to the investigation, but also a
requirement to provide a "reasoned and adequate explanation", which cannot be limited to the mere"investigation".
4486 China also argues that Article 9.1's coverage is confirmed by the fact that the first
                                                     
4479 United States' oral statement at the second substantive meeting, para. 150.
4480 United States' first written submission, para. 1269.
4481 United States' written reply to Panel question No. 154 at the first substantive meeting.
4482 China's second oral statement, para. 7.
4483 China's second written submission, paras. 376-377.
4484 China's written reply to Panel question No. 123 at the first substantive meeting.
4485 China's first written submission, para. 642.
4486 China's written reply to Panel question No. 120 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
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Page 637
sentence of Article 3.1 refers to Article X of GATT 1994, indicating that Article 3.1, in this aspect, is
nothing more than a lex speciales of Article X in the specific context of safeguard.4487
7.1887  China argues that this approach is confirmed in US – Lamb  case where the Appellate Body
found that: "Article 3.1 requires competent authorities to set forth findings and reasoned conclusions
on 'all pertinent issues of fact and law' in their published report".4488  China further relies upon the
Appellate Body decisions in US – Lamb  and US – Cotton Yarn  to argue that the standard of review
under Article 11 of the DSU in relation to claims under the Agreement on Safeguards is such that
"panels must examine whether the competent auth ority has examined all the pertinent facts and
assessed whether an adequate explanation has been provided as to how those facts support thedetermination; and they must also consider whet her the competent authority's explanation addresses
fully the nature and complexities of the data and responds to other plausible interpretations of the
data".
4489  In China's view, whether a Member is a developing country accounting for less than 3% of
total imports is a pertinent issue in the application of Article 9.1 and, therefore, must be subject to
"findings and reasoned conclusions" published in accordance with Article 3.1.4490
7.1888  China argues that the obligation of the United States authorities in this case was twofold: to
explain in an adequate and reasoned manner the reasons why China is not a developing country; or to
explain in an adequate and reasoned manner the reasons why Chinese products did not meet the de
minimis  test of Article 9.1 of the Agreement on Safeguards.4491  China submits that the existence of a
"developing country", on the one hand, and the fact that the de minimis  test is met, on the other hand,
are in its view "pertinent issues of fact" under Article 3.1, for the application of a safeguard
measure.4492  China argues that it follows that the published report of the competent authorities under
that provision must contain an adequate and reas oned explanation as to how the facts support their
determination.4493
7.1889  China argues that, however, in the present case, the United States authorities failed to provide
a reasoned and adequate explanation of how the facts support their determination that Article 9.1 of
the Agreement on Safeguards is not applicable to China.4494  In particular, China argues that the
United States authorities failed to provide a reasoned explanation as to how the facts support their
determination on Article 9.1 with regard to China and why Chinese products did not meet the de
minimis test of Article 9.1 of the Agreement on Safeguards.  In this regard, China argues that since
China is a developing country and has always claimed itself as such, in particular when it joined the
WTO, the United States authorities could not reasonably exclude China from the benefit of Article 9.1of the Agreement on Safeguards, unless in its published report the United States authorities were able
to explain, in an adequate and reasoned manner, the reasons why China had to fall within the scope of
the United States' measures.
4495
7.1890  The United States submits that China is mistaken.  The "pertinent issues of fact and law"
under Article 3.1 are those related to the investigation and determination of serious injury by thecompetent authorities.  Issues related to the application of the safeguard measure under Article 5.1 –
an inquiry that the Appellate Body has found to be  "separate and distinct" from the finding of serious
                                                     
4487 China's second written submission, para. 410.
4488 China's first written submission, para. 643.
4489 China's first written submission, paras. 644-645.
4490 United States' first written submission, para. 1283.
4491 China's first written submission, para. 668.
4492 China's first written submission, para. 670.
4493 China's first written submission, para. 671.
4494 China's first written submission, para. 672.
4495 China's first written submission, paras. 652 and 667.WT/DS248/R, WT/DS249/R,
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Page 638
injury – are not subject to Article 3.1.4496  The United States argues further that compliance with
Article 9.1 is not part of the investigation or determination of serious injury.  The obligation isphrased in terms of the application of the safeguard measure to developing country Members.  Thus,
China is mistaken in its view that "the existence of a 'developing country' . . . and the fact that the de
minimis test is met" are "pertinent issues of fact" to be addressed under Article 3.1.   These matters
may be pertinent to a non-application determination under Article 9.1, but they are not issues pertinent
to the conduct of an investigation under Article 3.1.
4497  The United States argues that, moreover,
nothing in the reasoning of the Appellate Body reports cited by China supports China's conclusion
that the reports indicate an obligation to explain an Article 9.1 determination as part of an Article 3.1report.  Indeed, in each of the citations noted by China, the Appellate Body is addressing the
requirement of Article 3.1 that competent authorities publish a report containing the findings and
conclusions reached in an investigation.  The Appellate Body findings do not indicate that the
competent authorities must address whether the application of a measure is consistent with
Article 5.1, or whether non-application of the measure is required under Article 9.1.  Thus, thesefindings of the Appellate Body do not support China's views.
4498
7.1891  China argues that the United States is trying to create an illogical line of reasoning between
the investigation and the application of the measure.  In particular, China argues that the United States
wrongly asserts that the question of non-application of the measure to the developing countries under
Article 9.1 comes after the investigation.  In China's view, this is misleading, as all imports are subjectto investigation.  The imports from developing countries, in particular, are placed under the scrutiny
of the competent authorities whose role is to determine which individual country's imports are under
the 3% threshold, and whether the sum of the imports from developing countries does or does not
exceed 9%. China asserts that, clearly, the findings on Article 9.1 are not only relevant when the
measure is applied, but these findings constitute a part of the investigation process, and therefore mustbe covered by the obligation expressed in Article 3.1 of providing a reasoned and adequate
explanation.
4499
5. Time/period during which developing countries identified
7.1892  Norway argues that the safeguard measures in que stion are inconsistent with Article I:1 of the
GATT 1994 and Article 9.1 of the Agreement on Safeguards.  In this regard, Norway submits that
GATT 1994 Article I:1 sets out the general MFN principle, which is also applicable within the sphere
of the Agreement on Safeguards.  According to Norway, any deviation from this principle must havea legal basis, one of them being the possibility to exclude certain developing countries found in
Article 9 of the Agreement on Safeguards.
4500
7.1893  Norway submits that the pivotal question in Article 9.1 is what the correct recent
representative reference period is for the establishment of the exclusions.4501  Norway argues that in
the present case, the United States used import figures for various years and not the same years as theperiod of investigation (1996-2000) when establishing which developing countries had imports under
                                                     
4496 United States' first written submission, para. 1284.
4497 United States' first written submission, para. 1285.
4498 United States' first written submission, para. 1286.
4499 China's second oral statement, paras. 28-30.
4500 Norway's first written submission, para. 398.
4501 Norway's first written submission, para. 399.WT/DS248/R, WT/DS249/R,
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the threshold in Article 9.1.  During consultations, the United States explained that they had mostly
relied on import statistics for 1996-97 to determine the import levels of developing countries.4502
7.1894  Norway points to the statement by the Appellate Body in US – Line Pipe , where it made
reference to the fact that the United States should ha ve looked at "the latest data available at the time
the line pipe measure took effect" . Norway believes that the statement of the Appellate Body in US –
Line Pipe  implies that the United States in the present case should have computed their percentages
based on 2000 or 2001 figures, not 1996-97.4503 Norway submits that, having failed to do so, the
United States breached Article 9.1 of the Agreement on Safeguards, and thus also Article I.1 of the
GATT 1994.4504
7.1895  The United States argues that the Appellate Body has found that the Agreement on
Safeguards does not indicate how a Member must comply with Article 9.1 and that it is for the
importing member to decide how to apply the safeguard measure. 4505
7.1896  In counter-response, Norway argues that it must be flatly rejected that it is for the importing
member to decide how to implement Article 9:1.  All obligations under the covered agreements arethe subject of multilateral control.  According to Norway, this is the very purpose of the Agreement
on Safeguards, as stated explicitly in the preamble.
4506
7.1897  The United States submits that the period 2000 through interim 2001 was one in which the
USITC found that increased imports caused or were threatening to cause serious injury.  The United
States considered that, as a general matter, this period did not reflect normal flows of imports andwould accordingly lead to an aberrational calculation as to whether developing countries qualified for
non-application of the safeguard measures under Arti cle 9.1.  By way of example, the United States
asserts that for certain carbon flat-rolled steel, imports from developing countries had reached a level
in 2000 at which those countries accounting for less than 3% of total imports collectively accounted
for more than 9% of total imports.  If that period were used, no developing country would be eligiblefor exclusion from the safeguard measure on certain carbon flat-rolled steel.  The 1996-1997 period
predates the beginning of the increase in imports for most products subject to the steel safeguard
measures.  Therefore, the United States considered this period particularly appropriate for applying
the Article 9.1 criteria.
4507
7.1898  The United States argues that Norway has not established that the United States' use of
1996-97 as the period for calculating the 3% threshold for non-application was inconsistent with
Article 9.1.  The United States argues that Norway misreads both Article 9.1 and the Appellate BodyReport.  The text of Article 3.1 does not specify any particular period for calculating whether
developing country Members' imports meet the 3% and 9% thresholds.
4508  The 1996-1997 period was
consistent with these requirements.  Since that period predates the increase in imports, it allows an
evaluation of import levels undistorted by the increased imports or the serious injury they caused to
the domestic industries.  By using such a period, the United States could accurately evaluate whether
particular developing country Members qualified for non-application.4509  The United States further
submits that Norway misreads the US – Line Pipe  Report when it states that the Appellate Body
                                                     
4502 Norway's first written submission, para. 400.
4503 Norway's first oral statement on behalf of all complainants, para. 5.
4504 Norway's first written submission, para. 401.
4505 United States' first written submission, para 1260.
4506 Norway's first oral statement on behalf of all complainants, para. 4.
4507 United States' written reply to Panel question No. 125 at the first substantive meeting.
4508 United States' first written submission, para. 1279.
4509 United States' first written submission, para. 1280.WT/DS248/R, WT/DS249/R,
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"made reference to the fact that the United States should have looked at 'the latest data available.'"
The Appellate Body was not making a normative statement about what data a Member shouldconsider, but responding to the Panel's citation to particular data.  Moreover, it considered that data
primarily to evaluate whether the US mechanism for excluding developing countries would work
"automatically", a question that has not been raised in this dispute.
4510
7.1899  Norway further argues that Article 9.1 uses the present tense "as long as its shares of imports
… does not exceed 3 per cent". Norway argues that this indicates that import figures for the 'very
recent past ' are relevant.4511 The United States counter argues that the use of the present tense in
Article 9.1 does not preclude the possibility of using any period within the investigation period, andthat in this case the United States chose a period prior to the increase in imports.  The United States
also questions the significance of the use of the present tense in the English language version of this
provision.  The French text of Article 9.1 is written, in part, in the future tense ("tant que la part de ce
Membre dans les importations du produit considéré du Membre importateur ne dépassera  pas 3 pour
cent") ("as long as the share of the imports of the product concerned in the importing Member will not
exceed  3 percent") (emphasis added).  Thus, according to the United States, it appears that the
negotiators did not attach great significance to the tense of the obligation under Article 9.1.
4512
6. Conclusions
7.1900  China argues that in view of all the above, it would not be appropriate to consider that the
United States authorities fulfilled their obligations under Article 9.1 and 3.1 of the Agreement onSafeguards because it failed to provide adequate and reasoned explanation as to how the facts support
the exclusion of China from the benefit of Article 9.1 of the Agreement on Safeguards.
4513  C h i n a
argues that accepting the conclusion of the United States authorities would allow a WTO Member to
unilaterally and arbitrarily define another Member's status under the WTO.  China submits that this
would be a grave concern to all Members, particularly developing countries.  China further argues thatallowing such a practice runs the risk of opening a back door to nullifying or impairing WTO benefits
accruing to individual Members.
4514  For all the above reasons, China argues that the Panel should
reach the conclusion that the determination made by the United States authorities is inconsistent with
the specific requirements of both Articles 9.1 and 3.1 of the Agreement on Safeguards.4515
7.1901  The United States argues that it is well established that under the WTO Agreement the burden
of proof rests upon the party who asserts the affirmative of a particular claim or defence.  In this
instance, China and Norway are asserting that the United States failed to comply with Article 9.1.Thus, according to the United States, they bear th e burden of proof, which would require a showing
that the United States has applied the measure to a developing country Member that accounts for less
than 3% of total imports.  The United States argues that neither China nor Norway has met that
burden.
4516 According to the United States Norway does not identify any developing country Member
that it believes was improperly subjected to a safeguard measure and China argues only that is hasdesignated itself a developing country  for purposes of Article 9.1, which is not how Article 9.1
works.
4517
                                                     
4510 United States' first written submission, para. 1281.
4511 Norway's second written submission, para. 204.
4512 United States' written reply to Panel question No. 68 at the second substantive meeting.
4513 China's first written submission, para. 676.
4514 China's first written submission, para. 666.
4515 China's first written submission, para. 674.
4516 United States' first written submission, para. 1266.
4517 United States' first oral statement, para. 83.WT/DS248/R, WT/DS249/R,
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N. ARTICLE  I:1 OF THE GATT 1994 AND ARTICLE  2.2 OF THE AGREEMENT ON SAFEGUARDS
(NON-DISCRIMINATION )
1. Exclusion of imports from free-trade areas
(a) The MFN principle
7.1902  Japan and Korea argue that according to the plain meaning of "irrespective of its source" in
Article 2.2 of the Agreement on Safeguards, safeguar d measures must be applied on an MFN basis,
subject only to the special treatment of customs union members4518 and the Article 9 exception for
developing countries4519 and even then only in certain circumstances.4520 More specifically, the MFN
principle embodied in Article 2.2 requires that once a Member conducts an investigation of totalproducts imported and the effects of imports on its domestic industry and reaches an affirmative
determination
4521, any safeguard measures imposed on the basis of that investigation must be applied
to imports from all sources, even imports from countries with which the Members have a specific
agreement prohibiting the application of safeguard measures.4522  Japan and Korea argue that
Article 2.2 prohibits Members from exempting other countries, such as those with which the Memberhas signed a free trade agreement.
4523
7.1903  Japan submits that like Article 2.2 of the Agreement on Safeguards, Article I:1 of GATT 1994
requires Members to treat imports from other Members similarly.  If an "advantage, favour, privilege
or immunity" is granted to any Member, the same courtesy must be accorded "immediately and
unconditionally" to all other Members.  In the context of a safeguards measure, this MFN principlerequires the United States to treat imports equally.  If the President decides to exclude countries that
are members of a free trade agreement which is clearly an "advantage, favour, privilege or immunity"
because the free trade agreement countries would not be subject to the measure – the President must
also extend the exclusion to other WTO members (absent an exception, such as those afforded to
customs union members and developing countries, in certain circumstances).
4524
7.1904  Japan and Korea assert that, in this case, the United States violated the MFN principle by
exempting Canada and Mexico, which are signatories to the North American Free Trade Agreement,
and Israel, which is a signatory to the United States-Israel Free-trade area from the measures.4525
Japan argues that safeguards measures are intended to be global in nature.  Any country-specificexclusion (with the exception of developing countries under Article 9) violates this principle.
Provisions within free trade agreements are no exception and cannot justify the departure from the
non-discrimination principle.  The United States plainly breached its obligation to apply the safeguardmeasure to a product "irrespective of its source".
4526
(b) Application of Article XXIV of GATT 1994
7.1905  With respect to arguments by Japan and Korea that Article I and Article 2.2 embody the MFN
principle of the WTO and that this principle prevents the exclusion of any Member (other than a
                                                     
4518 Japan's second written submission, para. 170.
4519 Japan's first written submission, para. 329; Korea' first written submission, para. 172.
4520 Japan's second written submission, para. 170.
4521 Japan's second written submission, para. 170.
4522 Japan's first written submission, para. 329.
4523 Japan's first written submission, paras. 330-331.
4524 Japan's first written submission, para. 330.
4525 Japan's first written submission, para. 331; Korea's first written submission, para. 173.
4526 Japan's first written submission, para. 334WT/DS248/R, WT/DS249/R,
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Page 642
developing country Member subject to Article 9.1) from a safeguard measure, the United States
argues that Article XXIV creates an exception to the MFN obligation for parties to a free tradeagreement, allowing them to terminate duties and other restrictive regulations of commerce –
including safeguard measures – between them.  Footnote 1 of the Agreement on Safeguards
establishes that "[n]othing in this Agreement prejudges the interpretation of the relationship between
Article XIX and paragraph 8 of Article XXIV of  GATT 1994".  Therefore, the United States'
exclusion of products of Canada, Mexico, Israel, and Jordan from the steel safeguard measures is not
inconsistent with GATT 1994 or the Agreement on Safeguards.
4527
7.1906  The United States submits that the text of GA TT 1994 is clear on this point.  Article XXIV:4
recognizes "the desirability of increasing freedom of trade by the development, through voluntary
agreements, of closer integration" among Members, consistent with the objective of 'facilitating trade
between the constituent territories' of the free trade area4528 while not raising barriers to trade with
other Members.  To this end, Article XXIV:5 provides that "the provisions of this Agreement shall not
prevent" the formation of a free-trade area, provided that certain conditions are met.4529  The United
States further argues that to the extent that Artic les I or XIX can be interpreted to contemplate the
application of safeguard measures to products from all sources, Article XXIV creates a limited
exception.  This is because under the express terms of Article XXIV:5, no other provision of the
GATT 1994, including Article XIX, can be read to prevent participants in an FTA from carrying out
their mutual commitments to exempt each other's trade from trade restrictive measures, including
safeguard measures.4530
7.1907  The United States argues that the United States' free trade agreements with Canada, Mexico,
Israel, and Jordan clearly meet the requirements of Article XXIV.4531  In this regard, the United States
asserts that no complainant has disputed that the safeguard exclusion is an integral component of the
elimination of trade restrictive measures incorporated in NAFTA, the Israel FTA, and the JordanFTA, or that the United States acted in compliance with these agreements in excluding FTA partners'
goods from the steel safeguard measures.  The United States submits that, therefore, the exclusion of
the products of each of these countries from the steel safeguard measures is part of the general
elimination of duties and restrictive regulations of trade in those agreements, and falls within the
purview of Article XXIV.  By virtue of Article XX IV:5, this application by the United States of the
safeguards exclusion is not foreclosed either by the requirements of Articles I or XIX.
4532
7.1908  The United States argues that while Article 2.2 of the Agreement on Safeguards also creates a
nondiscrimination requirement, this requirement does not supersede the Article XXIV authorization
for Members to exclude free trade agreement partners from safeguard measures.  The last sentence of
footnote 1 of the Agreement on Safeguards deals with the relationship between Article XXIV and the
Agreement on Safeguards.  It specifies that "[n]othing in this Agreement prejudges the interpretation
of the relationship between Article XIX and paragraph 8 of Article XXIV of GATT 1994".  Thus,issues related to FTA imports are to be addressed exclusively under the relevant GATT 1994
articles.
4533  The United States submits that application of the customary rules of treaty interpretation
supports this conclusion.  According to these rules, the words in footnote 1 of the Agreement on
Safeguards must be interpreted in good faith in accordance with their ordinary meaning in their
                                                     
4527 United States' first written submission, para. 1228.
4528 United States' second oral statement, para 141.
4529 United States' first written submission, para. 1229.
4530 United States' first written submission, para. 1231.
4531 United States' first written submission, para. 1232.
4532 United States' first written submission, para. 1240.
4533 United States' first written submission, para. 1241.WT/DS248/R, WT/DS249/R,
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Page 643
context and in the light of the object and purpose of the Agreement on Safeguards.  The ordinary
meaning of the first four words of the footnote, "nothing in this Agreement", is to place a limitationon the entire agreement by indicating something that it does not do.  The end of the sentence indicates
what is being limited – "the interpretation of the relationship between Article XIX and paragraph 8 of
Article XXIV of GATT 1994".
4534  The United States submits that, in other words, the footnote means
that the provisions of the Agreement on Safeguards are not intended to disturb the relationship
between the GATT 1994 rules addressing safeguard measures on the one hand and the rights and
obligations of the participants in a free trade agreement on the other.4535
7.1909  The United States notes that the Panel in US – Line Pipe  addressed this question and
concluded that the information presented by the United States established a prima facie case that
NAFTA is in conformity with Article XXIV:5(b) a nd (c), and with Article XXIV:8(b).  According to
the United States, it found further that "the United States is entitled to rely on an Article XXIV
defence against Korea's claims under Articles I, XIII and XIX regarding the exclusion of imports from
Canada and Mexico from the scope of the line pipe [safeguard] measure".  The United States submitsthat the Panel also found, based on footnote 1 of the Agreement on Safeguards, that "Article XXIV
can provide a defence against claims of discrimination brought under Article 2.2".
4536  The United
States asserts that the Appellate Body declared these findings "moot".  Accordingly, the DSB did not
adopt these findings when it adopted the Panel Re port, as modified by the Appellate Body Report.
However, the Appellate Body at no point criticized the Panel's reasoning, which the United Statessays it finds persuasive on these issues.
4537
7.1910  Japan submits that the reliance by the United States on the Panel decision in US – Line Pipe  is
misplaced.  First, the Appellate Body declared th at the Panel's finding was moot and had no legal
effect.  Second, according to Japan, the Panel's reasoning in US – Line Pipe  is flawed; it is shallow
and conclusory rather than convincing.4538
7.1911  In response, the United States argues that the declaration that a finding is moot means only
that it need not have been made.  Such a finding does not signify any infirmity in the reasoning
underlying the substantive finding.  The United States argues that, therefore, the Panel's findings on
Article XXIV in US – Line Pipe , like an unadopted panel report, may provide guidance to a later
panel.4539
7.1912  Japan further argues that the United States' assertion that footnote 1 to Article 2 of the
Agreement on Safeguards does not disturb the exceptions permitted by GATT 1994 Article XXIV ismisguided and that the United States both misread s footnote 1 and misinterprets prior decisions on
this issue.  First, Japan notes that footnote 1 is inapplicable to free-trade areas (or their members).  It
does not define a "Member" as a free-trade area or a country belonging to one; nor does it mention
free-trade areas in any other way.  According to Japa n,  the United States claims, in essence, that the
last sentence of footnote 1 has nothing to do with the rest of the footnote, and that it covers free-tradeareas as well as customs unions.  In Japan's view, this sentence, however, merely states that "[n]othing
in this Agreement prejudges the interpretation of the relationship between Article XIX and paragraph
8 of Article XXIV of GATT 1994".  It says nothing about free-trade areas.  If the Members meant for
the same rules to apply to both customs unions an d free-trade areas, they would have said so quite
                                                     
4534 United States' first written submission, para. 1242.
4535 United States' first written submission, para. 1245.
4536 United States' first written submission, para. 1247.
4537 United States' first written submission, para. 1248.
4538Japan's second written submission, para. 171.
4539 United States' second oral statement, para. 143.WT/DS248/R, WT/DS249/R,
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Page 644
clearly.  Japan argues that the use of the Article XXIV exception is strictly conditioned with respect to
customs unions.  The Appellate Body in Argentina  – Footwear (EC),  citing Turkey  – Textiles,  said
that, under certain conditions, "Article XXIV may justify a measure which is inconsistent with certain
other GATT provisions". ... [T]his defence is available only when it is demonstrated by the Member
imposing the measure that "the measure at issue is introduced upon the formation of a customs union
that fully meets the requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV" and "that the
formation of that customs union would be prevented if it were not allowed to introduce the measure at
issue". Japan submits that, therefore, it would be  anomalous, indeed, if free-trade areas and their
members (which are not even mentioned in footnote 1) were subject to no restrictions conditioningtheir ability to use the defense of Article XXIV while customs unions (which are specified in the text)
could benefit from the defence only in limited circumstances.
4540
7.1913  Korea agrees that by its explicit terms, footnote 1 applies to customs unions.  Further there is
no basis to conclude that footnote 1 is actually two footnotes that must be read separately, as the
United States suggests, but never demonstrates.  Acco rding to Korea, the last sentence of footnote 1
cannot be read as separate and apart from the entire footnote – which by its terms applies to customs
unions alone.  Thus, Korea argues that footnote 1 deals with the particular circumstances of safeguard
investigations conducted by a customs union as to all the elements of an investigation when conducted
on the basis of a single market.4541
7.1914  Norway argues that safeguard measures based on GATT 1994 Article XIX and the
Agreement on Safeguards may be excluded as between free trade partners, although such an exclusion
is not required.4542 The Agreement on Safeguard requires that where such an exclusion is undertaken
that the imports from these countries also be excluded from the safeguards findings and
determinations .  In this regard, Norway argues that GATT 1994 Article XXIV applies to the
Agreement on Safeguards as it applies to GATT 1994 Article XIX.4543 According to Norway, the
correct understanding and application of GATT 1994 Article XXIV:8(b) has been somewhat disputed
for a long time, but particularly since the 1970s.  Norway notes that itself, and its European free trade
partners have routinely exempted their partners from safeguard actions, based on GATT 1994
Article XXIV:8(b) and the provisions of the respective FTA mandating such preferential treatment.
Norway submits that the Agreement on Safeguards did not change the relationship between
Article XXIV and Article XIX.  The last sentence of footnote 1 to Article 2 of the Agreement on
Safeguards indicates that nothing was changed and nothing was finally agreed during the UruguayRound.  The sentence itself and the history behind it implies, like Article XXIV itself does, that the
possibility for exemption  applies both to customs unions and free trade areas.
4544  Norway argues that
this follows from the general nature of the wording, which refers to the whole of paragraph 8, not only
to paragraph 8(a) that concerns customs unions or only to 8(b) that  concerns free trade areas.  This
also follows from the fact that the footnote is attached to the word "Member" in paragraph 1.  If it
should apply only to customs unions, and thus override Article XXIV and limit the rights of Member
States, it would have had to state so explicitly. Thus, Norway submits, the non-discrimination
requirement of Article 2.2 of the Agreement on Safeguards does not supersede the authorisation of
Article XXIV for Members to exclude free trade area partners from safeguard measures.4545
                                                     
4540 Japan's second written submission, paras. 172-175.
4541 Korea's second written submission, para. 223.
4542 Norway's written reply to Panel question No. 117 at the first substantive meeting.
4543 Norway's second written submission, para. 188.
4544 Norway's second written submission, paras. 189-190.
4545 Norway's second oral statement on behalf of all complainants, para. 4.WT/DS248/R, WT/DS249/R,
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7.1915  Norway notes that the issue has been touched upon in Turkey – Textiles  and Argentina –
Footwear (EC) , both of which, however, concerned "c ustoms unions" and not Free Trade
Agreements.  Norway notes that the issue was raised once more in US – Line Pipe, where the
Appellate Body explicitly declined to rule on this point  However, Norway notes that in Turkey –
Textiles  the Appellate Body and the Panel admitted that an Article XXIV defence in principle exists –
but found that the conditions for its application were not met in that specific case.4546
7.1916  Japan and Korea argue that, even if one assumes that the last sentence of footnote 1 applies to
free-trade areas, the Article XXIV defense is not available to the United States.4547 Korea argues that
Article XXIV is intended to preserve the rights of members to form free trade areas.  Article XXIV.5is intended to protect members' rights to enter into free trade areas by assuring that the provisions of
the Agreement on Safeguards do not prevent it, as long as the establishment of a free trade area does
not make the duties and other regulations of commerce applicable to WTO members higher than prior
to the formation of such a free trade area.  Korea submits that in this case, the inclusion of NAFTA
members in safeguard measures would not "prevent" the formation of NAFTA – NAFTA specificallypermits NAFTA members to decide unilaterally whether or not to include each other in safeguard
measures on an ad hoc  basis.  Therefore, Korea argues that regardless of the full meaning of
Article XXIV, the United States does not need to in voke Article XXIV to ensure that "this Agreement
shall not prevent the formation of a free trade area".  Korea submits that this defence is, therefore,
unavailable to the United States and the United States is therefore in violation of Article 2.2 of theAgreement on Safeguards.
4548
7.1917  Article XXIV:8(b) defines an FTA as a group of two or more customs territories in which the
duties and other restrictive regulations of commerce (except, where necessary, those permitted under
Articles XI, XII, XIII, XIV, XV and XX) are eliminated on substantially all the trade between the
constituent territories in products originating in such territories.  In response to a question from thePanel as to the significance of the fact that Article XIX is not mentioned in the brackets of
Article XXIV:8(b), Japan asserts that assuming, fo r purposes of argument, that an FTA member must
eliminate application of safeguard measures to its FTA partners by virtue of the brackets, Members
would also have to eliminate other measures not enumerated in the brackets, particularly anti-
dumping and countervailing duty measures.  Clearly,  the United States has not eliminated – and has
no intention to eliminate – anti-dumping and countervailing duty measures against Canada, Mexico
and Israel.
4549  Japan argues that, on realising this, the United States changes its position and expects
to back away from its contention that it must eliminate safeguard measures as a "restrictive regulation
of commerce" because they are not among the measures that a Member is permitted to retain.4550
7.1918  In response to the same question, Korea argues that the measures mentioned in the
parenthetical clause in Article XXIV:8(b) of the GATT 1994 are illustrations of the measures
available even among the members of an FTA.  It is not an exhaustive list.  The measures specificallyidentified in the parenthetical clause are those that  by their very nature do not prevent the formation of
free trade areas and, therefore, are permitted, if necessary.  As to any other measures not listed, the
fundamental question is:  Does the maintenance of those measures prevent the formation of a free
trade area?  Each measure and the circumstances of its imposition must be examined for all measures
not explicitly permitted.  In the case of NAFTA and the other FTAs at issue, the imposition ofsafeguard measures between members would not have  prevented the formation of  NAFTA, etc.  To
                                                     
4546 Norway's second written submission, paras. 189-191.
4547 Japan's second written submission, para. 176; Korea's second written submission, para. 224.
4548 Korea's second written submission, paras. 225-226.
4549 Japan's written reply to Panel question No. 117 at the first substantive meeting.
4550 Japan's second written submission, para. 179.WT/DS248/R, WT/DS249/R,
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the contrary, the members of NAFTA and the FTAs explicitly preserved the right of members to
impose safeguard measures against each other.4551
7.1919  The United States argues that the formation of a free trade area does not rest on the
elimination of any single measure.  The United States relies upon Article XXIV:8(b) in asserting that
formation of a free trade area requires the elimination of a package of duties and other restrictive
regulations of commerce that collectively covers substantially all trade.  This standard does not
require an analysis of each distinct measure but, rather, the group.  The United States notes that
Article XXIV does not require the elimination of all duties and other restrictive regulations of
commerce.  Some restrictive regulations, if they fall within the enumerated exceptions, may beapplied "where necessary".  The remaining restrictiv e regulations must be eliminated on substantially
all trade.  The United States argues that if FTA parties can achieve the Article XXIV:8 threshold
(covering "substantially all trade") without including all duties and other restrictive regulations of
commerce, they may retain such duties and regulations.  Thus, as with any duty or other restrictive
regulation of commerce, retention of safeguard measures, in whole or in part, is consistent withArticle XXIV:8(b) as long as those measures that are eliminated cover substantially all trade among
the parties.  According to the United States, the only significance associated with the absence of
Article XIX from the bracketed text in Article XXIV:8(b) is that, unlike the measures described
within the brackets, Article XIX measures are not automatically exempt from the requirement to
eliminate duties and other restrictive regulations of commerce on substantially all trade.  They maystill be retained if the parties to an free trade agreement otherwise meet the requirements of
Article XXIV:8.  The United States asserts that this was the case for the NAFTA.
4552
7.1920  Japan further argues that, assuming that Article XXIV applies to the exclusion of free trade
agreement partners from safeguard measures, the phrase "are eliminated", as used in
Article XXIV:8(b), appears to indicate that safeguard measures should be excluded unconditionally atthe time a free trade agreement is negotiated
4553, and that this wording makes clear that a general
exception from safeguard measures must be written into an FTA in order for the Article XXIV
exception to be applicable.4554  Japan argues that, moreover, if the measure is not subject to general
exemption, how would one judge whether or not the "substantially all" requirement under Articles
XXIV:8(b) is met in terms of such conditional e limination? Safeguard measures were not eliminated
in either United States FTA. According to Japan, Article 802.1 of the NAFTA  conditions exemption
of Canada and Mexico from a safeguard measure to situations where imports from them do notaccount for "a substantial share of total imports" and they do not "contribute importantly" to the
serious injury.  Similarly, Article 5.3 of the United States-Israel Free Trade Agreement limits
exemption from a safeguard measure to situations where imports from Israel are not "a substantial
cause of the serious injury".  Japan argues that the conditional exemption in certain cases when certain
subjective conditions are satisfied does not meet the requirements for asserting Article XXIV:8(b) as adefense to Article 2.2 of the Agreement on Safeguards and GATT 1994 Article I:1.
4555  Korea adds
that even if a NAFTA member unilaterally decides that it wishes to exempt another NAFTA member
from the application of a safeguard measure on a case-by-case basis, it is not required to do so by its
obligations under the free trade agreement.  In other words, safeguard measures could be preserved
against other NAFTA members at the discretion of each national authority and so it cannot be said tobe an integral component of the elimination of trade restrictive measures, argues Korea.
4556
                                                     
4551 Korea's written reply to Panel question No. 117 at the first substantive meeting.
4552 United States' written reply to Panel question No. 117 at the first substantive meeting.
4553 Japan's written reply to Panel question No. 118 at the first substantive meeting.
4554 Japan's second written submission, para. 176.
4555 Japan's second written submission, paras. 176-178.
4556 Korea's second written submission, para. 229.WT/DS248/R, WT/DS249/R,
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Consequently, no "exception" to the clear mandate of Article 2.2 is established for NAFTA safeguard
measures by Article  XXIV.  Korea further adds that the United States cannot "invoke" Article XXIVon a case-by-case basis depending on whether the Un ited States decides to exempt Canada and/or
Mexico based on its own internal regulation.
4557 The fact that the United States cannot "invoke" an
Article XXIV defence on a case-by-case basis is further confirmed by the review procedures
established by the NAFTA itself.  Further, Korea notes that such determinations to include NAFTA
members in a safeguard measure are even exempted from review by NAFTA dispute settlement
panels.4558
7.1921  The United States argues that Article XXIV would permit only a safeguard exclusion that is
permitted under the terms of the FTA.4559  Further, according to the United States, the US – Line Pipe
Report addresses and disposes of all the arguments raised by Japan and Korea.4560  In addition, , the
United States notes that Japan and Korea both claim that NAFTA did not truly "eliminate" safeguard
measures because it would allow inclusion of Cana da and Mexico in certain limited circumstances.
However, the United States claims, what Japan and Korea fail to recognize is that NAFTA requireselimination of safeguard measures in particular circumstances.  If those circumstances exist, one party
must exclude another from any safeguard measures.  There is no choice.  The United States further
submits that, contrary to Korea's view, this oblig ation is subject to dispute settlement under NAFTA.
According to the United States, there is, in fact , nothing in Article XXIV that requires complete
elimination of a duty or other restrictive regulation of commerce.  In fact, Article XXIV:8 envisagesthe retention of some such measures in that it requires elimination on "substantially all" – not all –
trade among FTA parties.  Indeed, it is not uncommon for Members who enter into FTAs to retain
certain trade restrictive measures in whole or in part.
4561
7.1922  Norway submits that the relevant issue is not whether the free trade partners may be excluded
from safeguard actions, but which criteria apply to make such an exclusion permissible. Norwaysubmits that there are three main criteria. 
4562  Firstly, that NAFTA itself must fulfil the requirements
of an FTA under the GATT 1994 Article XXIV:8(b) , which is not contested.4563  Secondly, according
to Norway, Article XXIV:8(b) implies that the general  exclusion from the GATT 1994 Article XIX
safeguards must follow from the FTA itself, either directly or implicitly (i.e by way of a prohibition
on all restrictions on commerce).  Norway submits that a GATT 1994 Article XXIV exception can, of
course, only cover as much as is covered by the FTA itself.4564  Norway argues that the proscription of
safeguards under GATT 1994 Article XIX must, therefore, be contained in the free trade agreement inorder for Article XXIV to apply.  According to Norway, this does not mean that the specific safeguard
measure (for e.g. regarding steel) should be dealt with in the free trade agreement but, rather, that the
agreement should only contain provision(s) dea ling with the exclusion from safeguards.  Norway
agrees with Korea that conditional exclusions or permissions to exclude, as under NAFTA, do not sit
well with GATT 1994 Article XXIV, as the United States is not required under the FTA to exclude itsfree trade partners.
4565  According to Norway, Article 802.1 of the NAFTA conditions exclusion of
Canada and Mexico from a safeguard measure to situations where imports from them do not account
for "a substantial share of total imports" and they do not "contribute importantly" to the serious
                                                     
4557 Korea's written reply to Panel question No. 118 at the first substantive meeting.
4558 Korea's second written submission, para 231.
4559 United States' written reply to Panel question No. 118 at the first substantive meeting.
4560 United States' second oral statement, para. 144.
4561 United States' second oral statement, paras. 144-146.
4562 Norway's second written submission, para. 192.
4563 Norway's second written submission, para. 193.
4564 Norway's second written submission, para. 194.
4565 Norway's written reply to Panel question No. 118 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
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injury.4566  Similarly, Article 5.3 of the United States -Israel Free Trade Area limits exemption from a
safeguard measure to situations where imports from Israel are not "a substantial cause of the seriousinjury". Norway submits that these Agreements, particularly the NAFTA, with their conditional
exceptions, do not fit well with this second criterion – as it is difficult to ascertain from their
provisions whether the exclusion from safeguards (based on GATT 1994 Article XIX and Agreement
on Safeguards) is required by the FTA in a particular case – and thus that this exclusion conforms to
Article XXIV.  Norway argues that, therefore, the second condition does not seems to be fulfilled by
the Agreements of the United States.
4567  As for the third criteria, Norway  links this with the
application of the principle of parallelism and non-attribution.4568
7.1923  As a separate argument, Japan and Korea reiterate that this claim is a separate and distinct
claim from the Article 2.2 and 2.1 "parallelism" claim.4569  Japan also note that, with regard to the
exclusion of imports from Israel, this is Japan's onl y claim.  Therefore, Japan submits that exercise of
judicial economy with respect to this claim woul d not be appropriate because, as stated by the
Appellate Body in Australia – Salmon : 'The principle of judicial economy has to be applied keeping
in mind the aim of the dispute settlement system.  This aim is to resolve the matter at issue and "to
secure a positive solution to a dispute" [DSU Article 3.7].  To provide only a partial resolution of the
matter at issue would be a false judicial economy.'4570
2. Exclusion from the benefit of Article 9.1 of the Agreement on Safeguards
7.1924  China argues that due to the fact that Chinese products were unfairly and illegally included in
the scope of application of the United States safeguard measures while, at the same time, imports
originating from other developing countries were excluded, China considers that the United States
violated the Most Favored Nation treatment provided by Article I:1 of the GATT 1994.4571  I n  t h e
view of China, there is a discrimination, and therefore a violation of Article I.1 of the GATT 1994 as
well as Article 2.2 of the Agreement on Safeguards, when a country is excluded from the benefit ofArticle 9.1 while all criteria of this provision are met.  This is the case if not all the de minimis
exporting developing country Members are excluded.
4572
7.1925  The United States argues that China fails to recognize that Article I:1 and Article 2.2 require
most favoured nation treatment – the same treatm ent to all Members.  When a Member affords
developing country Members the same treatment as developed country Members, it is acting in
conformity with  Article I:1 and Article 2.2.  Article 9.1 acts to require differential treatment
inconsistent with those Articles, and provides a defense against a claim from developed countries thatArticle I:1 or Article 2.2 entitles them to the same differential treatment.  Therefore, the United States
argues, if a Member fails to provide treatment consistent with Article 9.1 to a developing country
Member, it has acted inconsistently with Article 9.1, but not with Article I:1 or Article 2.2.
4573
                                                     
4566 Exhibited by the United States in Exhibit US-50.
4567 Norway's second written submission, para. 194-195.
4568 Norway's second written submission, para. 197-199.
4569 Japan's second written submission, para 181; Korea's second written submission, para. 220.
4570 Japan's second written submission, para. 181.
4571 China's first written submission, para. 677.
4572 China's written reply to Panel question No. 119 at the first substantive meeting.
4573 United States' second written submission, para. 244.WT/DS248/R, WT/DS249/R,
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Page 649
O. DECISION -MAKING
1. Articles 2.1 and 4.2(b) of the Agreement on Safeguards
7.1926  Brazil and Japan submit that Articles 2.1 and 4.2(b) require an exact correspondence between
the injury determination, the like product definition, and the measure imposed.4574  In particular, Japan
argues that according to the plain meaning of Arti cles 2.1 and 4.2(b) of the Agreement on Safeguards,
a safeguard measure cannot be applied to imports of a product without an affirmative injury or threat
determination based on an examination of the domestic industry producing the like or directly
competitive product.  Japan asserts that, in other words, there must be a one-to-one relationship
between the injury determination and the like product definition.4575
7.1927  The United States argues that, for purposes of determining whether increased imports are
causing serious injury to a domestic industry, the "determination of the competent authorities" is a
matter of the Member's domestic law.  There is a well-established practice under US law that when
USITC Commissioners disagree with respect to the like product definition, the USITC determination
is based on the overlap of the determinations of the individual Commissioners.  Here, the sixCommissioners produced three affirmative and three negative individual determinations concerning
stainless steel wire.  Under US domestic law, the President may treat the USITC's equally divided
determination as an affirmative determination.  An overlap of decisions is acceptable as long as each
decisionmaker addressed the goods in question and found that the increased imports caused serious
injury or threat of serious injury.
4576
7.1928  The United States further argues that in US – Lin e Pipe, the Appellate Body found that if a
Member has taken a safeguard action  that satisfies the requirements of the Agreement, the particular
manner in which the decision is reached by the comp etent authorities is of no consequence.  In that
dispute, the Appellate Body found that a combination of individual determinations based on serious
injury and threat of serious injury was sufficient to support an overall affirmative determination.4577
(a) Tin mill products
7.1929  According to Brazil and Japan, exact correspondence between the injury determination, the
like product definition, and the measure imposed did not exist in the case of tin mill products given
the very different findings of the commissioners on injury, like product and the measure
recommended with respect to tin mill products.4578
7.1930  Brazil and Japan argue that in this case, the commissioners did not agree on either the like
product definition or the injury findings for tin mill products.  In particular, two commissioners,Bragg and Devaney, treated tin mill products as part of the CCFRS product category.
4579  They , in
turn, made an affirmative injury determination concerning this broader category.4580  The other four
                                                     
4574 Brazil's first written submission, para. 250; Japan's first written submission, paras. 153-154. Japan
claimed Article X:3(a) violation as well as Articles 2.1 and 4.2(b) violation for the like product determinations
on tin mill and stainless wire products, Ibid. para. 152. See also paras.7.1954-7.1974
4575 Japan's first written submission, para. 154.
4576 United States' written reply to Panel question No. 78 at the second substantive meeting.
4577 United States' first written submission, para. 1005, citing Appellate Body Report, US – Line Pipe ,
para. 171.
4578 Brazil's first written submission, para. 250; Japan's first written submission, para. 156.
4579 USITC  Report  at 273 (Bragg on tin mill), 277 (Bragg on stainless wire), 36 footnote 65 (Devaney
on tin mill), and 335 (Devaney on stainless wire) (Exhibit CC-6).
4580 Japan's first written submission, para. 155.WT/DS248/R, WT/DS249/R,
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Page 650
commissioners considered tin mill products as a separate like product from the CCFRS product
category.  Three of these four commissioners made negative injury determinations on the tin millproducts.  Commissioners Hillman, Okun, and Koplan found that imports of tin mill products were
not injuring the domestic tin mill industry; only Commissioner Miller found otherwise.
4581  Brazil and
Japan argue that, in other words, only one commissioner found that imports of tin mill products
unbundled from other products injured the domestic industry making those products.4582  Brazil and
Japan assert that the overall injury votes on tin mill products was three-to-three.  However, the
decision on the proper like product definitions for the products was four-to-two in favor of treating
them as their own like product categories:  tin mill was separate from other flat products.  Brazil andJapan argue further that the injury votes on the preferred like product definition were three-to-one
negative determinations.
4583 4584
7.1931  Japan argues that the USITC's injury determinations on these products were improperly
treated by the President as three-to-three ties.4585 Japan notes that the votes on tin mill products should
only have been viewed as tied if they were based on the same like product definition, given howcritical this definition is to the ultimate outcome of the analysis.
4586 Japan argues that the President
applied what he believed was his discretion under Section 330(d)(1) of the Tariff Act of 1930, as
amended, to treat the votes on tin mill products either as affirmative or as negative decisions.  Japan
asserts that, in this instance, the President chos e the former.  The President, however, announced a
remedy for tin mill products separate from his remedy for CCFRS products, thereby indicating hisagreement with the four commissioners who treated tin mill products as a separate like product.
4587
Japan submits that, yet, only one commissioner found that imports of these products injured the
relevant domestic industry.4588  Japan asserts that the President's reliance on tie votes that did not
correspond to the separate like product definitions with which he implicitly agreed violates Articles
2.1 and 4.2(b).  According to Japan, the measure is not supported by an affirmative injurydetermination on the tin mill category itself.
4589
7.1932  The United States argues that the Appellate B ody's conclusion is also instructive with regard
to the affirmative votes made by those Commissioners whose respective starting point for their
assessment of serious injury began with a different definition of the relevant like products. By way of
example, both Commissioners Bragg and Devaney de fined a like product that consisted of a broad
grouping of flat-rolled steel products, including tin mill steel. They both analyzed increased imports
corresponding to the like product, as they defined it, considered the conditions of competition, andassessed whether the domestic industry was suffering or threatened with serious injury and lastly
considered the causal link, if any, between any such injury and the increased imports. The United
States argues that, as discussed in more details in sections on injury and causation, their legal findings
fulfilled the requirements of Articles 2.1 and 4.2 of the Agreement. Therefore, they satisfied the
applicable requirements set forth in the Agreement to be completed by the competent authorities inthis regard.  At the same time, four other Commissi oners defined a like product consisting exclusively
of tin mill steel and conducted the same methodical analysis required by Articles 2 and 4 of the
Agreement. One of the four Commissioners concluded that increased imports of tin mill steel were
                                                     
4581 USITC Report, Vol. I, at 25 (Hillman, Okun , and Koplan) and 307 (Miller's separate views).
4582 Brazil's first written submission, para. 248; Japan's first written submission, para. 156.
4583 USITC Report, Vol. I, at 49.
4584 Japan's first written submission, para. 157.
4585 Japan's first written submission, paras. 158-159.
4586 Japan's oral statement for the second substantive meeting, para. 24; see also Japan's second written
submission, paras. 50-51.
4587 Japan's first written submission, para. 159.
4588 Japan's first written submission, para. 160.
4589 Japan's first written submission, para. 161.WT/DS248/R, WT/DS249/R,
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causing serious injury to the domestic industry produ cing tin mill steel as discussed in the injury and
causation.4590
(b) Stainless steel products
7.1933  Japan argues that, in this case, the commissioners did not agree on either the like product
definition or the injury findings for stainless steel wire products.  In particular, two commissioners,
Bragg and Devaney, treated stainless wire products as a part of a combined stainless wire/wire rope
category.4591  They, in turn, made an affirmative injury determination concerning this broader
category.4592  The other four commissioners considered stainless wire as separate from stainless wire
rope.  Three of these four commissioners made negative injury determinations on the stainless wireproducts.  Commissioners Hillman, Okun, and Miller fo und that imports of stainless wire were not
injuring the domestic stainless wire industry; only Commissioner Koplan found otherwise.
4593  Japan
argues that, in other words, only one commissione r found that imports of tin mill products and
stainless wire products, unbundled from other products, injured the domestic industry making those
products.4594  Japan asserts that the overall injury votes on stainless steel products was three-to-three.
However, the decision on the proper like product definitions for the products was four-to-two in favor
of treating them as their own like product categories: stainless steel wire was separate from stainless
wire rope.  Japan argues further that the injury votes on the preferred like product definition were
three-to-one negative determinations.4595 4596
7.1934  Japan argues that the USITC's injury determinations on these products were improperly
treated by the President as three-to-three ties.4597  Japan notes that the votes on stainless wire products
should only have been viewed as tied if they were based on the same like product definition, given
how critical this definition is to the ultimate outcome of the analysis.4598  Japan argues that the
President applied what he believed was his discretion under Section 330(d)(1) of the Tariff Act of
1930, as amended to treat the votes stainless products either as affirmative or as negative decisions.Japan asserts that, in this instance, the President chose the former.  However, for stainless wire, the
President had to treat it as a separate like product since the Commission had voted four-to-two that
stainless wire rope imports were not injuring the domestic stainless wire rope industry.
4599 4600  Japan
argues that the President's choice to impose a separate measure on stainless wire products shows that
he agreed with a majority of commissioners that stainless wire was a separate like product.  Japan
submits that, yet, only one commissioner found that imports of these products injured the relevant
                                                     
4590 United States' first written submission, para. 1006.
4591 USITC  Report  at 273 (Bragg on tin mill), 277 (Bragg on stainless wire), 36 footnote 65 (Devaney
on tin mill), and 335 (Devaney on stainless wire) (Exhibit CC-6).
4592 Japan's first written submission, para. 155.
4593 USITC Report, Vol. I , p. 27 (Hillman, Okun, and Miller) and 256 (Koplan's separate views).
4594 Japan's first written submission, para. 156.
4595 USITC Report, Vol. I , p. 49.
4596 Japan's first written submission, para. 157.
4597 Japan's first written submission, paras. 158-159.
4598 Japan's oral statement for the second substantive meeting, para. 24; see also Japan's second written
submission, paras. 50-51.
4599 USITC  Report at 27 (Koplan, Bragg, and Devaney affirmative determination on stainless wire and
Okun, Miller, and Hillman negative determination with respect to stainless wire); also, p. 27 footnote 13 (Bragg
and Devaney indicate that stainless wi re and wire rope are one like product) and 277 (Bragg's separate views for
stainless steel wire products) along with 335 (Devaney's separate views with respect to stainless steel wire and
wire rope).  See also ibid., p. 26 (Koplan, Okun, Miller and Hillman determine that stainless rope does not cause
serious injury to the domestic industry) (Exhibit CC-6).
4600 Japan's first written submission, para. 159.WT/DS248/R, WT/DS249/R,
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Page 652
domestic industry.4601 4602 Japan submits that, therefore, in fact, the President made his decision based
on the vote of a single Commissioner.4603  Japan asserts that the President's reliance on tie votes that
did not correspond to the separate like product definitions with which he implicitly agreed violates
Articles 2.1 and 4.2(b).  According to Japan, the measure is not supported by an affirmative injury
determination on the stainless steel wire category itself.4604
2. Article X:3(a) of GATT 1994
(a) Like product determinations
(i) Comparison with determinations in othe r anti-dumping and countervailing duty cases
7.1935  Japan argues that because the USITC adopted a like product analysis contrary to its 15 years
of precedent in the anti-dumping and countervailing duties context, its actions are inconsistent with
Article X:3(a) of GATT 1994.4605  In particular, Japan argues that plate, hot-rolled, cold-rolled, and
corrosion-resistant steel have traditionally been treated as separate like products by the USITC in
other recent trade remedy cases.4606  The factual findings in these cases confirm the factual findings in
this case about physical properties, production processes, and end-uses.4607  Japan argues the USITC
has consistently found that no individual CCFRS is commercially interchangeable with any other
CCFRS product.  Indeed, the USITC considered and rejected making even cut-to-length plate and
plate-in-coil (a hot-rolled steel product) a single like product, citing "differences in physical
characteristics and end-uses", "some limitations on…interchangeability", and "differences in
production facilities".4608 4609  Japan asserts that the USITC, however, chose to completely ignore this
precedent.  More particularly, Japan argues that nowhere in its Section 201 determination does the
USITC attempt to square its finding of a single CCFRS product with its innumerable factual findings
from previous anti-dumping and countervailing duties cases demonstrating the contrary.  According to
Japan, nowhere does the USITC rebut, or even address, arguments that the USITC's like product
factual findings from past anti-dumping and countervailing duties cases are relevant for itsconsideration of the same products and factors in the Section 201 context.
4610
7.1936  Japan also asserts that inconsistent with its previous decisions, the USITC failed to perform
its like products analysis of CCFRS products in a "uniform", "impartial", or "reasonable" manner,
consistent with Article X:3(a) of GATT 1994.  The analysis was not "uniform" because it did not treat
                                                     
4601 Treated as a separate like product, imports of tin mill products were found by Commissioner Miller
to be seriously injuring the domestic tin mill industry. Ibid . at 307.  Likewise, stainless wire was regarded by
Chairman Koplan as a separate like product and found the domestic stainless wire industry to be seriously
injured.  Ibid. at 256.
4602 Japan's first written submission, para. 160.
4603 Japan's oral statement for the second substantive meeting, para. 24; see also Japan's second written
submission, para. 56.
4604 Japan's first written submission, para. 161.
4605 Japan's first written submission, para. 125.
4606 See, e.g., USITC  Hot-Rolled (Final)  USITC Pub. 3446  (August 2001) (Exhibit CC-30), USITC
Hot-Rolled (Final)  USITC Pub. 3468  (November 2001) (Exhibit CC-31), USITC  Flat-Rolled (Preliminary)
USITC Pub. 2549 (August 1992) (Exhibit CC-32), USITC -Cold-Rolled (Final)  USITC Pub. 3283  (March 2000)
(Exhibit CC-34) .
4607 Japan's first written submission, para. 132.
4608 Certain Carbon Steel Plate from China, Russia, South Africa, and Ukraine , Inv. Nos.
731-TA-753-756 (Final), USITC Pub. 3076 (December 1997), at 5-7 (Exhibit CC-41).
4609 Japan's first written submission, para. 134.
4610 Japan's first written submission, paras. 135-136.WT/DS248/R, WT/DS249/R,
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imports the same under similar circumstances.  Nor was it "reasonable" to break with its past factual
findings on the same CCFRS and like product factors without explanation.4611  Japan argues that
based on past precedent, and its own factual findings, the USITC could only have determined that
each CCFRS product constitutes a separate like product.  Its failure to do so constitutes an
inconsistency with the US obligation under Article X: 3(a) to apply its laws in a uniform, impartial,
and reasonable manner.4612
7.1937  According to Japan, the analysis was not "impartial" because the USITC's omission of these
factual findings was not accidental oversight, but a wilful gambit to facilitate an affirmative injury
determination on CCFRS products to benefit the US domestic industries over their foreigncompetitors.  Japan submits that under the safeguards statute, the USITC cannot render an affirmative
determination unless it finds:  (1) an increase in imports, either actual or as a percentage of domestic
production; (2) the domestic industry producing the like product is suffering serious injury; and (3)
imports were a substantial cause of the serious injury.
4613  In Japan's view, in analysing the question of
increased imports, the USITC traditionally compares import volume and the ratio of imports todomestic production in the first and last full years of its period of investigation
4614;  in this case, it
compared 1996 and 2000.4615 4616  Japan argues that had the USITC made each CCFRS product a
separate domestic like product, consistent with past practice, then it could not have found the requisite
increase in import volume for plate – plate import volume declined 50.9% between 1996 and 20004617
– and would have had to somehow explain away th e decline in the ratio of imports to domestic
production for cold-rolled steel and corrosion-resistant steel.4618  With a single CCFRS like product,
the USITC was able simply to note that imports increased from one end-point to another, both
absolutely and as a ratio to domestic production4619 (though, as discussed below, this increased
imports analysis fails to meet the standard established by the Agreement on Safeguards, as interpreted
by the Appellate Body).4620
7.1938  Japan also argues that had the USITC made each CCFRS product a separate like product, it
could not have established causation for many of  the products.  For example, slab import volume
increased the most of any CCFRS product between 1996 and 2000, but almost all of these imports
were purchased by domestic producers themselves, because they could not produce sufficient volumes
of slab to meet booming steel demand4621;  in this way, slab imports actually benefited domestic
producers.4622 4623  Japan argues that the USITC also could not have found cold-rolled steel imports a
"substantial cause" of serious injury to the domestic cold-rolled steel industry, when it had just
                                                     
4611 Japan's first written submission, para. 137.
4612 Japan's first written submission, para. 142.
4613 19 U.S.C. §§2252(c)(1)(A-C) (Exhibit CC-47).
4614 USITC  Report, pp. 32-33  (Exhibit CC-6).
4615 Ibid ., p. 49.
4616 Japan's first written submission, para. 138.
4617 USITC Report, Vol. I, FLAT-9.
4618 Ibid ., FLAT-11 (cold-rolled import volume as a share of domestic production declined from 7.5%
to 7.3%), and FLAT-13 (corrosion-resistant import volume as a share of domestic production declined from
13.3% to 11.8%.).
4619 Ibid., pp. 49-50.
4620 Japan's first written submission, para. 139.
4621 USITC Report, Vol. I., p. 56 ("steelmakers themselves are the only purchasers of slabs").
4622 Ibid., p. 62 ("The domestic industry includes a number of producers who rely on imported certain
carbon flat-rolled steel–especially slab–for use as raw materials in the production of further processed certain
carbon flat-rolled steel.  Some of these producers may have  benefited from the decline in import prices during
the POI.").
4623 Japan's first written submission, para. 140.WT/DS248/R, WT/DS249/R,
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determined that cold-rolled steel imports had not caused  material injury to the domestic industry in its
March 2000 anti-dumping determination for cold-rolled steel4624, under a lower causation standard.4625
By combining the major CCFRS products into a single domestic like product, the USITC was able to
ignore conditions of competition unique to individual CCFRS products, thereby facilitating its
affirmative determination.4626
7.1939  In response to the argument that the USITC's like product definitions were not reasonable
because the agency departed from a like product determination made in earlier investigations
involving dumped and subsidized steel products, the United States relies upon the Panel's decision in
US – Stainless Steel  to argue that the requirement of reasonable administration of laws and regulations
is not violated merely because, in the administration of those laws and regulations, different
conclusions were reached based upon differences in the relevant facts.4627  More particularly, the
United States argues that with respect to differing like product determinations issued by the USITC in
prior anti-dumping and countervailing duty cases, Article X:3(a) does not require "uniform"
administration between different laws.  It requires the uniform, impartial, and reasonableadministration of each law.  Otherwise, the complainants' approach would require all laws, no matter
how different in their texts, purposes, and scope, to  be administered in the same way with the same
substantive outcome.
4628
7.1940  In counter-response, Japan argues that the safeguards law, like the anti-dumping and
countervailing duty laws, is a trade remedy law.  Although the standards are not identical, the basicpurposes of the laws are similar.  Of particular importance, all three laws focus on the economic effect
of imports on the competing domestic industry producing like or substitutable/directly
competitive/similar products.  Thus, given the similarities, decisions regarding like products in the
context of one of these trade remedy laws are highly relevant to analysing the uniform application
requirement of Article X:3(a).
4629
7.1941  The United States argues that the fact that the USITC has reached different like product
determinations in different cases does not establish a violation of Article X:3(a).  First, the USITC
would not violate Article X:3(a) even if it had reached different like product findings in different
safeguards cases.  In applying the United States' safeguards law, the USITC has applied the same five
factors to define the domestic "like product" as it has applied for decades.  Thus, its application of the
safeguards law is uniform, in compliance with Articl e X.  The United States submits that if the facts
in two different cases differ, or if the scope of the petition in two cases differs, this may lead to twodifferent like product findings.  Such an outcome is completely consistent with a uniform application
of the law to different facts.  Second, Article X is not violated simply because the interpretation of the
term "like product" may differ across different statutes.  Article X refers to the administration of laws,
not the substance of the underlying laws themselves.  There is no obligation under Article X to define
the same term in the same way in different statutes.  Thus, if the underlying laws define the term "likeproduct" differently, then there is no obligation to administer the laws in a way that ignores these
differences.  The United States submits that, in the case at hand, the US unfair trade laws approach the
                                                     
4624 USITC  Cold-Rolled (Final)  USITC Pub. 3283 (March 2000), at 24  (Exhibit CC-34).
4625 In anti-dumping investigations, the USITC need only find that a domestic industry is suffering
material injury "by reason of" subject imports.  19 U.S.C. § 1677(7)(A) (defining "material injury" as "harmwhich is not inconsequential, immaterial or unimportant.").  In Section 201 investigations, the USITC must findthat imports are a "substantial cause" of "serious inju ry" meaning "a cause which is important and not less than
any other cause."  19 U.S.C §2252(b)(1)(B) ( Exhibit CC-47).
4626 Japan's first written submission, para. 141.
4627 United States' first written submission, para. 1303.
4628 United States' first written submission, para. 1304.
4629 Japan's written reply to Panel question No. 136 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
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term "like product" differently than the United States' safeguards law.  The USITC explicitly
addressed some of these differences in its determin ation.  Third, even if the underlying statutes did not
directly address how the term "like product" should be interpreted, Article X would not require the
USITC to interpret the term uniformly across different statutes.  Requiring uniform interpretation
across different laws would ignore essential differences between the laws and the situations in which
they are applied.  Finally, even if Article X required the USITC to interpret the term "like product" the
same way for purposes of the anti-dumping, counter vailing duty, and safeguard statutes, this would
not necessarily mean that the USITC would reach the same "like product" findings in all cases.  The
United States submits that each case must be judged on its individual facts.  The facts of an anti-dumping or countervailing duty cases may differ si gnificantly from the facts of a safeguard case.
4630
7.1942  In counter-response, Japan submits that the question at stake is whether the USITC
administered its laws concerning like product delineations appropriately.  The United States appears
to be saying that like product means something different in the anti-dumping and countervailing
duties context, but never explains why this is necessarily so.  In this regard, Japan notes that theUnited States explained in the like product discussion that, under both laws, the purpose is to discern
the clear dividing line between products.  Japan questions why the clear dividing line would be
different in an anti-dumping and countervailing duties context from a safeguard context unless the
USITC was interested in justifying the difference where it otherwise was unjustifiable.
4631
7.1943  The United States responds by stating that Article X:3 applies only to administration of a
particular law.  It does not require a Member to administer its safeguards law in the same manner as
its anti-dumping laws, food safety laws, or any other laws.  The United States submits that, indeed,
there are good reasons why the same term may be interpreted and applied differently under different
laws, especially if those laws have different objectives.  In the view of the United States, adoption of
Japan's interpretation of Article X:3 would disregard these differences, and commit Panels to aboundless review of Members' entire legal systems to determine whether terms received identical
treatment in every law.  The United States submits that it sees no indication that Article X:3 imposes
such a requirement.
4632
(ii) Comparison with other determinations in the same case
7.1944  Japan argues that because the USITC adopted a like product analysis contrary to like product
distinctions for other products in this case, its actions are inconsistent with Article X:3(a) of GATT
1994.4633  More particularly, Japan argues that the USITC made similar factual findings for semi-
finished flat, long, and stainless steel products under its like product factors, but failed to render
similar like product determinations.4634
7.1945  By way of elaboration, Japan submits that while the USITC lumped semi-finished flat steels –
or slab – into the same like product as finished flat steels, it decided to treat semi-finished long
products and semi-finished stainless products as separate like products, apart from finished products.Carbon billets, which bear the same relationship to carbon long products as does carbon slab to carbon
sheet products in that both are the input for further rolling into the next stage product, were found to
be a separate like product from finished long products.  Stainless slab, which bears the identical
relationship to stainless plate and other CCFRS produc ts as carbon slab bears to finished carbon flat
                                                     
4630 United States' written reply to Panel question No. 136 at the first substantive meeting.
4631 Japan's oral statement at the second substantive meeting, para. 34.
4632 United States' second written submission, para. 243.
4633 Japan's first written submission, para. 125.
4634 Japan's first written submission, para. 143.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 656
products, was found to be a different like product than stainless plate and other flat-rolled stainless
products.  Likewise, within the CCFRS category,  although both tin mill products and corrosion
resistant products use a cold rolled substrate, they were treated as separate like products.  According
to Japan, such treatment was not uniform, reasonable or impartial.4635
7.1946  Japan argues that the USITC combined semi-finished slab with the major finished CCFRS
products made from slab – hot-rolled steel, plate, cold-rolled steel, and corrosion-resistant steel – into
a single CCFRS like product by ignoring the findings of its own analysis of like product factors.4636
According to Japan, these findings demonstrated that slab is not "like" any of the finished CCFRSproducts in terms of physical characteristics, end-uses, production processes, channels of distribution,and tariff classifications.  In terms of physical characteristics, slab is much thicker than any finished
CCFRS product, all of which are reduced in thickness via rolling.
4637  In terms of production
processes, slab is continuously cast, wh ereas all finished CCFRS products are rolled4638, and some are
coated.4639  In terms of channels of distribution and end-uses, nearly all slab is internally consumed by
domestic producers themselves for the production of downstream products.4640  By contrast, most
corrosion-resistant steel and plate is sold to end-users and distributors, as is a substantial proportion of
hot-rolled and cold-rolled steel, destined for a variety of end-use applications.4641  Japan submits that
the USITC folded all CCFRS products into a single li ke product in part because most finished CCFRS
products are sold into the automotive and construction markets, but this logic does not apply to slab.
Finally, as with all CCFRS products, slab is classified under its own tariff classification numbers.4642
7.1947  Japan argues that the USITC's like product findings for semi-finished carbon steel, semi-
finished long products (billets) and semi-finished stainless products should have resulted in
determinations that all three were not "like" the corresponding finished steel products.  Yet, the
USITC did not render like product determinations consistent with these findings:  semi-finished long
and stainless products were made separate like products, but carbon slab was not.4643 4644  Japan argues
that likewise, within the CCFRS category, both tin mill products and corrosion-resistant products use
a cold-rolled substrate.4645  Tin mill products are coated with tin or chromium; corrosion-resistant
products are coated with zinc or zinc-aluminum alloys.  Yet, they were treated as separate like
products, with all commissioners treating corrosion-resistant products as part of the larger flat product
category, and four commissioners treating tin mill products as its own separate like product.4646  Japan
submits that, if anything, it would make more sense to consider tin mill and corrosion-resistant
products as a single like product given their physical characteristics, their location in the productionchain, and their sometimes common treatment in the HTS.  Japan submits that, however, the USITC
made the odd leap to consider, effectively, slab and plate to be more comparable to corrosion-resistant
steel than tin mill products.
4647
                                                     
4635 Japan's second written submission, para. 75.
4636 USITC  Report at 36 (Exhibit CC-6).
4637 Ibid., at OVERVIEW – 8.
4638 Ibid., at OVERVIEW – 10.
4639 Ibid.
4640 Ibid., p. FLAT – 1.
4641 Ibid., p. OVERVIEW – 13, Table OVERVIEW – 2.
4642 Japan's first written submission, para. 144.
4643 USITC Report, Vol. I, p. 36 (flat), p. 83 (long), p. 193 (stainless).
4644 Japan's first written submission, para. 145.
4645 Compare  USITC Report, Vol. I, p. 42 (discussing cold-rolled products) to 48 (discussion of tin mill
products).
4646 Ibid., p. 48 (with Commissioner Devaney not joining in the views of the Commission in tin mills).
4647 Japan's first written submission, para. 146.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 657
7.1948  In response, the United States argues that in evaluating the complainants' arguments that the
USITC's determinations were not "uniform, impar tial and reasonable", the Panel should apply the
ordinary meaning of these terms as used in Article X:3: "uniform" means "of one unchanging form,
character or kind;" "impartial" means "not partial; not favouring one party or side more than another;
unprejudiced; unbiased; fair;" and "reasonable" means that the actions must be rational and not
absurd.4648
7.1949   The United States argues that, in claiming that the USITC failed to provide uniformity when
it included slab in a single like product with finished CCFRS, while placing semifinished and finished
products in separate like products for other steel products, Japan has shown only that the results weredifferent, and has demonstrated no difference in the way the USITC applied the relevant legal
standard to the facts.  According to the United States, the record before the USITC fully supported
both the conclusions reached for each product, and the differences among those conclusions.  Thus,
the different outcomes all reflect the application of a uniform test to distinct facts.
4649
7.1950  Japan also argues that the USITC's like product analysis of CCFRS products increased the
probability of an affirmative injury determination because it made slab part of a single domestic like
product encompassing finished CCFRS products, while making semi-finished long and stainless
products separate like products; and it made corrosion-resistant products part of the CCFRS like
product, while making tin mill products a separate like product.  Japan submits that in all such
instances, the USITC did not administer the safegu ards law in a "uniform, impartial, and reasonable
manner", as required by GATT 1994 Article X:3(a).4650
7.1951  Japan states that the USITC's decisions were not "uniform" or "reasonable" because the
USITC had no principled reason for relying on its analysis of like product factors for semi-finished
long, semifinished stainless products, and tin mill products while ignoring the same analysis for slab
and corrosion-resistant products, based on the allegedly greater degree of vertical integration for thoseproducts.  It was not "impartial" because the USITC's decision to combine all CCFRS products,
including slab, into a single like product was calculated to facilitate an affirmative injury
determination – under WTO-inconsistent application of US law – based on a wrongful like product
definition and  resulting in the application of safeguard measure to a wider range of imports than
should have been lawfully allowed under the Agreement on Safeguards.
4651
7.1952  The United States argues that the USITC provided a uniform, impartial, and reasonable like
product analysis by applying the same legal standards to the distinct facts of each case and reachinglegal conclusions supported by the facts of the case..
4652  According to the United States, relying upon
the Panels' decisions in Argentina – Hides and Leather  and US – Stainless Steel , Article X:3(a)
requires that the administration of a measure be uniform, and not that the results of the measure be the
same each time it is applied.  The United States submits that the USITC applied the same like product
factors that it uses in every safeguard investigation to each group of imports in the steel investigation.Based on the facts, the USITC determined that those factors justified the product definitions that it
used.
4653
                                                     
4648 United States' first written submission, para. 1298.
4649 United States' first written submission, para. 1300.
4650 Japan's first written submission, para. 125.
4651 Japan's first written submission, para. 147.
4652 United States' first written submission, para. 1298.
4653 United States' first written submission, para. 1299.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 658
7.1953  The United States also submits that the complainants have failed to establish that the USITC's
product definitions were anything other than impartial.  According to the United States, the USITCshowed no favoritism to either side.  In several instances the Commissioners decided in favor of
foreign producers by rejecting domestic producer requests to join or subdivide product categories.
The claims to the contrary are unsupportable.
4654  The United States also argues that the complainants
have also failed to establish that the USITC product definitions are "unreasonable".  Rather, the
agency fully explained its findings, and supported them with record evidence.4655
(b) Treatment of affirmative votes
(i) General
7.1954  Japan argues that the treatment of USITC votes by the President is one of the key areas to
which Article X:3(a) applies.  According to Japan, there is no doubt that the US domestic rules on the
President's treatment of USITC tie votes falls within the scope of paragraph 1 of Article X:3(a) –
"administrative laws, regulations, decisions and rulings" pertaining to "restrictions or prohibition on
imports".4656  In this regard, Japan argues that section 330(d)(1) of the Tariff Act of 1930 specifies, in
pertinent part, that when the USITC determines "whether increased imports of an article  are a
substantial cause of serious injury … and the commissioners voting are equally divided with respect
to such determination", then the President can choose either of the two decisions.4657  "An article",
according to a majority of commissioners, was clearly defined as:  (i) tin mill products, separate from
all other CCFRS products; and (ii) stainless wire, separate from stainless wire rope.  Japan submitsthat only one of four commissioners found imports of these separate articles to injure the relevant
domestic industries.  However, the President treated the Commission's decision as a tie vote and
accordingly an affirmative injury determination and he imposed a safeguard measure on imports of tin
mill and stainless wire.
4658
7.1955  Japan argues that such treatment is an unreasonable administration of the safeguard law,
because the President regarded the vote in this par ticular case as a tie when two of the affirmative
votes were based on a like product definition with which he disagreed.  According to Japan,  such a
decision simply strains logic.  Japan also argues that the President's treatment also constitutes non-
uniform administration of the safeguard law because the President's treatment of the divided votes as
"equally divided" within the meaning of Section 330(d)(1) of the Tariff Act is a clear departure from
the ordinary and longstanding practice in the administration of United States' safeguard law.  For the
President to treat the Commission's determination in this instance as a tie vote and an affirmativeinjury determination and to impose a safeguard measure on imports of tin mill and stainless wire
products is considered to be at least unreasonable and non-uniform and therefore is inconsistent with
Article X:3(a).
4659  Japan adds that, as required by Article X:3, the President has an obligation to treat
divided USITC votes in a consistent and transparent way, given that the result of the investigation,
including whether the US eventually imposes a safeguard measure or not, depends on such votetreatment.
4660  Japan asserts that for the President to rely on the inappropriate mixture of votes based
on different like product definitions in this case does not represent a uniform or reasonable application
                                                     
4654 United States' first written submission, para. 1302.
4655 United States' first written submission, para. 1303.
4656 Japan's first written submission, paras. 151 and 162.
4657 Japan's first written submission, para. 163.
4658 Japan's first written submission, para. 164. For Japan's argument for the United States' violation of
Articles 2.1 and 4.2(b) of the Agreement on Safeguards, see paras. 7.1926-7.1934, and supra . footnote 4574
4659 Japan's first written submission, para. 164.
4660 Japan's first written submission, paras. 151 and 162.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 659
of US law, as required by Article X:3(a) of GATT 1994.  Japan submits that, left unchecked, such
action impermissibly would erode the predictability and stability of the administration of thesafeguard law.
4661
7.1956  With respect to arguments that the President's "treatment" of the USITC votes on tin mill and
stainless steel wire as "a tie" was inconsistent with Article X:3(a) because Section 330(d)(1) of the
Tariff Act did not permit such treatment, the United States relies upon the panel decision in US –
Stainless Steel  to argue that Article X:3(a) does not bring within the mandate of a panel the allegation
that a Member has acted inconsistently with its own domestic legislation.4662  The United States
argues that it is also noteworthy that a US court recently held that the USITC's counting of affirmativeand negative determinations by individual Commissioners in the safeguard investigation on tin mill
steel was consistent with US law.   Moreover, the Court specifically held that Commissioners
Devaney and Bragg considered tin mill products in their analysis, and thus made affirmative injury
and causation findings with respect to tin mill products.   The United States submits that this same
reasoning applies to the divided vote on stainless steel wire products.
4663
7.1957  With respect to arguments that the USITC made a negative determination by a vote of 3-1 on
tin mill product and that the President included tin mill in the remedy based on what is alleged to be
just one affirmative vote4664 and that, with respect to stainless steel wire, the President did not
consider the determinations of two of the Commissioners since their determinations were based on a
broader domestic industry, consisting of producers of stainless steel wire and stainless steel wire rope,
and that the President's decision was based on the decision of only one Commissioner, the United
States submits that none of the complainants provide support for their claims, either in the text of the
Agreement on Safeguards, or in panel or Appellate Body reports, that the USITC's method of
counting votes – cumulating the votes of the individual Commissioners – is within the purview of a
panel, or explain how it is inconsistent with Articles 2.1 and 4.2 of the Agreement.  The United Statessubmits that nor do they provide support for their underlying claim that the findings of the different
decision-makers must be exactly the same on all issues in order to be aggregated.
4665
7.1958  In counter-response, Japan submits that in addition to the legal flaw that consistency with
WTO obligations is not dependent on a domestic court's declaration that action is consistent with a
domestic law, the US argument is, in essence, that the absence of standards and criteria in a law
renders it impossible to find that the law was administered in a non-uniform, partial and unreasonable
manner.  Japan submits that, to the contrary, the unfettered ability to apply different standards is asmassive a violation of the requirements of GATT Ar ticle X:3(a) as can be imagined.  The treatment of
some so-called tie votes as affirmative and others as negative is not only obviously non-uniform but
also partial and unreasonable, particularly without any explanation from the President, as the
competent authority, as to why he made inconsistent decisions.  Japan submits that, furthermore, the
decision to rely on three affirmative votes when only one of those votes agreed with the President'slike product delineations is clearly unreasonable.
4666
7.1959  In response to a question from the Panel, the United States argues that the President does not
cast a "tie-breaking vote".  He is not a "competent authority" under Articles 3 and 4 of the Agreement
on Safeguards and does not vote on whether the increased imports are a substantial cause of serious
                                                     
4661 Japan's first written submission, para. 165.
4662 United States' first written submission, para. 1309.
4663 United States' first written submission, para. 1310.
4664 United States' first written submission, para. 999.
4665 United States' first written submission, para. 1001.
4666 Japan's second written submission, para. 78.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 660
injury or threat of serious injury.  Instead, the President simply identifies which of two evenly
supported determinations is the determination of the Commission.  Second, the United States submitsthat the President clearly acted consistently with US law.  The United States' safeguard statute states
that when "the commissioners voting are equally divide d with respect to such determination, then the
determination, agreed upon by either group of comm issioners may be considered by the President as
the determination of the Commission".   The Commissioners were equally divided with respect to the
determinations on tin mill and stainless steel wire products.  In fact, the US Court of International
Trade recently found that the USITC vote on tin mill was, in fact, evenly divided despite the fact that
the Commissioners voting in the affirmative reach different like product findings.   Therefore, the
President had the authority under the statute to decide which determination was the determination of
the USITC.  The United States submits that, finally, interpreting US law is not an appropriate function
of the Panel in this dispute.  In the case at hand, the WTO agreements do not address the question of
how a Member may designate which among multiple findings constitutes the determination of the
competent authorities under the Agreement on Safeguards.  Whether the President acted consistentlywith US law is not relevant to the question of whether the United States complied with its WTO
obligations.  The United States submits that, consequently, there is no basis for the Panel to engage in
an examination of whether the President's actions were consistent with US law.
4667
7.1960  In response to the same question from the Panel, Japan submits that the issue is not whether
US law permits the President to treat tie votes by the Commission as affirmative.  It is that in thisproceeding, with respect to tin mill and stainless wire, the President should not have treated the
Commission action as a tie vote because the Commissioners had differing views about the proper
scope of the like product.  Japan argues that, by acting as he did, the President's decision contravened
Articles 2.1, 3.1 and 4.2 of the Agreement on Safeguards and Article X:3(a) of GATT 1994.
4668
7.1961  With respect to the argument that Article X:3(a) does not permit the "inappropriate
integration" by the USITC or the President of affirmative votes from Commissioners who defined the
like product differently from each other (see paragraph 7.1970), the United States submits that it is
unclear exactly why the complainants consider this to be "inappropriate". 4669
7.1962  The United States submits that if the complainants ' point is that it is impermissible to treat an
injury determination regarding a product (such as stainless steel wire products) as applicable to a
subset of that product (such as stainless steel wire), that would seem to be an issue of interpreting the
Agreement on Safeguards, and not Article X.4670  The United States submits that even if this
substantive decision somehow fell within Article X:3(a), it certainly represents a uniform, impartial,
and reasonable application of the law.  This analysis of individual Commissioners' determinations
based on different like products applies in every case, making it uniform.  It is also impartial, in that it
does not favor one side over the other.   Finally, the US practice follows the logical principle that an
affirmative (or negative) determination with regard to a product also covers subsets of that product.Although complainants may disagree with this logic, it is plainly reasonable.
4671
7.1963  The United States further submits that if the complainants' impermissible integration point
refers to their argument that the President agreed with one set of Commissioners in defining the like
products for tin mill and stainless steel wire, but another set in deciding how to treat the injury votes,
they misunderstand the President's action.  The President did not evaluate and separately endorse parts
                                                     
4667 United States' written reply to Panel question 132 at the first substantive meeting.
4668 Japan's written reply to Panel question 132 at the first substantive meeting.
4669 United States' first written submission, para. 1311.
4670 United States' first written submission, para. 1311.
4671 United States' first written submission, para. 1312.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 661
of the USITC determination.  With regard to the like products subject to safeguard measures, he
accepted the findings of the USITC majority as presented, without agreeing or disagreeing with them.With regard to the divided votes, he considered the determinations of both sides, including the use of
different like product definitions in the affirmative determinations for tin mill and stainless steel wire.
US practice recognizes that determinations based on different like products may be equally valid,
albeit different, ways of analysing imports, and this practice is uniform, impartial, and reasonable.
For the President to consider a determination based on this principle to be the determination of the
USITC is, therefore, also uniform, impartial, and reasonable.
4672
7.1964  The United States argues that there is no basis to Japan's claim that the President's actions
deviated from an "ordinary and longstanding practice in the administration of US safeguards law".
According to the United States, Japan does not cite or otherwise identify this alleged practice, nor is
there any authority to cite.  The United States reiterates that a US court upheld the President's action
in accepting these tie votes as affirmative determinati ons.  In any event, it is impossible for the panel
to determine whether the President acted inconsiste ntly with a practice which has not been identified
with specificity.4673
7.1965  The United States also argues that the fact that the President designated some divided
determinations as affirmative (tin mill and stainless steel wire) and others as negative (tool steel and
stainless fittings and flanges) does not establish an inconsistency with Article X:3(a).  Panels have
found that Article X:3(a) requires identical treatment, not identical outcomes.  Indeed, where the factsof two cases differ, uniform treatment might require different outcomes.  Thus, the mere fact that
administration of a law or regulation in different cases leads to different results cannot by itself
establish inconsistency with Article X:3(a).
4674  The United States submits that in the case of the four
divided determinations, there is no question that the facts differed tremendously.  The four domestic
industries produced different products, under different market conditions, and with greatly differentperformance levels of revenue, sales, market share, profits, and other performance indicators.  Two of
the Commissioners recognized that the four domestic industries might warrant different findings.
Commissioner Miller issued an affirmative determin ation with regard to tin mill, but not the other
three divided votes.  Chairman Koplan issued an affirmative determination with regard to stainless
steel wire, tool steel, and stainless steel fittings and flanges, but not with regard to tin mill.  Therefore,
by doing nothing more than to observe that the divided votes in different factual situations had
different results, the United States argues that th e complainants have failed to meet their burden of
proof to establish an inconsistency with Article X:3(a).
4675
7.1966  The United States also argues that according to the complainants, a tie vote must always be
treated as a negative determination, or always be treated as an affirmative determination.  The United
States submits that as the complainants would have it, the President should not have the flexibility to
make decisions based on the unique facts and merits of each particular case.  According to the UnitedStates, the complainants' position is untenable.  The United States submits that each tie vote must be
judged on its merits.  Article X:3(a) cannot require the same outcome in all tie vote situations, just as
it could not require, for example, the same injury findings in all safeguards cases or the same dumping
margin in all dumping cases.  The United States submits that, in fact, Article X:3(a) requires uniform
                                                     
4672 United States' first written submission, para. 1313.
4673 United States' first written submission, para. 1314.
4674 United States' first written submission, para. 1315.
4675 United States' first written submission, para. 1316.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 662
administration of the law, not uniform outcomes, and where the facts of two cases differ, uniform
treatment might actually require different outcomes.4676
7.1967  In response to the United States' claims Japan argues that the United States fails to
comprehend that for the two products where the President chose the affirmative side (tin mill and
stainless steel wire), the Commissioners did not agree on the product definition. The Commission was
therefore not, in fact, evenly divided. Furthermore, even if the Panel were to decide that the USITC
was in fact, evenly divided, the President still failed to provide an explanation for his decision.
Therefore the Article X:3(a) violation is attributable to the way in which the President treated the
affirmative votes of individual Commissioners based on differing views about the proper scope of thelike product definitions. Absent a common basis for the affirmative votes, the United States cannot
contend that the President administered the law in a uniform, impartial and reasonable manner.
4677
(i) Tin mill products
7.1968  Brazil and Japan explain that the President decided to impose safeguard measures on tin mill
products based on his treatment of the USITC's tie vote on injury as an affirmative determination.Brazil, Japan and Korea argue that the Commissi on's decision on tin mill products, however, should
not have been treated as equally divided, and does not support the measures.
4678  Brazil and Japan
argue that, in effect, the President agreed with the three affirmative votes on tin mill products.
However, in doing so he also agreed with the four commissioners who found tin mill products to be
separate like products.  Hence, he effectively imposed a measure on products for which only one outof four commissioners with whom he agreed in te rms of the like product definition (treating the tin
mill and stainless wire products as separate products) had made an affirmative determination.
4679
Similarly, Korea argues that the President of the United States considered the situation in relation totin mill products to be a "tie" vote – three affirmative and three negative – even though the majority of
Commissioners who examined the like product adopted by the President–tin mill products – reached anegative injury determination.
4680
7.1969  Further, Korea argues that since both the USITC and the President determined that the
relevant like product was tin mill products, the President had to rely on the causation and serious
injury decisions related to the tin mill industry.  The President did not (and could not) impose
safeguard measures on that basis.  Instead, he based his decision on the combination of a single
affirmative injury vote by Commissioner Miller together with the votes of two other Commissioners
who rendered their affirmative decision based on a different, unadopted like product.  Korea arguesthat it was, in fact, a double counting of the votes of Commissioners Bragg and Devaney in the sense
that their affirmative votes were counted both fo r the injury determination on CCFRS products and
again for the injury determination on tin mill products.
4681
7.1970  Brazil and Japan argue that the WTO Agreements, particularly Article X:3(a) of the GATT
1994, require the President to administer the safeguard law in a uniform, impartial and reasonablemanner.  According to Brazil and Japan, the rights of other WTO Members to fundamental fairness
and due process envisioned under Article X:3(a) were breached when the President treated the USITC
                                                     
4676 Korea's written reply to Panel question 134 at the first substantive meeting.
4677 Japan's second written submission, paras. 48 and 76.
4678 Brazil's first written submission, para. 248; Japan's first written submission, para. 149; Korea's first
written submission, para. 170.
4679 Brazil's first written submission, para. 249; Japan's first written submission, paras. 149 and 152.
4680 Report Submitted to the US Congress at Tin Mill Products (March 2002) (Exhibit CC-89).
4681 Korea's first written submission, para. 170; see also Japan's first written submission,
paras. 155-157.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 663
votes on tin mill as "evenly divided" based on an inappropriate integration of affirmative votes
premised on different like product definitions.4682  Similarly, Korea argues that the US statute was not
administered in a "uniform, impartial and reasonable manner" and, the United States violated its
Article X:3(a) obligation.4683
7.1971  In response, the United States argues that the USITC and the President permissibly exercised
their authority under US law in their treatment of divided votes.  Although two of the Commissioners
based their analyses on like product definitions different from those adopted by the remaining four
Commissioners, all six of them rendered a determination that included imported tin mill and stainless
steel wire.  According to the United States, US legislation permitted the USITC to count each of theseindividual determinations in deciding whether the determination of the USITC was affirmative,
negative, or divided.  The legislation also permitte d the President to accept the determination of the
USITC as reported to him.  For the divided votes, the President also had the authority to consider the
Commission determination to be affirmative or negative.  That he made different designations with
regard to the four divided votes does not call into question the uniformity, impartiality, orreasonableness of his action, since the individual Commissioners' determinations were based on the
distinct facts related to each domestic industry.
4684
(ii) Stainless steel wire
7.1972  Japan argues that the President decided to impose separate safeguard measures on stainless
steel wire products based on his treatment of these products as subject to USITC's tie-vote injurydeterminations.  Japan submits that, the Commission's decisions on these products, however, should
not have been treated as equally divided, and do not support the measures.  Japan argues that for
stainless wire products, two commissioners considered these products as part of a combined stainless
wire and wire rope like product and issued an affirmative determination on these products.  The other
four commissioners considered them separate like products.  All four voted in the negative forstainless wire rope, resulting in a majority negative determination for this product.  One of the four,
however, made an affirmative determination for stainless wire; the other three voted in the negative
for stainless wire.  Overall, therefore, the vote was tied at three-to-three for stainless wire; but for
stainless wire as a separate like product, the vote was three-to-one negative.
4685
7.1973  Japan argues that the WTO Agreements, particularly Article X:3(a) of the GATT 1994,
require the President to administer the safeguard law in a uniform, impartial and reasonable manner.
According to Japan, the rights of other WTO Me mbers' to fundamental fairness and due process
envisioned under Article X:3(a) were breached when the President treated the USITC votes on
stainless steel products as "evenly divided" based on an inappropriate integration of affirmative votes
premised on different like product definitions.4686
7.1974  In response, the United States argues that the USITC and the President permissibly exercised
their authority under US law in their treatment of divided votes.  Although two of the Commissionersbased their analyses on like product definitions different from those adopted by the remaining four
Commissioners, all six of them rendered a determination that included imported tin mill and stainless
steel wire.  According to the United States, US legislation permitted the USITC to count each of these
individual determinations in deciding whether the determination of the USITC was affirmative,
                                                     
4682 Brazil's first written submission, para. 251; Japan's first written submission, para. 150.
4683 Korea's first written submission, para. 170.
4684 United States' first written submission, para. 1306.
4685 Japan's first written submission, para. 149.
4686 Japan's first written submission, para. 150.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 664
negative, or divided.  The legislation also permitte d the President to accept the determination of the
USITC as reported to him.  For the divided votes, the President also had the authority to consider theCommission determination to be affirmative or negative.  That he made different designations with
regard to the four divided votes does not call into question the uniformity, impartiality, or
reasonableness of his action, since the individual Commissioners' determinations were based on the
distinct facts related to each domestic industry.
4687
(c) Exclusion of NAFTA imports
7.1975  Korea notes that the USITC found that, under Section 311(a) of the US NAFTA
Implementing Legislation, imports of other weld ed pipe (among other products) from Canada
accounted "for a substantial share of total imports and contribute importantly to the threat of serious
injury caused by the imports".4688  According to Korea, the USITC also found that, under
Section 311(a) of the US NAFTA Implementing Legislation, imports of CCFRS (among other
products) from Mexico accounted for a substantial share of total imports and contributed importantly
to the serious injury.4689 4690 4691
7.1976  Korea states that irrespective of the finding of the USITC, the President of the United States
determined that imports from Canada and Mexico did not account for a substantial share of total
imports nor did they contribute importantly to the serious injury for any product that was subject to a
safeguard measure.4692  Korea argues that in reversing the determination of the USITC, the President
of the United States did not provide any explana tion for the manifest discrepancy between the USITC
determination and the determination of the President.   Indeed, the President made a blanket exemption
for all products subjected to safeguard measures regardless of the determination by the USITC.  It was
on the basis of such a determination by the President that the United States excluded imports from
Canada and Mexico.4693
7.1977  Korea argues that although the USITC and the President should administer the same legal
standard under sections 311(a) and 312(b) of the US NAFTA Implementing Legislation4694 when
assessing the same factual situation, the two authorities came to totally different decisions with
respect to flat steel products and other welded pipe .  If the two authorities' application of the same
legal standard to the same set of facts had been uniform, impartial and reasonable, they would have
come to the same conclusion.  In Korea's view, sinc e the two authorities' decisions were contradictory,
the United States is in violation of Article X:3(a) of the GATT 1994.4695
7.1978  In response, the United States submits that the USITC's findings are not subject to Article X:3
since, under Section 311, they have no legal effect and they do not change any party's legal rights,
impose or remove any burden on imports, or require any other agency or government officer to take
action.  Therefore, according to the United States, they are not a law, regulation, judicial decision or
                                                     
4687 United States' first written submission, para. 1306.
4688 USITC Report , Vol. I , p. 166 (Exhibit CC-6).  The Commission was evenly divided on whether
those imports contributed importantly to the threat of serious injury.
4689 USITC  Report, Vol. I , pp. 66-67 (Exhibit CC-6).
4690 USITC Report, Vol. I , p. 66 (Exhibit CC-6).
4691 Korea's first written submission, para. 175.
4692 Proclamation 7529, 67 Fed. Reg. 10553, 10555-56 (2002), para. 8 and clause (2) (Exhibit CC-13).
4693 Korea's first written submission, para. 176.
4694 Codified at 19 U.S.C. §§ 3371-3372, Implementing Chapter 8, Article 801 of the North American
Free Trade Agreement Between the Government of the United States of America, the Government of Canadaand the Government of Mexico (Exhibit CC-47).
4695 Korea's first written submission, para. 177.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 665
administrative ruling of general application.  The United States submits that, similarly, their lack of
effectiveness means that the USITC findings with respect to Canada and Mexico are not part of the"administration" of such measures.  Since the USITC findings on "substantial share" and "contribute
importantly" have no legal effect, any difference between them and the Presidential determination
would not represent a legally cognizable lack of uniformity, impartiality, or reasonableness in the
"administration" of a measure.
4696
7.1979  The United States argues that, in any event the President did not, as Korea alleges, apply "the
same legal standard to the same set of facts".  The United States submits that, unlike the USITC, the
President based his determination on the original report and the supplemental responses, which werenot available when the USITC made its findings.  In addition, although the USITC is subject to a
statutory standard almost identical to the one applic able to the President, nothing required the USITC
and the President to reach identical results in applying that statutory standard.  Reasonable minds may
differ in applying the law to the same set of facts.   Thus, even if it were assumed that different levels
of government reached different results, that difference does not implicate Article X.
4697
7.1980  In counter-response, Korea notes the following facts that it considers to be salient:4698  I n
relation to CCFRS products, Korea notes that Mexi co was one of the top five sources of CCFRS;
Mexico's import volume increased 26.9% during the 1996-2000 period; Mexico's rate of increase of
imports was higher than the rate of increase of non-NAFTA imports; and Mexico's AUV for CCFRS
was consistently below the AUVs of other imports..4699  In relation to pipe and tube, Korea notes that
Canada was the largest single supplier for the three most recent years in the period examined; the
quantity of imports from Canada between 1998-2000 was 141% greater than the quantity from the
second largest supplier; between 1998-2000, Canada accounted for at least 35% of the imports; and
imports from Canada increased their market share from 10.8% in 1999 to 14.2% in 2000.4700Korea
states that the evidence concerning the significan ce of NAFTA imports of CCFRS and pipe and tube
calls into question whether, indeed, the President's decision to exclude imports from these sources was
reasonable and not arbitrary, when the United States itself admits that the decision was based on the
USITC Report.4701 4702
(d) Explanation/publication
7.1981  Brazil and Japan note that the President provided no explanation for why he treated these
purported "tie votes" as affirmative determinations for tin mill products and stainless steel products
while treating tie votes on two other products – tool steel and stainless flanges/fittings – as negativedeterminations.
4703  Brazil and Japan argue that with no explanation of his decision to treat some tie
votes as affirmative and some as negative, the Presid ent's decisions in this regard are inconsistent with
one another.  They, therefore, violate the requirement under Article X:3(a) of the GATT that each
Member must administer its laws in a uniform, impartial, and reasonable manner.4704 4705
                                                     
4696 United States' first written submission, para. 1319.
4697 United States' first written submission, para. 1320.
4698 Korea's second written submission, para. 235.
4699 USITC  Report, Vol. I , p. 66-67 (Exhibit CC-6).
4700 USITC  Report, Vol. I , pp. 166-167 (Exhibit CC-6).
4701 United States' first written submission, para. 1320.
4702 Korea's second written submission, para. 236.
4703 Brazil's first written submission, para. 249; Japan's first written submission, paras. 152 and 166.
4704 Argentina –Hides and Leather , paras. 11.78-11.101.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
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Page 666
7.1982  According to Japan, the decisions here are not uniform for the obvious reason that they are
inconsistent:  two tie votes are treated as affirmative; two are treated as negative.  This is not auniform administration of US law.  Absent the required explanation for the President's decision, one
can only surmise that the decisions are also not impartial.  Finally, the decisions are by nature
unreasonable because, as discussed above, they were not supported by the requisite reports and
analyses.  It is not a reasonable administration of US law to make a decision without explaining the
basis for that decision.  The decisions are therefore inconsistent with the requirements of
Article X:3(a).
4706
7.1983  The United States argues that there is no reason in the text (or even in the "spirit") of
Article X to support Japan's conclusion that "impartial" and "reasonable" administration of measures
listed in Article X:1 requires the publication of "principled reasons" for reaching a decision.  Article X
explicitly requires publication only in paragraph 1, which is limited to regulations, rulings, judicial
decisions and administrative rulings of general application.  Even this explicit obligation only requires
publication "in such a manner as to enable governments and traders to become acquainted with" themeasures.  In other words, as long as the measure explains what it does, a Member need not explain
why it was adopted.  In contrast, Article X:3 contains no reference to publication, suggesting that the
words that are actually there – "administer in a uniform, impartial and reasonable manner" – do not
require publication.  Moreover, a Member can meet the Article X:1 publication requirement by
indicating what the measure does, without describing why it took the measure.  Thus, if anypublication requirement can be read into Article X:3, it would seem to involve only the description of
action taken by a Member, and not an explanation of how the measure complies with municipal or
WTO rules.
4707
7.1984  Korea asserts that the President ignored the findings of the USITC with respect to Mexico and
Canada and rendered a conclusion that imports from Canada and Mexico did not account for asubstantial share of total imports nor contribute importantly to the serious injury.
4708  However, the
United States failed to provide any explanation of how it reached this directly contrary conclusion on
this important and pertinent issue of fact and law.  Thus the determination is in violation of Articles 3
and 4.2(c) of the Agreement on Safeguards as well as Article X:3(a) of the GATT 1994.4709
7.1985  The United States argues that Article X:3 does not oblige a Member to "explain" the reasons
for administering a law, regulation, judicial decision, or administrative ruling in a particular manner.
Thus, the absence of such an explanation for the President's decision on the application of thesubstantial share and contribute importantly standards cannot establish the existence of an
inconsistency with Article X:3.
4710
(e) Scope of the obligations imposed by Article X:3(a) of GATT 1994
7.1986  Japan argues that unlike most provisions of GATT 1994, which are concerned with the
content of a government's laws, regulations, decisions and rulings, Article X of GATT 1994 focuses
                                                                                                                                                                    
4705 Brazil's first written submission, para. 253; Japan's first written submission, para. 173. Japan
claimed GATT 1994 Article X:3(a) violations as well as Articles 3.1 and 4.2(c) violation for the lack ofexplanation.  Ibid. para. 166.  See also paras. 7.1996-7.2018.
4706 Japan's first written submission, para. 174.
4707 United States' first written submission, para. 1294.
4708 Proclamation 7529, 67 Fed. Reg. 10553, 10555 (2002), para. 8 (Exhibit CC-13).
4709 Korea's first written submission, para. 180.
4710 United States' first written submission, para. 1321.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 667
on the administration of those laws, regulations, decisions, and rulings.4711  According to Japan,
Article X articulates the basic principles of what is widely known as due process or fundamentalfairness.
4712 4713  Japan further argues that the words "uniform", "impartial", and "reasonable" form the
essence of the Article X:3(a) obligations.4714  They are to be interpreted "in good faith in accordance
with the ordinary meaning to be given to the term s of the treaty in the context of its object and
purpose".4715  Japan submits that with respect to the administration of laws which Article X:3(a)
governs, "impartial" ensures that authorities do not favor particular parties over others4716;
"reasonable" is directed at the nature of the administration itself and ensures that authorities do not
administer a law in an inappropriate manner, such as applying a penalty in a disproportionatemanner
4717;  and "uniform" ensures that authorities do not administer laws in different ways under
similar circumstances.4718  Collectively, these obligations ensure due process.4719  Based on the
Appellate Body's interpretation of Article X:3 in US – Shrimp4720, Japan argues that the Appellate
Body considers the standards contained in Article X:3 to represent in one sense the notion of good
faith and in another sense the "fundamental requirements of due process".4721
7.1987  Japan further agues that the Article X:3(a) due process rights may be viewed as a specific
incorporation of the fundamental international legal principle of abus de droit.  Japan submits that
                                                     
4711 The Appellate Body referenced this distinction in EC – Bananas III,  at para. 200 ("Article X
applies to the administration  of laws, regulations, decisions and rulings." (emphasis in original)).
4712 The term "due process" has been used extensively in WTO dispute settlement proceedings.  See,
e.g., Appellate Body Report, India – Patents (US) , at para. 94; and Panel Report, US – FSC,  at para. 6.3.
4713 Japan's first written submission, para. 126.
4714 The New Shorter Oxford Dictionary  defines these important terms as:
"impartial" — Not partial; not favouring one party or side more than another; unprejudiced, unbiased; fair, at
1318;
"reasonable" — 1. Endowed with the faculty of reason, ra tional.  2.  In accordance with reason; not irrational or
absurd.  3.  Proportionate.  4. Having sound judgment; ready to listen to reason, sensible.  Also, not asking fortoo much.  5. Within the limits of reason; not greatly less or more than might be thought likely or appropriate;moderate, at 2496;
"uniform" — "1. Of one unchanging form, character, or kind; that is or stays the same in different places or
circumstances, or at different times, . . . 4. Of the same  form, character, or kind as another or others; conforming
to one standard, rule, or pattern; alike, similar" at 3488.
4715 Vienna Convention, art. 31.1.  Article 26 also establishes the concept of pacta sunt servanda  stating
"Every treaty in force is binding upon the parties to it and must be performed by them in good faith", and itappears in Part III of the Vienna Convention titled, "Observance, Application and Interpretation of Treaties."
Ibid.  The Vienna Convention governs the interpretation of the provisions of the WTO Agreements, including
GATT 1994.  See DSU Article 3.2; see also AD Agreement, Article 17.6 (i) (requiring Members' authorities to
evaluate facts in "an unbiased and objective manner"); Article 17.6(ii) (directing Panels interpreting theAgreement to use "customary rules of interpretation of public international law", i.e., the Vienna Convention).
Most recently, the Panel in Korea – Procurement  recognized the implicit development of Vienna Convention
Article 26 pacta sunt servanda  in respect of the GATT 1947 and the WTO Agreements, at para. 7.93.
4716 Argentina – Hides and Leather,  para. 11.95, 11.100 (noting that "impartiality" prohibits an
authority from giving unfair advantage to one party).
4717 Argentina – Hides and Leather , para. 11.86 (holding that the meaning of "reasonableness" relates
to how a law or regulation is actually administered).  Panel Report, US – Stainless Steel , para. 6.51 ("the
requirement of uniform application of laws and regulations must be understood to mean uniformity of treatmentin respect of persons similarly situation").
4718 Ibid .
4719 Japan's first written submission, paras. 127-131.
4720Appellate Body Report, US – Shrimp,  (emphasis in original), at para. 182.
4721 Japan's first written submission, para. 128.WT/DS248/R, WT/DS249/R,
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Page 668
abus de droit , or abuse of law, prohibits a state from engaging in an abusive exercise of its rights.4722
According to Japan, this principle was recognized by the Appellate Body in the US – Shrimp  case.  "It
noted that good faith" is a "general principle of law and a general principle of international law [that]
controls the exercise of rights by states"4723 and that abus de droit  is one application of this general
principle.4724 4725  Japan asserts that in this way, the Appe llate Body adopted the concept of good faith
as a tool for interpreting WTO provisions so as to guarantee the due process rights of WTO Members.
Specifically, good faith precludes unreasonable, abusive, or discriminatory interpretation of WTO
rights and obligations.  These principles prove even more crucial when a particular law endows a
national authority with discretion.4726  An exercise of discretion in good faith must include a
consideration of the parties' interests.  In this way, the concept of good faith imposes a duty upon
Members to implement the provisions in a reasonable and equitable manner.4727
7.1988  In response, the United States argues that Japan's analysis omits a key aspect of the reasoning
in US – Shrimp .  According to the United States, the Appellate Body cited Article X:3 not in response
to a claimed inconsistency with that Article, but as context for the interpretation of Article XX(g).The United States submits that the Appellate Body appears to have distinguished between "certain
minimum standards" that Article X:3 actually "establishes" and other due process ideals that are part
of the "spirit, if not the letter" of that Article.  According to the United States, the Appellate Body did
not have to clarify this distinction, as consistency with Article X was not subject to the appeal.
4728
The United States further submits that in line with the Appellate Body's repeated cautions against
reading into the Agreement words that are not there, a panel cannot add new terms or change the
meaning of existing terms.  Accordingly, the Un ited States reads the Appellate Body's guidance in US
– Shrimp  as a recognition that Article X provides only "certain minimum standards of transparency
and procedural fairness" – namely, those expressly provided by its terms.  The United States submits
that it does read the Appellate Body's reference to the "spirit" of Article X – a "spirit" not found in the"letter" (i.e., the text) –  as justifying the importation into Article X of alleged due process concepts
that are not expressly provided. '
4729
7.1989  The United States further submits that there is nothing in Article X to suggest that it
incorporates international law principles of abus de droit  or "good faith".  According to the United
States, as a general matter, the DSU is specific when it incorporates customary rules of international
law, which it does only in Article 3.2, and only with regard to rules of interpretation.  Abus de droit
                                                     
4722 Sir Robert Jennings, Oppenheim's International Law, Vol. I, p. 407 (9th ed. 1992) (an abuse of
right occurs when a state avails itself of a right in an arbitrary manner).
4723 US – Shrimp , at para. 158; see also  US – FSC , at para. 166; US – Gasoline , at 18.  This principle is
set out at Article 26 ("pacta sunt servanda") of the Vienna Convention, which requires states bound by treaties to
perform them in good faith.
4724 As the Appellate Body concluded, "(a)n abusive exercise by a Member of its own treaty right thus
results in a breach of the treaty rights of the other Members and, as well, a violation of the Treaty obligation ofthe Member so acting."  US – Shrimp , at para. 158.
4725 Japan' first written submission, para. 129.
4726The same leading treatise used by the Appellate Body in US – Shrimp  explains, "wherever the law
leaves a matter to the judgement of the person exercising the right, this discretion must be exercised in goodfaith, and the law will intervene in all cases where this discretion is abused … Whenever, therefore, the ownerof a right enjoys a certain discretionary power, this must be exercised in good faith, which means that it must beexercised reasonably, honestly, in conformity with the spirit of the law and with due regard to the interests ofothers."  B. Cheng, General Principles of Law as applied by International Courts and Tribunals  (Stevens and
Sons, Ltd., 1953), Chapter 4, p. 133, (Exhibit CC-48).
4727 Japan's first written submission, para. 130.
4728 United States' first written submission, para. 1292.
4729 United States' first written submission, para. 1293.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 669
does not fall into that category.  Moreover, the Appellate Body noted in US – Shrimp  that this concept
"enjoins that whenever the assertion of a right 'impinges on the field covered by [a] treaty obligation,it must be exercised bona fide, that is to say, reasonably.'"   However, Article X applies to any
measure described in its first paragraph – including a measure that liberalizes trade.  Thus, according
to the United States, it cannot be understood as the incorporation of a legal principle directed
exclusively at measures that prejudice other signatories to an Agreement.
4730
7.1990  Japan argues that the Agreement on Safeguards requires the competent authority to determine
whether or not increased imports cause serious injury to the domestic industry before taking a
safeguard measure.  Under US law, the USITC is re sponsible for the injury determination.  Thus, the
USITC determination falls under the scope of Article X:3, since the administration of the laws,
regulations, decisions and rulings related to the United States' safeguard system mainly consists of the
USITC determination based on its investigation as well as the subsequent decision on the application
of the measure by the President.4731
7.1991  The United States argues that Article X:3 does not apply to the substantive content of laws,
regulations, judicial decisions and administrative rulings of general application.  More particularly,
the United States argues that none of the claims raised in relation to Article X:3(a) is implicated by
Article X:3(a), as they involve substantive findin gs or determinations, and not the administration of
laws, regulations, judicial decisions or administrative rulings of general application.4732  The United
States submits that the Panel should not even reach the complainants' factual allegations that specificdecisions by the President and the USITC were not uniform, impartial, and reasonable.  It further
submits that should the Panel decide to reach that question, the facts show that with regard to each of
these claims, the complainants have failed to meet their burden of proof to establish an inconsistency
with Article X:3(a).
4733
7.1992  According to the United States, the argument that some of the decisions by the USITC or the
President under Section 201 or Section 312 are not "uniform", "impartial", or "reasonable" and,
consequently, are inconsistent with Article X:3(a) are based on the mistaken view that Article X:3(a)
requires "decisions" to be uniform and ignores the text of Article X:3(a) which applies to
"administering" laws relating to international trade.   According to the United States, panels and the
Appellate Body have made clear that Article X:3 applies exclusively to the administration – in the
sense of procedures applied – of the laws, regulations, judicial decisions, and administrative rulings of
general application described in Article X:1.4734  The United States relies upon comments made by the
Appellate Body in EC – Poultry  and the panel in Argentina – Hides and Leather  to argue that the
Article X obligations are of a limited nature.  On the basis of those decisions, it argues that,
Article X:1 covers only certain "laws, regulations, judicial decisions and administrative rulings of
general application", generally those pertaining to in ternational trade.  With regard to these measures,
the only obligations are that a Member publish them promptly and, for certain of them, not enforce themeasure until after its official publication.  Article X:3(a) applies not to the measures described in
Article X:1 themselves, but to their administration, which must be "uniform, impartial and
reasonable".
7.1993  Relying upon the Appellate Body's decision in US – Shrimp , the United States further argues
that Article X:3 does not require substantive decisions to be uniform.  Indeed, a uniform, impartial,
                                                     
4730 United States' first written submission, para. 1295.
4731 Japan's first written submission, para. 131.
4732 United States' first written submission, para. 1296.
4733 United States' first written submission, para. 1297.
4734 United States' first written submission, para. 1287.WT/DS248/R, WT/DS249/R,
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Page 670
and reasonable administration of laws will often require different outcomes because of different facts
or other circumstances.4735  According to the United States, other provisions of the covered
agreements specify the substantive requirements, and these must be the basis for a claim that the
substantive aspects of a Member's actions are inconsistent with WTO obligations.  To the extent that
the complainants are complaining that a particular outcome is inconsistent with a provision of a
covered agreement, they have the burden of proof in establishing that breach, and that would not be a
claim under Article X:3(a).4736
7.1994  In counter-response, Japan argues that to the extent that the Argentina – Hides and Leather
Panel implied that a measure was either administrative (procedural) or substantive, Japan believes thisto be erroneous and unsupported by any Appellate Body precedent.  That a substantive measure can
be administered in a manner that is not uniform, impartial and reasonable is self-evident.  According
to Japan, GATT Article X:3(a) is meant to address and prevent precisely this type of procedural
protectionism.
4737 4738  Japan also submits that the United States' contention that the customary
international law principles of good faith and abus de droit  are not applicable to GATT
Article X:3(a)4739 is expressly contradicted by the declaration of the panel in Korea – Procurement
that principles of customary international law apply to WTO provisions unless they are explicitly
excluded by the text of a WTO Agreement.4740  Japan argues that, moreover, in its prior decisions, the
Appellate Body has declared both that the de mands of due process are implicit in the DSU4741 and that
the principle of good faith indeed informs the WTO Agreement in general.4742 4743  Japan concludes
that, in light of the foregoing, it is indisputable th at the international law principles of due process and
good faith are embedded in GATT Article X:3(a).  Thus, in analysing how the US administered its
safeguard law in this dispute, the Panel should  examine the US conduct closely, with an eye to
whether the United States administered its law in a way that respected its due process and good faith
obligations.4744
7.1995  Japan argues that the United States must administer its safeguard law in a uniform, impartial
and reasonable manner.  The same standards must be applied in every instance.  When applied to
different facts, the outcome may differ.  However, different outcomes when faced with the same or
highly similar facts do not meet the requirements of Article X:3(a).4745  Similarly, Korea argues that
                                                     
4735 United States' first written submission, para. 1290.
4736 United States' first written submission, para. 1287.
4737 The erroneous nature of the US argument is also illustrated by the Panel and Appellate Body
reports in US – Underwear .  There, the Panel and Appellate Body said that the administrative (procedural)
obligations of GATT Articles X:1 and X:2 applied in the context of a textile safeguard restraint measure (asubstantive measure).  Appellate Body Report, US – Underwear , at pp. 20-21 and Panel Report, US –
Underwear,  at paras. 7.64-7.66.  Though Article X:3(a) em bodies a different administrative (procedural)
obligation than Articles X:1 and X:2, like them it applies that administrative (procedural) obligation to
substantive measures of general application.
4738 Japan's second written submission, paras. 65-67.
4739 United States' first written submission, at para. 1295.
4740 Panel Report, Korea – Procurement , at para. 7.97 (decision not appealed).
4741 Appellate Body Report, India – Patents (US),  at para. 94.
4742 Appellate Body Report, US – Hot-Rolled Steel,  at para. 101;  Appellate Body Report, US – FSC, at
para. 166.
4743 Japan's second written submission, para. 68.
4744 Japan's second written submission, para. 69.
4745 Japan's written reply to Panel question No. 134 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 671
while Article X:3(a) does not require uniformity in outcome in every case there, nevertheless, has to
be consistency in administration so that the results are also consistent.4746
3. Articles 3.1 and 4.2(c) of the Agreement on Safeguards
(a) Treatment of affirmative votes
7.1996  Brazil, Norway and Japan argue that even assuming that the President's reliance on three
affirmative votes based on differing like product definitions for tin mill products and stainless steel
wire was legitimate, the decision was inconsistent with Articles 3.1 and 4.2(c) of the Agreement on
Safeguards because the President failed to identify which determinations "set[s] forth the findings and
reasoned conclusions reached on all pertinent issues of law and fact".  He, therefore, also failed, asrequired by Article 4.2(c), to provide "a detailed analysis of the case under investigation as well as a
demonstration of the factors examined".
4747  Japan argues that anytime the President makes a decision
that departs from or lacks an USITC majority – which applies with respect to the tin mill and stainless
wire products – then he must provide an explanation for the decision.  Japan submits that, in this case,
the President provided no explanation as to why he agreed with those Commissioners voting in theaffirmative for tin mill and stainless wire, while agreeing with those voting in the negative for tool
steel and stainless flanges and fittings.
4748
7.1997  Referring to relevant parts of the USITC Report, the United States argues that the
determinations of the three USITC Commissioners who made affirmative determinations on tin mill
products4749 and stainless steel wire4750 are supported by findings and conclusions and a detailed
analysis that fully meets the requirements of Arti cles 3.1 and 4.2(c) of the Agreement on Safeguards.
More particularly, the United States argues that the competent authorities (i.e., the USITC) made an
affirmative determination with regard to tin mill and stainless steel wire under US law and fully
complied with Article 3.1 by publishing "a report setting forth their findings and reasoned conclusions
reached on all pertinent issues of fact and law".  The report addressed all of the factors necessary foran affirmative determination consistent with Articles 2.1 and 4.  Since the views of the
Commissioners and data in the USITC Report provid ed findings and reasoned conclusions in support
of the affirmative determinations, Article 3.1 did not require further explanation by the President.
This, says the United States, is in keeping with the President's role in the US statutory process – not to
make a separate determination, but to decide on which of the determinations already made by the
Commissioners to rely as the determination of the USITC as a whole.
4751
7.1998  In addition, the United States submits that  the President did not make a decision that "departs
from" the USITC's decision.  Instead, he simply iden tified which votes constituted the determination
of the USITC.  Further, in deciding that an affi rmative determination constitutes the determination of
the USITC, the President decides which of two determinations – one negative and one affirmative,
each of them potentially consistent with US law – shall be the collective determination of the USITC.
He does not pick and choose among the Commissioners who supported that determination, adopt oneset of views, or adopt one set of conclusions as his own.  The United States submits that this is
entirely consistent with the Agreement on Safeguards, provided that the Commissioners' written
                                                     
4746 Korea's written reply to Panel question No. 134 at the first substantive meeting.
4747 Brazil's first written submission, para. 252; Japan's first written submission, paras. 166 and 167. For
Japan's related argument for the United States' violation of Articles X:3(a), see 7.1981-7.1983 andsupra . footnote 4705
4748 Japan's oral statement for the first substantive meeting, para. 12.
4749 United States' first written submission, paras. 982-989.
4750 United States' first written submission, paras. 990-997.
4751 United States' first written submission, para. 1017.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 672
views provide explanations (albeit alternative explanations) demonstrating the legal sufficiency of the
determination that the President selected.4752
7.1999  Japan and Norway assert that a question arises in this case as to who is the "competent
authority" in the United States in safeguard investigations.  Although the USITC conducts the injury
investigation, the President makes the ultimate decision on whether and how to impose the measure.
This distinction will sometimes not matter if the President agrees with the USITC and imposes the
remedy they recommend he impose.  However, anytime the President makes a decision that departs
from or lacks an USITC majority – which applies with respect to the tin mill and stainless wire
products, and his choice of remedy for all products – then he must provide an explanation for thedecision.  Japan submits that the US law construct that the President rather than the competent
authority, i.e., the USITC, makes the final decision in safeguards cases does not absolve the United
States Government of the obligation to abide by Articles 3.1 and 4.2(c).  If the President chooses a
course unsupported by an USITC majority, he must issue his own report or, at least, provide a
reasoned analysis or identify whose reports and analysis he is adopting.  Otherwise, as here, themeasure is unsupported and violates Articles 3.1 and 4.2(c).
4753  More particularly, Japan argues that,
under the WTO Agreement, if the President disagrees with the USITC's analysis, then he effectively
takes the role of the competent authority within  the meaning of Article 3.1 of the Agreement on
Safeguards, because his decision becomes the injury determination of the United States.  Therefore,
under such circumstances, the President must abide by Articles 3.1 and 4.2(c) and any otherobligations applicable to competent authorities.
4754
7.2000  Japan submits that the crux of its argument on this point is that the requirements of the
Agreement on Safeguards must be followed by each Member regardless of the internal decision-
making process for the Member.  According to Japan, if the President disagrees with the USITC
analysis, then he effectively takes the role of  the competent authority within the meaning of
Article 3.1 of the Agreement on Safeguards, because his decision becomes the injury determination of
the United States.4755  Furthermore, Article 2.1 provides that "a Member may apply a safeguard
measure only if  that Member has determined" which makes clear that a measure can only be taken
after an investigation is performed pursuant to Article 3.1, and consistent with the result of that
investigation .  Japan submits that it is not sufficient for the President to point his finger at the USITC
and say "they're the competent authority, not me".  This approach, submits Japan, would apply to all
cases in which the President's measure lacks support in the USITC's explanation.4756
7.2001  Similarly, Korea argues that it is not relevant how the internal decision-making process is
organized by a Member.  However, there must be a determination that meets all the requirements of
the Agreement on Safeguards and compliance must be judged by reference to the authorities'
published report.  If that decision contains internal inconsistencies which are not resolved within the
report, or legally inconsistent findings, then the requisite legal basis for a safeguard measure has notbeen met.  Korea submits that, for this reason, when there are conflicting legal recommendations and
even inconsistent factual findings, the President may not simply pick out any of the findings that
support serious injury, causation, etc.  If not even a majority of the Commission agrees that serious
injury, causation, or increased imports exists then there are questions raised as to the existence of the
necessary pre-conditions for safeguard relief.  The failure of the President to either seek a clarificationfrom his authorities or otherwise explain the decision to nonetheless find serious injury, causation, etc.
                                                     
4752 United States' written reply to Panel question No. 93 at the second substantive meeting.
4753 Japan's first written submission, para. 168; Norway's first written submission, para. 342.
4754 Japan's oral statement for the second substantive meeting, para. 27.
4755 Japan's second written submission, paras. 59-61.
4756 Japan's written reply to Panel question No. 69 at the second substantive meeting.WT/DS248/R, WT/DS249/R,
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renders the decision-making process not in accord with the Agreement on Safeguards.  The necessary
prerequisites for safeguard relief have not been met.4757
7.2002  China argues that,  pursuant to Article 3.1 of the Agreement on Safeguards, the competent
authorities are required to provide a report setting forth their findings and reasoned conclusions
reached on all pertinent issues of fact and law.  These findings represent the legitimate basis for the
imposition of a safeguard measure.  Thus, the Agreement on Safeguards requires that the reasons why
a measure is applied be adequately explained and transparent.  According to China, if the authority
applying the measure (in this case the President) decides to depart from the findings of the
investigating authority by imposing a higher remedy, it has to provide an adequate explanation. Suchan explanation is necessary in order to provide a legitimate basis for its decision, and in order to
ensure transparency.  China submits that the ab sence of explanation would allow the authority to
arbitrarily modify the outcome of the investigation and impose remedies of higher extent than
necessary.
 4758
7.2003  Norway submits that it is the United States that is the Member of the WTO, not the USITC
nor the President.  The United States has an obligation to ensure that Articles 3.1 and 4.2(c) is adhered
to.  Any decision must be supported, as required  by the Agreement on Safeguards, and that support
must be published as required by Articles 3.1 and 4.2(c).  Internal US legislation on "bifurcation" of
decision making power or on confidentiality of commissioner's recommendations are irrelevant, and
cannot override the obligations of the US as a Member of the WTO.4759
7.2004  In response, the United States submits that the Appellate Body in US – Line Pipe  made it
clear that the internal decision making process of a Member is entirely within the discretion of that
Member and an exercise of its sovereignty.  The United States argues that, on the basis of that
decision, the Agreement leaves the decision-making process to the Members, including the
identification of what constitutes a decision under its municipal law, provided that the determination,"however it is decided domestically", meets the requirements of the Agreement.
4760  The United States
argues that the United States implementing legislation provides for the USITC to conduct
investigations and make injury determinations a nd for the President to make the decision on remedy
and certain other matters.  It provides that when the USITC is equally divided in its injury
determination, the President may consider as the USITC determination either the determination of the
Commissioners voting in the affirmative or those voting in the negative.4761
7.2005  The United States also argues that the President is not a "competent authority" for purposes of
Articles 3 and 4.  He does not participate in the investigatory process or cast a vote.  He merely
decides which explanation by those who did participate in the investigation carries the greater
weight.4762  The United States further argues that even if the President were a "competent authority",
the Agreement on Safeguards does not require a report, or even written views, from each member of a
competent authority.  Thus, even if the President facing a tie vote of the USITC could be treated as acompetent authority under Articles 3 and 4, he would bear no obligation to explain his views
separately.
4763
                                                     
4757 Korea's written reply to Panel question No. 69 at the second substantive meeting.
4758 China's written reply to Panel question No. 69 at the second substantive meeting.
4759 Norway's written reply to Panel question No. 69 at the second substantive meeting.
4760 United States' first written submission, para. 980.
4761 United States' first written submission, para. 981.
4762 United States' oral statement for the second substantive meeting, para. 136.
4763 United States' oral statement for the second substantive meeting, para. 137.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
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7.2006  The European Communities and Korea agree that it is of no matter whether the determination
results from a decision by one or one hundred, individual decision-makers under the municipal law ofthat WTO Member.  However, the European Communities and Korea submit that, in accordance, with
the Appellate Body decision in US – Line Pipe , what matters is whether the determination, however it
is decided domestically, meets the requirements of the Agreement on Safeguards.
4764  The European
Communities submits that one of the requirements of the Agreement on Safeguards is the provision of
a reasoned and adequate explanation in a report.  If having a bifurcated or any other system makes
compliance more difficult with this obligation, then  that is the problem of the Member imposing the
safeguard measures and cannot be used as an excuse to lower the standards contained in theAgreement on Safeguards.
4765
7.2007  The United States argues that it has never asserted that the "bifurcation" of the process allows
the President to escape responsibility under the Agreement on Safeguards.  The Agreement on
Safeguards itself divides the process into two stages: (a) the investigation (Article 3) and the
determination of serious injury or threat thereof (Article 4); and (b) application of the safeguardmeasure (Article 5).  The United States submits that with respect to the investigation, Article 3.1
states that "[t]he competent authorities shall publish  a report setting forth their findings and reasoned
conclusions".  With respect to the determination of serious injury, Article 4.2(c) states that "[t]he
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 thefactors examined".  As the competent authority, the USITC must comply with these requirements.
However, the United States submits that there is no analogous provision applicable to step two, i.e.,
application of the safeguard measure, except with respect to certain types of quantitative restrictions
that were not used in the steel case.  Thus, the President, who administers this second step, was under
no obligation to provide such an explanation.  The United States further argues that the bifurcation ofthe proceedings between the USITC and the President is not pertinent.  In fact, even if the USITC
administered both stages of the process, the Agreement on Safeguards still would not require an
explanation, at the time a safeguard measure was imposed, of how that measure was only to the extent
necessary to remedy or prevent injury and to facilitate adjustment.
4766
7.2008  The United States submits that the complainants fail to address or even acknowledge the
recent finding of the Appellate Body in US – Line Pipe , in which the Appellate Body both confirmed
that the decision-making process is left to the discretion of the Members and found no inconsistencybetween the requirements of the Agreement and the manner in which the USITC counts votes, at least
in the instance of its present injury and threat of injury determinations.
4767  According to the United
States, in that case, the Appellate Body said that if a Member has taken a safeguard action that
satisfies the requirements of the Agreement, the particular manner in which the decision is reached by
the competent authorities is of no consequence.4768
7.2009  The United States argues that that decision is instructive in relation to stainless steel wire
insofar as it indicates that the fact that Commissioner Bragg found that increased imports constituted a
threat of serious injury while Commissioner Devaney determined that such imports cause serious
injury does not in any way diminish the sufficiency of their findings for purposes of Article 2.1.4769
                                                     
4764 European Communities' written reply to Panel question No. 128 at the first substantive meeting;
Korea's written reply to Panel question No. 128 at the first substantive meeting
4765 European Communities' written reply to Panel question No. 128 at the first substantive meeting
4766 United States' written reply to Panel question No. 128 at the first substantive meeting.
4767 United States' first written submission, para. 1002.
4768 United States' first written submission, para. 1005.
4769 United States' first written submission, para. 1005.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
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According to the United States, the Appellate Body's conclusion is also  instructive with regard to the
affirmative votes made by those Commissioners whose respective starting point for their assessmentof serious injury began with a different definition of the relevant like products, as in the case of tin
mill products.
4770  The United States submits that since each Commissioner's determination fulfilled
the requirements of Articles 2 and 4, each provides a valid basis under both US law and the
Agreement for determining whether increased imports are a cause of serious injury to a domestic
industry.  Accordingly, the USITC was warranted in combining all of the affirmative votes and all of
the negative votes to determine the collective decision of the agency. In the case of both tin mill steel
and stainless steel wire, this process resulted in an evenly divided Commission with each grouping ofCommissioners, consisting of three votes.
4771
7.2010  The United States submits that, as in US – Line Pipe , a multiple number of USITC
Commissioners reached the same conclusion that domestic producers of tin mill and domestic
producers of stainless steel wire, either by themselves or as part of a larger group of producers, are
seriously injured or threatened with serious injury by increased imports.  As in US – Line Pipe , they
reached the same result, albeit based on different findings on certain discrete subject matter.  Each
group of three determined, based on the facts in the case, that the right to apply a safeguard measure
on imports of tin mill and stainless steel wire had been established.4772  The United States asserts that
the essence of what has been argued is that the USITC should hold two votes – one on the definition
of industry and the other on whether the industry as defined by the majority is seriously injured orthreatened with serious injury by increased imports.  The United States submits that this is not how
the USITC votes or counts votes or a subject to which the Agreement speaks. Moreover, the vote-
counting methodology they appear to advocate could have the unintended consequence, in other
cases, of changing the USITC's decision from a negative one to an affirmative one.
4773
7.2011  Japan also agrees with the Appellate Body that the Agreement on Safeguards is silent
regarding how a Member must undertake its decision-making process.  However, Japan submits that
this case presents new and different facts.  First, there was only one decision that appears to have
supported each of the President's decisions on tin mill and stainless wire products (Commissioner
Miller for the first and Commissioner Koplan for the second) since these are the only Commissioners
who agreed with the President on both the like product definition and affirmative injury.  Japan
questions whether a reasoned and adequate analysis could exist when the decision of only one of six
Commissioners provides the basis on which the President imposes a measure.  Japan states, secondly,that even if this were deemed sufficient, it is still required, when the Commission is split among
themselves, that the President indicate which explan ation he has adopted as his own.  Otherwise, his
decision is not supported by the report required by Article 3.1.  In this regard, it is instructive that the
United States does not appear to know itself which decision the President relies upon, as it defends in
its first submission the views of all the Commissioners voting in the affirmative for these products.
4774
7.2012  Further, Japan argues that the US attempt to analogize these facts to the US – Line Pipe case
is inapt.  In that case, the question was whether a current injury finding by some Commissioners and a
threat of injury finding by others could be viewed as being consistent with one another.  The
Appellate Body decided that they could.  Actual "serious injury" and "threat" may be "distinct
concepts" under the Agreement, but if the compet ent authority appropriately determines that an
import increase of the same particular product is causing either of these distinct effects to the
                                                     
4770 United States' first written submission, para. 1006.
4771 United States' first written submission, para. 1008.
4772 United States' first written submission, para. 1009.
4773 United States' first written submission, para. 1010.
4774 Japan's written reply to Panel question No. 128 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 676
domestic industry producing like or directly competitive products, both determinations would be
supportive of a measure on that product.  Japan argues that the question in the present case, in starkcontrast, is whether an affirmative decision based on one like product definition can be viewed as
consistent with an affirmative decision based on another like product definition where these distinct
decisions consist of only three affirmative votes altogether out of six.  Japan submits that they cannot.
This is because like product definitions alter all subsequent analyses – the increased imports analysis,
the serious injury analysis, and the causation analysis.  Thus, aggregation of the results of these
analyses based on differing like product definitions would affect the ultimate result on whether a
safeguard measure should be applied on a particular product.
4775
7.2013  In counter-response, the United States submits that the Appellate Body in US – Line Pipe
concluded that findings of "serious injury" and "threat of serious injury" are "two distinct concepts
that must be given distinctive meanings in interpreting the Agreement on Safeguards".4776  I n
particular, these concepts "refer to different moments in time"4777 – "[p]resent serious injury is often
preceded in time by an injury that threatens cl early and imminently to become serious injury".4778
Accordingly, the Appellate Body expressed no disagreement with the US – Line Pipe  panel's finding
that the concepts are "mutually exclusive".4779  Nevertheless, the Appellate Body stated that it does
not matter whether the decision is based upon "serious injury" or "threat" because either finding
supports the right to apply safeguard measures.4780 4781  The United States submits that US – Line Pipe
clearly establishes that individual decision-makers within the competent authorities need not agree onwhether there is "serious injury" or "threat" – even though these are distinct concepts with distinct
meanings – because either finding supports application of a safeguard measure.  Together, the
decision-makers need only agree that there is either serious injury or threat thereof.  By analogy,
when the decision-makers agree that increased imports caused serious injury, but differ on the
rationale for that conclusion, the question for the Panel is not whether the individual conclusions arethe same, but whether each conclusion supports application of a safeguard measure.  As long as the
conclusions of each decision-maker supporting an affirmative determination are consistent with the
Agreement on Safeguards, as was the case for tin mill steel and stainless steel wire, the overall
determination of the competent authorities is valid.
4782
7.2014  Japan notes that the Commission in this case was equally divided in its injury determination
with respect to four products:  tin mill, stainless steel wire, tool steel, and stainless flanges/fittings.
On the first two – tin mill and stainless wire – the President sided with the affirmative votes.  On thethird and fourth – tool steel and stainless flanges/fittings – the President agreed with the negative
votes.
4783  Japan and Norway argue that no explanation was provided at all by the President, in his
proclamation or elsewhere, as to why he agreed with one or the other side of these tie votes.4784  Japan
postulates that perhaps it could be inferred in some cases that the President agreed with one side or the
other because of the existence of just two reports – one signed by three Commissioners, the othersigned by the other three.  In such instances, one could say that he implicitly adopted the report of the
                                                     
4775 Japan's oral statement for the second substantive meeting, para. 23.
4776 Appellate Body Report, US – Line Pipe , para. 167.
4777 Ibid., para. 166.
4778 Ibid., para. 168.
4779 Ibid., paras. 162 and 164 ("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 a finding that both exist at the same
time").
4780 Ibid., para. 171.
4781 United States' second written submission, para. 234.
4782 United States' second written submission, para. 235.
4783 Japan's first written submission, para. 169.
4784 Japan's first written submission, para. 170; Norway's first written submission, para. 344.WT/DS248/R, WT/DS249/R,
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side with which he agrees.  Japan submits, however, that here, there were more than two reports.
Japan and Norway note, however, that for tin mill and stainless wire products there were fourdifferent reports, three of which supported affirmative decisions
4785 and the reports address different
combinations of like product categories.4786 4787  Japan argues that, it is impossible, therefore, to know
with which Commissioner's or Commissioners' analysis the President agreed.  The President failed to
state which of the multiple reports issued by the Commission he adopted.  Thus, it is impossible to
know the basis for his decision.  In the parlance of Article 3.1, the President failed to identify which
report "set[s] forth the findings and reasoned conclusions reached on all pertinent issues of law and
fact".  He has therefore also failed, as required by Article 4.2(c) to provide "a detailed analysis of thecase under investigation as well as a demonstration of the factors examined".
4788
7.2015  In response to a question from the Panel as to whether it is possible to satisfy the requirements
for reasoned and adequate explanations under Articles 3.1 and 4.2(c) of the Agreement on Safeguards
with a report that is comprised of individual dete rminations of multiple decision-makers that are
divergent, the European Communities states that it would not exclude that this is possible providedthat the prevailing determination and reasoned and adequate explanation can be determined with
certainty.
4789  However, Japan argues that where the individual determinations are based on different
like products, as in this proceeding with respect to tin mill and stainless wire, the answer is no.  The
ultimate question, as the Appellate Body found in US – Line Pipe , is whether the decisions are
inconsistent with one another.  When they involve serious injury versus threat, as in US – Line Pipe ,
they are not inconsistent.  When they involve affirmative versus negative determinations or
differences of opinion as to a critical threshold question such as like product, then such
inconsistencies matter and therefore require additional consideration and reasoned and adequate
explanations.4790  Similarly, Korea argues that the answer to this question depends upon whether the
divergent opinions are legally consistent.  If they are legally consistent, as the Appellate Body held inUS – Line Pipe  with respect to serious injury and threat of serious injury, then the decisions are
legally sufficient.  However, to the extent that the opinions reached are not legally consistent, such as
a finding of serious injury and a finding of no serious injury or distinct like product determinations,
they cannot be reconciled nor do they meet the requirements of Articles 3.1 and 4.2(c) of the
Agreement on Safeguards.
4791
7.2016  In response to the same question, the United States argues that it is possible to satisfy the
requirements for reasoned and adequate explanations under Articles 3.1 and 4.2(c) of the Agreementon Safeguards with a report that is comprised of individual determinations of multiple decision-
makers that are divergent.  First, as indicated by the Appellate Body's decision in US – Line Pipe , the
Agreement on Safeguards allows multiple decision-makers to be involved in an investigation and
determination of injury.  Second, the fact that certain decision-makers may have issued dissenting
views is not pertinent.  For purposes of determ ining compliance with the Agreement on Safeguards,
the Panel need only examine the views of the Commissioners that support the determination of the
competent authorities.  The United States submits that the dissenting views that are not part of these
                                                     
4785 USITC  Report at 269 (Bragg's separate views), 307 (Miller's separate views), 311 (Devaney's
separate views, 256 (Koplan's separate views) (Exhibit CC -6).  Together, four separate reports comprised the
reasoning of the marginal 3-3 affirmative determinations in the tin mill and stainless wire products.
4786 Ibid . at 36 (identifying tin mill as a separate product from the flat products category), and 190
(identifying ten domestic industries producing stainless steel articles of which stainless wire was distinguishedas a separate industry).
4787 Japan's first written submission, para. 171; Norway's first written submission, para. 344.
4788 Japan's first written submission, para. 172; Norway's first written submission, paras. 344-345.
4789 European Communities' written reply to Panel question No. 130 at the first substantive meeting.
4790 Japan's written reply to Panel question No. 130 at the first substantive meeting.
4791 Korea's written reply to Panel question No. 130 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
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determinations are not relevant for determining consistency of the US measures with the Agreement
on Safeguards.  Third, the fact that a single determination may be comprised of the views of multipleconcurring decisions does not in itself mean that the determination in its entirety is not reasoned or
that it does not provide an adequate explanation.  Given the complexity of this case, opinions may
reasonably differ as to how the facts and relevant legal requirements should be interpreted and
applied.  As long as each of the opinions comprising the determination, standing on their own, is
consistent with the Agreement on Safeguards including Article 3.1 and 4.2(c), then the determination
as a whole is consistent with the Agreement.  Finally, the mere existence of dissenting or concurring
opinions should have no bearing on the question of whether the overall determination of a competentauthority was properly reasoned or explained.  The United States submits that it is common in
domestic and international court systems for judges to render dissenting or concurring views, but this
does not in itself call into question the reasoning of the official decision of the court.  Dissenting
views have even been rendered by WTO panels, but this in itself does not mean that the adopted
reports reflecting the conclusions of the majority of the panel did not properly "set out the findings offact, the applicability of relevant provisions and the basic rationale behind any findings and
recommendations" as required by Article 12.7 of the Dispute Settlement Understanding.
4792
7.2017  The United States also argues that Articles 3.1 and 4.2(c) do not require the President to issue
a report explaining the basis for his decision to treat certain tie votes as affirmative determinations.
The United States notes that section 330 of the Tariff Act  allows the President, when faced with a
divided vote, to consider the vote to be either an affirmative or negative determination by the USITC
as a whole.  He does not conduct his own investig ation, or render his own determination.  Instead, he
chooses whether the negative or affirmative determinations and their supporting views – each side
complete and potentially valid under US law – will be the determination of the USITC.  In this case,
Proclamation 7529 states that he considered "the determinations of the Commissioners with regard totin mill products and stainless steel wire", and refers to no other factors.
4793  The United States
submits that permitting the President to designate the determination of the USITC in the case of a
divided vote is part of the US internal process for deciding what is the determination of the competent
authorities.  The Agreement on Safeguards does not contain an obligation on this process.4794
7.2018  With respect to arguments that the President acted impermissibly when he "considered" or
"treated" these votes as divided votes, the United States submits that it was the USITC that decided
that the votes were equally divided.  Proclamation 7529 indicates that the President recited thischaracterization by the USITC, and did not make an independent decision as to whether the vote was
divided.
4795
(b) Treatment of NAFTA imports
7.2019  Korea further argues that in making his determination, the President declared that with respect
to imports of every product subject to the safeguard measures, imports from Canada and Mexico "donot account for a substantial share of total imports or do not contribute importantly to the serious
injury or threat of serious injury found by the USITC".
4796  In fact, however, there is nothing in either
                                                     
4792 United States' written reply to Panel question No. 130 at the first substantive meeting.
4793 United States' first written submission, para. 1012.
4794 United States' first written submission, para. 1013.
4795 United States' first written submission, para. 1014.
4796 Proclamation 7529, 67 Fed. Reg. 10553, 10555-56 (2002), para. 8 and clause 2 (Exhibit CC-13).