WT/DS399/R 
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ANNEX E 
  
EXECUTIVE SUMMARIES OF THE SECOND WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
 
Contents Page 
Annex E-1 Executive Summary of the Second Written Submission of China E-2 
Annex E-2 Executive Summary of th e Second Written Submission of the 
United States E-11 
 WT/DS399/R 
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ANNEX E-1 
 
 
EXECUTIVE SUMMARY OF THE SECOND 
WRITTEN SUBMISSION OF CHINA 
 
 
I. THE FACTUAL BACKGROUND OF THE MEASURES IN THIS DISPUTE 
PROVIDES RELEVANT CONTEXT FO R THIS PANEL AND SHOULD BE 
CONSIDERED 
 
1. The factual background surrounding the measures in  this dispute is highly relevant to this 
dispute, yet the United States attempts to shift the focus away from these determinations.  The 
United States highlights the size of the Chinese capacity  and other factors relating to threat of future 
injury, even though the USITC based its decision so lely on present injury.  This is inappropriate 
because the condition of the Chinese tyre industry is wholly irrelevant to this dispute as it is a 
consideration only for issues of "threat."  While focu sing on such irrelevant facts, the United States 
ignores that the USITC investigation was initiated sole ly by a labour union, the USW, and lacked the 
support of the U.S. tyre industry.  The USITC's failure to collect critical information about recent 
trends in imports, which showed that they were in  decline, rendered the U.S. injury and remedy 
findings further incomplete.  The USITC determinati on is also incomplete without consideration of 
the views of the dissenting Commissioners, thus the U.S. attempt to limit the Panel's inquiry to solely the majority determination is  inappropriate.  The United States ignores the unique and highly 
politicized process in which the quasi-judicial d ecision-making of the USITC actually took place in 
this specific case.  Properly understood, however, the factual background of these measures supports 
China's contention that they are inconsiste nt with U.S. obligations under the WTO. 
 
II. THE PROPER ANALYTIC FRAMEWORK SHIFTS THE BURDEN OF PROOF TO 
THE UNITED STATES AND REQUIRES THE PANEL TO CONDUCT A 
SEARCHING, "OBJECTIVE" ASSESSMENT 
 
2. China has met its burden of establishing a prima facie  case that the U.S. measures are 
inconsistent with Article 16 by demonstrating that  the United States neither evaluated all relevant 
factors nor provided a reasoned and adequate expl anation for its decision consistent with the 
requirements for imposing measures under Ar ticle 16.  Because China has made a prima facie  case, 
the burden of proof has shifted to the United States  to establish the elements of its defense of its 
actions in imposing measures under Article 16.    3. Both parties agree that the relevant standard of review is the standard provided in Article 11 
DSU, that a panel should make an "objective assessm ent of the facts of the case and the applicability 
of and conformity with the relevant covered agreem ents."  The jurisprudence on this standard, as it 
has been developed under the Agreement on Safeguards , is applicable.   The "objective assessment" 
required under DSU Article 11 is a searching inquiry in  which it is inappropriate to simply defer to 
the findings of an investigating authority.  In conducting a proper "objective assessment" a panel 
should inquire whether the investigating authority examined all the relevant facts before it and 
explained how the facts supported the determin ation made, as well as inquire whether the 
determination was consistent with the Member's obligations under the WTO.   
 4. The U.S. attempt to strip away the applicab le WTO jurisprudence is untenable.  Article 16, 
alone, does not govern the type of "objective assess ment" required.  There is no legitimate basis by 
which the United States can assert that the requirement s, and related jurisprudence, for an "objective 
assessment" of measures under the Agreement on Safeguards   should be ignored in the case of an  WT/DS399/R 
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"objective assessment" under Article 16.  Measures under both Article 16 and the Agreement on 
Safeguards  involve reviews of determinations of increased imports and causation, albeit based on 
sometimes differing substantive standards.  Appe llate Body jurisprudence – across various WTO 
agreements – makes clear that investigating authorities must examine and address alternative 
explanations of the evidence for that determin ation to be deemed re asoned or adequate.   
 
5. The U.S. attempt to ignore striking parallels between the Agreement on Safeguards  and 
Article 16 is impermissible.  The parallel language in the Agreement on Safeguards  provides highly 
relevant context for understanding Ar ticle 16, namely the necessity of demonstrating that imports are 
increasing and that the increasing imports are causing injury to an industry in the importing country.  
Although there are differences, the b asic concepts are the same.  Both  the similarities and differences 
between the texts serve to inform the Panel of the me aning of these terms.  The U.S. attempt to isolate 
the Protocol from the rest of the WTO Agreement is misplaced, and similar attempts have been 
rejected by panels in the past.  The certain parentage of Article 16 from the Agreement on Safeguards , 
including references to the Committee on Safeguard s, cannot be ignored.  The Protocol must be 
interpreted in context.  U.S. arguments that it should not be, are incorrect and inconsistent. 
 
III. IMPORTS FROM CHINA WERE NOT "INCREASING RAPIDLY" WITHIN THE 
MEANING OF ARTICLE 16 OF THE PROTOCOL 
 
A. THE PROTOCOL IMPOSES A SPECIFIC AND STRICT STANDARD THAT MUST BE 
MET TO FIND PROPERLY THAT IMPORTS ARE "INCREASING RAPIDLY" 
 6. The text of Article 16 sets forth a speci fic and narrow set of circumstances under which 
imports from China that are "increasing rapidly" may permissibly be subject to transitional product-specific safeguards.  Investigating authorities must make an adequate finding that imports from China 
"are being imported…in such increased quan tities" as well "increasing rapidly."  These two 
requirements, found in Article 16.1 and 16.4 respectiv ely, ensure that a finding of a simple increase 
over the entire period of investigation cannot meet th e standard required for measures to be imposed.  
Article 16 demands much more.    7. The use of the present continuous tense –  "are being imported" and "increasing" – in 
Articles 16.1 and 16.4 requires inv estigating authorities to focus on the more recent period of time 
when assessing increasing imports.  The Appellate Bo dy has recognized the distinction between the 
use of "increasing
" and "increased " and how "increasing" is a requirement for imports at the time of 
the determination, i.e. in the most recent past.  C ontrary to the U.S. argument, reviewing this standard 
in the context of the Agreement on Safeguards confirms this interpretation.  The use of the word 
"rapidly," which is intrinsically linked to "steep," ra ises the standard and is used to distinguish imports 
which are "increasing rapidly" from imports which ar e merely "increasing."  The U.S. attempt to limit 
"rapidly" to strictly a temporal interpretation is unavailing under its ordinary meaning and internally 
inconsistent.  8. The U.S. attempt to equate the lack of an  explicit quantitative standard in the text of 
Article 16 with the lack of any standard at all is in appropriate.  Rather, the text and applicable context 
of Article 16 require investigating authorities to consider three qualitative factors in determining 
adequately whether imports from China are "increasing rapidly."  Authorities should focus on the most recent full year of data and any available inte rim data, consider and give the most weight to the 
most recent import trends, and analyze the most recen t year in more detail when initial analyses show 
that imports are slowing.  The USITC, however, failed to comply with any of these factors.  
Additionally, the fact that Article 16 requires a show ing of "material injury" and not "serious injury" 
does not lower the causation standard.  The "increasing rapidly" standard is discrete from the "material injury" standard.  "Increasing rapidly" is the first element listed in Article 16 and thus the 
threshold consideration.  Only after a proper findi ng of "increasing rapidly" may an investigating 
authority independently begin to determine whet her such imports were a "significant cause" of WT/DS399/R 
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"material injury."  The U.S. attempt to conflate the two discrete issues through a quick glossing over of the full context of Article 16 and false analogies to Appellate Body jurisprudence is improper.  
Furthermore, the "increasing rapidly" standard  is also discrete from the "increased quantities" 
standard, making a finding of imports to be "increasing rapidly" all the more exacting. 
 
B. THE USITC IMPROPERLY FOUND IMPO RTS FROM CHINA TO BE "INCREASING 
RAPIDLY" 
 9. The USITC's analysis of increasing imports fails  to comply with specific and strict standard 
of Article 16.  Aware of this, the United States atte mpts to establish that the USITC had near blanket 
discretion to assess increasing imports and that the Pa nel should defer to this discretion.  Yet such 
discretion as the USITC has is limited to the extent  that its analysis must still comply with the 
standards of the Protocol.  The USITC had no di scretion to focus on an end-point-to-end-point 
increase over the period because this does not comply  with the "increasing rapidly" requirement of 
Article 16.4.  The USITC's over-reliance on this appr oach rendered its analysis inconsistent with 
Article 16.  It must have explained adequately why imports were found to be "increasing rapidly" 
during the more recent part of the period.  In contrast, the USITC never even stated what it understood "rapidly" to mean.  The U.S. attempt to equate wh at the USITC said with what the USITC did cannot 
be accepted.  10. The USITC's finding that increases had not abated in 2008 impermissibly ignores recent 
trends, misinterprets the data, and is premised on the improper approach of combining and analyzing 
2007 and 2008 together.  The largest increase in impor ts was from 2006 to 2007, which can hardly be 
considered the most recent period.  But by employ ing a simple "end-point-to-end-point" analysis, the 
USITC masked the fact that imports from China were dramatically slowing during the end of the 
period.  Imports could not properly be determined to  be still "increasingly rapidly" at the end of the 
period when the increase from 2007 to 2008 was only 10.8 per cent, a fraction of any of the prior 
years' increases.  Despite these essential facts, th e USITC did not focus on the difference between the 
increase in 2008 and 2007, or the difference betw een the increase in 2008 compared to the overall 
2004 to 2007 period.  Instead of properly focusing analysis on the more recent period, the USITC 
obscured it.    
11. China's alternative quarterly analysis, presente d in its First Written Submission, is directly 
applicable and relevant.  Due to the dramatic sl owing of imports from China, it was highly probative 
on whether imports were still "increasing rapidly" a nd consistent with the requirement of analyzing 
the most recent period and the trends within that period.  The analysis revealed that the largest 
increase in imports from China o ccurred in Q2 2007 – more than two years prior to the USITC 
determination.  Imports peaked in Q2 2008 and then proceeded to decline, with the quarter-to-quarter 
comparisons showing a mixture of increases and decreas es.  The U.S. response that this analysis is 
flawed because it does not assess 2004 to 2006 demonstr ates the U.S. failure to understand that the 
point of the quarterly analysis was to highlight the trends over the most  recent  period.   
 12. Similarly, the USITC should have – but refused  to – collect and analyze import data for the 
first quarter of 2009.  Although the USITC acknowledged that imports from China declined during 
the first quarter of 2009, it failed to gather or asse ss this data and its impact on the USITC's overall 
analysis.  The excuses offered for not collecting th e full data for this interim period are unavailing.  
There is no reason the data "would not have been available" if the USITC had asked for it.  The 
USITC has a well-settled practice of gathering such data, and in many cases has gathered interim data 
for a first quarter during a tighter time frame.  The U.S. claims that such a collection would have been 
too burdensome and that the USITC makes its deci sions on a case-by-case basis are unpersuasive and 
dangerous.   WT/DS399/R 
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IV. THE U.S. DEFINITION OF "SIGNIFICANT CAUSE" IS INCONSISTENT AS SUCH 
WITH THE REQUIREMENTS OF ARTICLE 16 OF THE PROTOCOL 
 
13. The U.S. statutory definition of "signifi cant cause" that was applied by the USITC is 
inconsistent "as such" with the requirements of the Pr otocol.  The text of the Protocol adds the word 
"significant" to the causation analysis under Article 16.  The ordinary meaning embedded in 
"significant cause" is one that requires subject impor ts to "produce" or "bring about" the injury in a 
significant way.  The rapidly increasing imports need not "produce" or "bring about" the injury in and 
of themselves, but the ordinary meaning of the wo rds used in the Protocol requires something much 
more than a mere contribution.  In contrast, S ection 421 defines "significant cause" as merely a cause 
that "contributes significantly" and "need not be gr eater than or equal to any other cause."  This 
binding definition impermissibly lowers the require d causation standard of Article 16 and is thus 
inconsistent as such with the Protocol.  It is simply  untenable, and contrary to  the ordinary meaning of 
the language, to argue that the use of "significant cause" in Article 16 of the Protocol can actually 
lower  the corresponding standard in global safeguards that does not contain the modifier "significant." 
 
14. The U.S. responses to this claim lack force.  The United States argues that it is free to adopt 
whatever "methodologies or standards" that it wish es to determine whether imports are a significant 
cause of material injury.  WTO members, howev er, do not have discretion to adopt whatever 
"standard" they wish – the standard is "significant cau se," and that standard has been set by the text of 
Article 16.  The U.S. argument that the definition si mply serves to provide "guidance" is unpersuasive 
as no guidance is provided and the definition serves exp licitly – in light of both the plain meaning of 
the words used as well as their history and applicat ion – to lower the causal standard and reduce the 
meaning of "significant."  The U.S. claim that the statute really means "a direct and significant causal 
link" is irrelevant because that is not the language used by the statute itself.  The statute redefines 
"significant cause" as a "cause that contributes signi ficantly," not as a "direct and significant causal 
link."   
 15. The United States cannot shift focus away from the words of the statute itself to the 
legislative history of Section 406, a different statute.  The legislative history of a different statute cannot trump the actual language of Section 421, esp ecially in the noncommittal way in which it has 
been cited by the USITC.  U.S. arguments misper ceive the potential relevance of these materials as 
this dispute arose due to the USITC's faulty app lication of Section 421 – not Section 406.  The U.S. 
claims that the USITC understood its obligations unde r Section 421 in light of the legislative history 
of Section 406, or that China should have been "wel l aware" – due to prior Section 406 investigations 
– that "significant cause" in Article 16 actually meant "contributes significantly" demonstrate a 
fundamental misunderstanding of the situation.  Th e legislative history of Section 406 cannot justify 
the impermissible redefinition of "significant cause" in  the U.S. implementing statute.  It is not the 
negotiating history of Article 16 and thus it cannot justify a low causation standard. 
 16. The additional language of "need not be equal to  or greater than any other cause" in the U.S. 
statute impermissibly allows an investigating author ity to determine that even a minimal cause, which 
can be less than any other cause, could still be co nsidered as "a significant cause."  This is not a 
reasonable interpretation of the words "a significan t cause."  The U.S. argument that the USITC has 
interpreted the statute in a way consistent with the Protocol is improper.  The United States must 
defend the statute itself in an "as such" claim, not the language of the USITC determination which 
differs from the statute.    
17. The United States claims that, even if this  definition does impermissibly lower the causal 
standard, the statute is still not inconsistent "as such" unless it "mandates" WTO-inconsistent action.  
Panels, however, have repeatedly noted that the ma ndatory/discretionary distinction is not an issue 
that needs to be decided as a threshold matter by a panel in an "as such" claim.  Rather, the issue is 
simply whether the legislation on its face is inc onsistent with the relevant WTO provision.  The 
"contributes significantly" redefinition has been dem onstrated to be precisely that.  Regarding the WT/DS399/R 
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mandatory/discretionary distinction, however, as in  previous disputes, the U.S. agency in this case 
lacks the necessary discretion.  Furthermore, the U.S. statute does require the USITC to apply a 
fundamentally flawed definition which the USITC had no discretion to disregard.  
V. IMPORTS FROM CHINA WERE NOT A "SIGNIFICANT CAUSE" OF INJURY 
WITHIN THE MEANING OF ARTICLE 16 OF THE PROTOCOL 
 
18. Imports from China were not a "significant cause " of material injury within the meaning of 
Article 16.  The USITC failed to conduct a reasone d and adequate analysis of the conditions of 
competition, failed to establish any temporal "c oincidence" between rapidly increasing Chinese 
imports and various alleged injury factors, and fa iled to address adequately alternative causes that 
undermine any suggestion that imports from China we re causing "material injury."  These failures 
render the USITC's causation analysis wholly incomp lete and inconsistent w ith the requirements of 
the Protocol.  
19. To fill this analytical void, the United Stat es claims that the Pane l should grant it extreme 
deference and discretion regarding causation.  Th e United States argues that it is unnecessary to 
conduct a conditions of competition analysis, a coinci dence analysis, or a weighing of alternative 
causes.  The United States seeks to ignore all prior e fforts to provide meaning to the core concept of 
"cause" in the context of WTO trade remedies.  This would render all prior WTO jurisprudence on 
these issues meaningless.  But the Protocol was not drafted – and does not exist – in a vacuum.  It 
cannot be interpreted in isolation from other WTO agreements.  The Panel should reject these U.S. 
arguments.  Likewise, the Panel should also reject  the U.S. claim that the limited analysis it did 
undertake was somehow sufficient to meet the demandi ng causation standard imposed by Article 16.  
This is an untenable attempt to have it both ways .  If the USITC did engage in analysis of the 
conditions of competition, coincidence, and alternativ e causes – then it must ha ve done so adequately.  
The cursory causation analysis provided by the USIT C, however, falls well short of that standard. 
 A. THE USITC FAILED TO ASSESS ADEQUATELY CONDITIONS OF COMPETITION  20. An analysis of the conditions of competition is required under the Protocol.  The U.S. claim 
that Article 16 "does not require the investigating authority to  examine conditions of competition" is 
incorrect.  This claim hinges on the use of the phrase  "or under such conditions of competition" in the 
English text of Article 16.1.  Yet the French and Spanish texts of Article 16.1 use the terms "et" and 
"y" respectively.  This conjunctive use is also consistent with Article 2.1 of the Agreement on 
Safeguards , which uses "and
 under such conditions of competition"  in all three languages.  The only 
way to reconcile the equally authentic texts, as is re quired, is to apply the conjunctive interpretation of 
the term "or" in the English text of Article 16.  The U.S. argument that Article 16.1 does nothing but 
define the conditions under which c onsultation may be requested is an  impermissibly strained reading 
of the text.  In contrast, China's reading reconcil es the texts and puts forth the logical claim that any 
reasonable analysis of causation must assess the cond ition of competition in which that analysis takes 
place.  The competitive relationship cannot be viewed in isolation. 
 
21. The USITC's failure to assess adequately co nditions of competition is not affected by the 
finding that products are "like" products because th is does not preclude finding attenuated competition 
based on market segmentation.  The segmentation of  the tyre market in this case led to attenuated 
competition.  Despite the fact that the USITC consider ed all tyres to be the same "like" product, this 
condition of competition – attenuated competition – continues to exist.  The concept "like or directly 
competitive product" serves simply to delineate wh ich domestic producers make the product and are 
to be included in the domestic industry.  This has been confirmed by the Appellate Body and is 
consistent with the approach of the USITC in th is case and in general as the USITC routinely finds 
that there is a single "like" product, but then assesses market segments under a conditions of competition analysis. 
  WT/DS399/R 
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22. Regardless, the USITC purported to analy ze the conditions of competition in its report – 
implicitly acknowledging that such an analysis wa s required and that faili ng to do so would produce 
an incomplete and invalid analysis of causation.  Despite having undertaken such an analysis, the 
USITC failed to do so in a reasoned and adequate  manner.  The USITC equated minimal competition 
between subject imports and domestic tyres as signifi cant competition and ignored the implications of 
attenuated competition and its impact on causation.  In doing so, the USITC relied too heavily on 
subjective questionnaires, and too little on the actua l evidence of a highly segmented market.  The 
USITC tried to dismiss the highly segmented market by finding isolated portions of competitive overlap, rather than the substantive degree of overl ap that would establish and support its findings.  
Such an approach is impermissible. 
 
23. There was attenuated competition in this case as imports from China were virtually absent 
from an estimated 74 per cent of the U.S. market.  Despite this, the USITC asserted that there was 
"significant competition" between imports and domestic tyres.  To critique China's data on this issue, 
the United States claims that the data is "belied by  the very article China cites" – yet China cited no 
article for this data, just the USITC Determination's reporting on U.S. producers.  Furthermore, the 
point of the data estimate was to convey the orde r of magnitude to which competition was attenuated 
and critique the USITC's improper willingness to equate any competition with "significant" 
competition.  If China's estimate is inhibited by th e limited public record, China urges the Panel to ask 
the United States to provide the actual inform ation necessary for the Panel to make its own 
assessment. 
 
24. The unsupported and unexplained inferential leaps made by the USITC in finding competition 
can be seen in the OEM market, where the USITC states there was competition despite imports from 
China making up 4.8 per cent of the market and U.S. tyres making up 51.6 per cent of the market in 2008.  With imports from China ranging from just 0. 2 per cent to 4.8 per cent of the OEM market, and 
non-subject imports being nine times the quantity of subject tyres in the OEM segment, it is simply 
fanciful that subject tyres could be in significant competition with U.S. tyres in this market or a 
significant cause of injury.  The U.S. claim that the Protocol does not require the USITC "to ignore 
the impact" of subject imports when they are just 5 per cent of the market improperly avoids the thrust 
of the requirement.  Where imports occupy a neglig ible proportion of the market in question, the 
investigating authority must provide a reasoned and adequate explanation of why there is significant 
competition between imports and domestic tyres, mu ch less a significant causal relationship between 
those imports and injury.    25. Similarly, there was no basis for inferring significant competition between tyres from China 
and domestic tyres in the replacement market.  The U. S. claim that "the record showed that tyres from 
China and tyres from the United States compete in all segments of the market" ignores impermissibly 
the fact that the USITC majority itself conceded that  sales in the aftermarket could be placed in three 
tiers of which "the largest  share of U.S. producers' shipments fall into category 1, and that the largest  
share of subject import shipments fall into category th ree."  The U.S. attempt to blur the lines between 
tiers to support its finding of significant competition belies the record and is indicative of bias.  The 
fact that the distinction between tiers may not be absolute does not mean that the distinction does not 
exist at all, or that the distinction does not produce highly attenuated competition. 
 B. THE USITC FAILED TO ASSESS ADEQUATELY WHETHER THERE WAS 
TEMPORAL COINCIDENCE BETWEEN IMPORTS FROM CHINA AND THE ALLEGED INJURY 
 
26. The USITC failed to establish any meaningful temporal coincidence between imports and injury.  When the ten factors asses sed by the USITC are examined pr operly, the lack of coincidence 
between rapidly increasing imports and injury to th e domestic industry is certain.  During the most 
recent period of time, the domestic industry experienced it best year of the entire period of 
investigation when imports from China increased at the highest rate.  The United States argues that WT/DS399/R 
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such an obvious lack of correlation is but an "anom aly" and does not speak to "overall correlation."  A 
proper analysis of "overall correlation," however, reveals that that this "anomaly" is in fact consistent 
with all the data.  There is no meaningful correlati on for the more recent half of the period and many 
of the factors show purely positive correlation thr oughout the period.  In short, during the period of 
time most relevant for drawing the link to imports from China that are "increasing rapidly," the 
USITC has demonstrated no temporal coincidence.   
 27. The United States fails to rebut China's show ing of a lack of coincidence.  Instead, the 
United States asserts, incorrectly, that a coincidence analysis was not required.  The U.S. attempt to 
justify what little coincidence analysis the USIT C actually undertook is improper as it adds new, ex 
post arguments in support of a coincidence finding.  A ll of this is unpersuasive  and inadequate.  Just 
as "coincidence" analysis plays a "central" role in determining whether or not a causal link exists in 
the context of global safeguards, such an analysis is equally important when evaluating the application 
of a product-specific safeguard under the Protocol.  Under Article 16.4, the correlation must exist 
during the period of time when imports were increasi ng rapidly, and correlate with the adverse trends 
at issue.  Moreover, this correlation must also be sufficient to constitute a "significant" causal link.   
 28. It is not true that, absent express direction, the investigating authority is "free to choose and 
use any appropriate methodology it wishes."  Guidance must be taken from the Agreement on 
Safeguards  jurisprudence, and such guidance was created  in the absence of any "express" correlation 
language requirement.  The U.S. attempt to limit the guidance to the specific text of the Agreement on 
Safeguards  also fails as the correlation requirement is intr insically linked to the causation analysis that 
investigating authorities must conduct – namely whether increased imports are causing injury.  
Because Article 16 of the Protocol involves the sam e causal analysis of whether rapidly increasing 
imports are causing injury, the same  embedded analysis is necessary.  In any event, the United States 
asserts that the USITC "did, in fact, use a ‘coincid ence of trends' analysis."  Accordingly, having 
engaged in such an analysis, the USITC was obliged to do so properly.    
 29. In the face of such a requirement, the USITC' s coincidence analysis is wholly inadequate.  
The USITC's report devotes little attention to coincidence analysis, relying primarily on sweeping generalizations.  The USITC majority failed to compare year-to-year movements in imports and 
injury factors, or assess in any serious way whethe r those movements reveal meaningful coincidence 
or correlation.  This failure is particularly appa rent with respect to the more recent period (i.e., 
changes in 2006-2007 and 2007-2008).  The USITC ignores that imports from China grew at their fastest rate in 2006-2007, but grew at their slowest  rate (10.8 per cent) in the period from 2007-2008.  
Likewise, the USITC ignores the fact that various in jury factors showed a substantial improvement in 
2006-2007, when imports from China were at their hi ghest level in the period, and experienced their 
greatest declines of the period in 2008, when Chinese imports grew at the slowest  rate in the period.  
And finally, the USITC ignores that certain the inju ry factors, such as price, R&D expenditures, and 
capital improvements, show positive trends throughout the period.  30. Regarding the U.S. theory of causation, two concrete tests present themselves in the more 
recent period.  Given the U.S. argument that imports from China were fungible, that the product is 
price sensitive, and that different market segments do not matter, one would expect the large increase 
in imports over the 2006-2007 period to have the largest adverse impact on injury indicators and one 
would expect that the small increase in imports over the 2007-2008 period would have the smallest 
adverse impact on injury indicators.  That the fact s in the record completely belie the U.S. theory 
strongly points to a lack of correlation. 
 
31. To refute this, the United States posits new, ex post  rationales for this absence of correlation, 
such as dismissing 2006-2007 as an "anomaly" and sp eculating that there may have been a temporal 
lag between imports and injury.  Both arguments are inadmissible, as the USITC never made findings 
on either point in its report and ex post  assertions cannot substitute for findings in the USITC's report.  
The U.S. attempt to bolster the theory of "underselling" is also unavailing as these comparisons do not  WT/DS399/R 
 Page E-9 
 
 
take into account the differences in brands nor do they account for the significant degree to which 
U.S. prices rose and outpaced prices for subject imports.  The U.S. claim that industry profits in 2007 were "small" is a strained reading of the record  as operating profits were $507 million.  On several 
factors, such as production and net sales, the Unite d States chose to avoid addressing their bearing on 
correlation, further reinforcing the fact that  not much can be said to buttress the USITC 
Determination's analysis of coincidence. 
 32. U.S. claims that the lack of correlation between  the individual injury factors does not speak to 
"overall coincidence" should be dismissed.  There ca n be no "overall correlation" in this case because 
there is essentially no correlation for 50 per cent of the period, and several factors (sales value, price, 
R&D, and capital investments) showed purely positi ve correlation throughout the period.  There was 
essentially a complete lack of coincidence across the factors during the most recent – most relevant – 
period.  The lack of correlation was not just "one  or two variations in trends" as posited by the 
United States.  Rather there was a complete temporal  lack of "overall coincidence" when the data is 
viewed on an individual factor basis or as a whole.  Despite this, the USITC has provided no " very 
compelling" explanation to rebut this lack of coin cidence as in necessary if  causation is still to be 
found.  C. THE USITC FAILED TO CONSIDER ADEQUATELY ALTERNATIVE CAUSES  33. The USITC also failed to consider adequately  alternative causes.  Causal factors such as 
changing demand and business strategy were put aside as the USITC invoked the low U.S. statutory 
standard that it need not engage in any "weighi ng of causes."  This failure renders the USITC's 
analysis incomplete and makes it nearly impossible for the USITC to determine whether or not subject 
imports were actually a "significant" cause of in jury.  Declines in demand and a shift in business 
strategy had a considerable effect on the U.S. ty re industry, yet the USITC chose to ignore these 
implications.  These failures reveal the striking de gree to which the USITC's causation analysis was 
inconsistent with the requirements of Article 16.    34. The U.S. argument that the USITC was under no obligation to examine alternative causes is 
misplaced, relying too heavily on the absence of  express non-attribution language in the text of 
Article 16.  Although there is no formal non-attrib ution requirement expressly provided in Article 16 
of the Protocol, such an assessment was still necessary.  The fact th at the USITC stated that it did 
consider alternative factors reinforces this re quirement and, as the United States acknowledges, a 
proper analysis of a causal link requires the aut hority to "consider such other factors."  Such 
consideration is necessary if a causation analysis is to be conducted in good faith and in accordance 
with the Protocol.   
 
35. The U.S. attempt to isolate Article 16 from any applicable WTO jurisprudence by claiming 
the relevant Appellate Body jurisprudence on the nature  of the causation analysis is limited strictly to 
the text of the Agreement on Safeguards  is unfounded.  An "assumption" that other factors are not 
causing the alleged injury cannot be made consistently  with the obligation to find a "causal link" – a 
"genuine and substantial" relationship of cause and effect.  Appe llate Body jurisprudence teaches that 
an authority cannot properly conclude that a "causal  link" exists without having first assessed whether 
other factors were actually responsible.  This is  true whether there is an express non-attribution 
requirement or not.  Likewise, the U.S. argument focuses exclusively on the omission of an express non-attribution clause while ignoring impermissibly th e key addition of the modifier "significant" to 
the causation standard.  Because "significant" is best understood in relation to other causes, the 
addition reinforces the need for a consideration of other causes.   
 36. Thus the USITC's failure to consider adequately other causes rendered its analysis 
inconsistent with the Protocol.  The mere mentioni ng of such factors, without any real analysis, is 
insufficient and cannot constitute a reasoned explanation.  The U.S. assertion that the USITC 
adequately considered declining demand is unsupported by the record .  The USITC gave only passing WT/DS399/R 
Page E-10  
 
attention to changes in demand, failing to account for the essentially 1:1 correlation between declining 
demand in 2008 and the fall in U.S. shipments.  The juxtaposition of statis tics upon which the U.S. 
argument rests is inadequate.  For the analysis to  be complete, an explanation was required for the 
prolonged decline in demand.  The U.S. claim that  the USITC "examined in detail and rejected" the 
role of producers' changing business strategy is misleading as the USITC devoted one paragraph to 
that issue.  In the face of t estimony and evidence concerning the long-standing industry restructuring 
– which predated the arrival of imports from Chin a – cursory treatment is inadequate.  Viewed 
cumulatively, these causes and other causes, have an  even greater impact which should have been 
considered.  The U.S. failure to do so by claiming that it is not "always" necessary is insufficient as 
the "specific factual circumstances" of  this case should have been addressed. 
 
VI. THE UNITED STATES APPLIED A REMEDY THAT WAS INCONSISTENT WITH 
THE REQUIREMENTS OF ARTICLE 16 OF THE PROTOCOL 
 
37. Despite the fact that the basic requireme nts for applying a transitional product-specific 
safeguard under Article 16 had not been met, th e United States imposed a remedy.  Because the 
USITC failed to establish that rapidly increasing im ports from China were a "significant cause" of 
market disruption, no remedy was appropriate.  Even if the United States had complied with the 
requirements of Article 16 and thus had the theore tical right to apply measures, the remedy applied 
was inconsistent with the Protocol.  Articles 16.3 and 16.6 require that any remedies imposed must be 
"only to the extent necessary" and only for "such period of time" as may be necessary to prevent or 
remedy market disruption.  Despite this, however, the United States chose to impose a blanket remedy 
– never taking into account what "extent" was nec essary to remedy the alleged market disruption.  
This failure by the USITC to properly limit the re medy rendered it excessive in extent and duration. 
 38. Asserting broad discretion, the U.S. argument claims that the imposition of remedies cannot 
be a matter of "scientific precision."  The United States makes this claim because the USITC never 
determined to what extent imports from Chin a were allegedly causing market disruption – and 
without knowing this, no remedy coul d be limited properly.  The Pa nel inquired as to how the USITC 
determined that its calculated reduction of subject imports addressed the alleged market disruption, 
but the United States avoided answering this questi on and instead simply quoted the output of its 
economic modeling.  These quotations in no way addr ess why the results calculated were in fact 
determined to be necessary to address the extent of the market disruption.  Article 16.3 requires an 
explicit and reasoned explan ation of how the remedy imposed addresses, and is limited to, the extent 
of the market disruption caused by imports from China.  And Article 16.6 requires the remedies 
imposed to be only "for such period of time" as necessary.  The U.S. failure to provide any such 
explanation renders its actions  inconsistent with its obligations under the Protocol. 
 
39. The U.S. deficiencies in explaining why th e remedy has been set for three years are even 
more glaring.  The economic modeling was done for only one year, not for all three years.  Neither the USITC nor President Obama provided any meaningful explanation of why the three years duration was necessary.  The focus of a permissible remedy must be on the effect of the allegedly injurious imports.  The remedy imposed by the United States,  however, is not limited to the effect of these 
imports.  Imports cannot be held responsible for the entire downturn, and the remedy cannot seek to 
address that entire downturn.  
VII. THE ADDITIONAL DUTIES IMPOSED BY THE UNITED STATES ARE ALSO 
INCONSISTENT WITH OBLI GATIONS UNDER GATT 1994 
 
40. Because the imposed tariffs were not justifie d as emergency action under relevant WTO rules, 
they are inconsistent with both Article I:1 and Ar ticle II:1(b) of the GATT 1994.  The United States 
does not accord the same treatment that it grants to  passenger and light truck tyres originating in other 
countries to like products originating in China a nd has imposed higher tariffs, which are unjustified 
modifications of U.S. concessions on passenge r and light truck tyres under the GATT 1994.   WT/DS399/R 
 Page E-11 
 
 
  ANNEX E-2 
 
 
EXECUTIVE SUMMARY OF  THE SECOND WRITTEN 
SUBMISSION OF THE UNITED STATES 
 
 
I. INTRODUCTION  
 
1. The United States has demonstrated, in its first written submission, oral statement, and 
answers to the Panel's questions, that China's basi c thesis – that the standards of the transitional 
mechanism are so high and the anal ysis by the ITC so deficient – is completely unfounded and based 
on mischaracterizations of the text of the Protocol  and the very detailed analysis conducted by the 
ITC.  A few new issues raised by China at the panel meeting – the language difference in 
paragraph 16.1 and the relations hip between section 421 and section 406, as examples – are 
distractions that do nothing to support China's ar guments.  Even while Ch ina conceded that the 
obligations of the Safeguards Agreement have not been  incorporated into the Protocol, it continues its 
attempt to draw the Panel to a comparison with th e Safeguards Agreement text.  This temptation must 
be resisted. 
 
II. INTERPRETIVE ISSUES  
 
A. TRANSITIONAL MECHANISM AND SAFEGUARDS AGREEMENT 
 
2. The question of what, if any, relationshi p there is between the transitional mechanism 
contained in paragraph 16 of Chin a's Protocol of Accession and the Safeguards Agreement has been a 
focus of attention in this dispute.  As the Un ited States has noted before, this is not a useful 
framework for analysis.    
3. The United States recalls that during the first meeting of the Panel with the parties, China 
clarified that it was not arguing that the pr ovisions of the Safeguards Agreement had been 
incorporated into the Protocol.  Therefore, we seem to have agreement on this issue. 
 4. With respect to whether the Protocol is lex specialis , in its answers to the Panel's questions, 
China states that paragraph 16 "provide[s] a more specific set of rules to address the application of 
safeguard measures to import from China under certa in particular circumstances" and that the 
Safeguards Agreement provides "the more general principles."  This is simply wrong.  The 
Safeguards Agreement and the transitional mechanism apply in different circumstances.  They are 
separate remedies available to a WTO Member under different circumstances.   Indeed, China's own 
answer acknowledges that the Protocol and the Safeguards Agreement apply in different 
circumstances.  Therefore, China seems to conced e – as it must – that the transitional mechanism is 
distinct from the Safeguards Agreement - that is, it exists separate and apart from the Safeguards 
Agreement, as the United States has explained.     5. The United States simply disagrees with China's assertion that there is "substantial overlap in 
structure and language" between the transitional me chanism and the Safeguards Agreement.  Even a 
quick reading of both reveals that there are subs tantial portions and con cepts from the Safeguards 
Agreement that are simply not present in the trans itional mechanism.  Any analysis that starts from 
the premise that terms have been "added" to  the Safeguards Agreement text is flawed.  
 WT/DS399/R 
Page E-12  
 
  6. Under the interpretive approach required by Ar ticle 3.2 of the DSU, the Panel must consider 
the text of the Protocol, in its context and in light  of the object and purpose of the agreement.  China 
appears to advance a different approach, under which the Panel should examine the Safeguards 
Agreement instead, and then add the Protocol to that agreement.  Nothing in the text of the Protocol, 
or in the customary rules of treaty interpretation, countenance that approach.  Furthermore, the most 
relevant context for the Panel's consideration is th e context provided by the other provisions of the 
transitional mechanism and the context provided by the relevant passages of the Working Party 
Report.  To the extent that there is a need to seek broader contextual guidance, the Panel may also 
look to prior interpretations of si milar terms or provisions of the Sa feguards Agreement or any of the 
other WTO agreements as appropriate.  Where releva nt, the Panel may also consider the reasoning of 
other panels and the Appellate Body interpreting such  provisions.  However, care must be exercised to 
avoid importing words or obligations from one agreement that are not found in the other.    B. THE UNITED STATES IS NOT ARGUING THAT THERE ARE NO STANDARDS TO 
BE APPLIED 
 
7. The United States has not argued that "there is  no standard and that the authorities are always 
correct."  A Member invoking the transitional mechan ism must meet the standards contained in the 
text of paragraph 16 of the Protocol, read in c onjunction with the context provided by the Working 
Party Report.  It is evident that the text of the transitional mechanism contains different, and in some 
cases fewer, prescriptions than the text of the Sa feguards Agreement.  This is not an "extreme 
interpretation," but an interpretati on consistent with the customary rules of interpretation of public 
international law, as required by DSU Article 3.2.   C. LANGUAGE DIFFERENCES IN PARAGRAP H 16.1 HAVE NO IMPACT ON ANALYSIS 
 
8. The textual difference identifie d by China has no bearing on the analysis of China's argument 
on the ITC's analysis of the conditions of comp etition.  China argues that the conditions of 
competition analysis that the ITC did conduct as part of  its causation analysis is flawed.  An analysis 
of that issue requires the Panel to look at paragra ph 16.4, not paragraph 16.1.  Paragraph 16.1 sets out 
the conditions under which a Member may seek c onsultations with China under the Protocol.  
Whether or not the basis for consultations is th e same as the standard for a finding of market 
disruption set out in paragraph 16.4 need not be ad dressed by this Panel.  In any event, it does not 
affect the analysis of the requirements of paragr aph 16.4, which is where "market disruption" is 
defined, and paragraph 16.4 does not require a "conditions of competition" analysis.  (Nor, for that 
matter, does paragraph 16.1.)  
D. STANDARD OF REVIEW 
 9. China's answers regarding this issue (to questi ons 9 and 18), do not address the issue of what 
is the proper standard of review which the Panel must use to evaluate whether the United States met 
its obligations.  China instead confu ses the standard of review with what is required by the particular 
obligation.  In discussing what it views as the differe nces in "application" of the standard of review, 
China merely restates particular terms from the provisions of the Safeguards Agreement and the 
Protocol, but the terms of these provisions are not a "standard of review."     
 
10. Throughout its submission and statements, China has tried to argue that the ITC did not 
conduct a thorough analysis of the facts and did not provide sufficient and ade quate explanations for 
its market disruption determination.  The ITC Report is before this Panel, a nd the Panel should review 
it to determine whether the ITC has provided reasone d explanations as to how the evidence before it 
supported its conclusion that there wa s market disruption.  For the reasons we have given, the answer 
is yes.  It should be clear from reading the Report,  that the issues raised by China in this dispute are 
the very issues that the ITC had before it, that  the ITC evaluated the evidence appropriately, and  WT/DS399/R 
 Page E-13 
 
 
  provided reasoned conclusions.  With respect to the remedy, we note that China's arguments are 
likewise centered on criticizing the ITC analysis.  We have explained why China's arguments are 
likewise invalid.    
III. IMPORTS OF TYRES FROM CHINA INCREASED RAPIDLY OVER THE PERIOD  
 
11. As the ITC found, the record showed clear ly that imports of tyres from China increased 
rapidly.  Imports increased by significant amounts in each year of the period of investigation, growing by 42.7 per cent in 2004, 29.9 per cent in 2005, 53.7 per cent in 2007, and 10.8 per cent in 2008, the final year of the period of investigation.  On a relative basis, Chinese imports gained approximately 
12 percentage points of market share during the peri od of investigation, which correlated with similar 
declines in the U.S. industry's market share.  The largest portion of these increases occurred during 
the final two years of the period.  As the ITC conc luded, the record showed that import "increases 
were large, rapid, and continuing at the end of the period – and from an increasingly large base." 
 
12. China's challenges to this finding are flawed.  First, China's assertion that imports "abated" is 
misleading.  It is only through use of a chart that  is limited to changes in the rate of growth 
of import 
increases that China can provide any support for its claim that there was a "declining" or "lessening" 
trend in import volumes during 2008.  The Protocol provides that competent authorities should 
establish that imports were "increasing rapidly", on an absolute or relative basis –  it does not 
require that subject imports be growing at an increasingly rapid rate at the end of the period, or 
that imports be increasing at a rate that is higher than the rate of growth of imports in any earlier point of the period.  Even if the rate of growth in abso lute terms lessened somewhat in 2008 
when compared to the extremely rapid rate of gr owth seen in 2007, the quantities of Chinese imports 
continued to grow rapidly in 2008.   
13. Moreover, China's use of quarterly data also is misleading.  China's comparison of changes in 
the quarterly volumes of Chinese imports in 2008  involves a comparison of quarterly data for 
successive quarters.  This type of comparison can be inherently distortive, however, because changes 
in import shipment data between quarters can be affected by variations in production schedules, 
seasonal demand, and w eather developments. 
 
14. Further, China's increasing imports arguments ignore the textual link in the Protocol between 
increased imports and material injury.  The United States did not "conflate two distinct issues," as China claims.  The concept of increased imports does not stand alone.  The language of the Protocol 
links the issue of rapidly increasing imports to mate rial injury.  Accordingly, when considering the 
meaning and scope of the term "rapidly," the Panel must take into account the "context" in which that 
term is used.  The Protocol's langua ge, which links "rapid increases" of imports to material injury or 
threat of material injury, estab lishes that the import increases required by the Protocol are less 
significant than those required in the context of the Safeguards Agreement. 
 15. Finally, China's assertion that the Appellate  Body requires a competent authority to obtain 
data only for the "most recent past" is unsupported by  the relevant Appellate Body reports.  In 
Argentina – Footwear  and US – Lamb Meat  the Appellate Body found that the examination of data 
for at least two years was appropriate.  Moreover,  the Appellate Body has stated that "in 
conducting their evaluation under Article 4.2(a) , competent authorities cannot rely exclusively 
on data from the most recent past, but must assess that data in the context of the data for the 
entire investigative period." 
 
IV. THE U.S. STATUTE IS CONSISTENT, AS SUCH, WITH THE PROTOCOL  
 
16. China has failed to carry its burden of establis hing that the U.S. statute is inconsistent, as 
such, with the Protocol.  Despite  China's claims, section 421's defi nition of a "significant cause" of WT/DS399/R 
Page E-14  
 
  material injury as a cause that "contributes signifi cantly to the material injury of the domestic 
industry" is consistent with the language of the Protocol itself, the ordinary meaning of the words 
"cause" and "contribute," and the Appellate Body's own definitions of the words "cause" and "causal 
link" under the Safeguards Agreement.  Simply put, section 421 does not "impermissibly lower" the 
causation standard of the Protocol, as China claims.  
 
17. China's claims on this score appears to be pr emised on the mistaken notion that the Protocol 
requires that imports from China be the sole
 cause of material injury to an industry.  This concept is 
not consistent with the Protocol.  The Protocol provides that "market disruption shall exist" if Chinese 
imports constitute " a significant cause of material injury" to the industry.  By providing that Chinese 
imports may constitute "a significant cause" of injury , the Protocol explicitly contemplates that there 
may be multiple  significant causes of material injury or th reat to an industry, a point which China 
ignores.    18. China's argument is also not consistent with  the ordinary meaning of the word "cause."   
While the Shorter Oxford English Dictionary defi nes the word "cause" as meaning a factor that 
"produces an effect or consequence" or "that brings about an effect or result," there is no question that 
the word "cause" can be used to describe a situation where more than one factor brings about or 
produces a particular effect or result.  Given this, it is clear that "cause" can be used with respect to 
situations where multiple factors contribute to "bri nging about" or "producing"  an effect or result. 
 
19. Finally, China's argument is inconsistent w ith the Appellate Body's explanation of the terms 
"cause" and "causal link" in the Safeguards Agreement context.  In US – Wheat Gluten , the Appellate 
Body explained that "the term ‘causal link' denot es, in our view, a relationship of cause and effect 
such that increased imports contribute to "bringing about, "producing," or "inducing
" the serious 
injury."   Given this reasoning, the ITC can r easonably conclude that imports that significantly 
"contribute" to the industry's injury are a significant cause of that injury.  
 20. China is also mistaken in claiming that th e U.S. statute "allows the U.S. investigating 
authority to determine that even a minimal cause, which can be less than any other cause, could still 
be considered as ‘a significant cause.'"  Under th e U.S. statute, rapidly increasing imports from China 
must "contribute significantly
" to material injury to be consider ed a significant cause of injury to the 
industry.  Moreover, the ITC has consistently stat ed that the statute requires a finding that Chinese 
imports have a "direct and significant causal link" to  the industry's material injury.  Indeed, the ITC 
has rejected the idea that imports from China can be a "significant cause"  of material injury if they 
constitute a "minimal" or "unimportant" cause of such  injury.  The statute does not allow the ITC to 
find imports to be a significant cause of injury if they contribute minimally to that injury.      
 
21. Furthermore, China has now raised, for the firs t time, the claim that the legislative history of 
section 406, the U.S. statute on which the Protocol was modeled, indicates that the "significant cause" standard of section 406 "was intended to be an easier standard to satisfy than" the "substantial cause" 
standard of section 201, the U.S. global safeguards st atute.  China's statements seriously misconstrue 
the legislative history of section 406 and the rela tionship of the causation standards set forth in 
sections 406 and 201.    
 22. In making this claim, China fails to point out to the Panel that the "substantial cause" standard 
of section 201 contains an additional element that makes the statutory "substantial cause" standard a 
higher one than section 406's "significant cause" standard.  In section 201, the Congress defines 
"substantial cause" to mean "a cause which is  important and not less than any other cause
" of serious 
injury to an industry.  As the ITC has consistent ly explained in its global safeguards determinations, 
section 201 therefore requires that "increased imports must be both  an important cause of the serious 
injury or threat and a cause that is e qual to or greater than any other cause ."   In contrast, section 406 
does not  require the ITC to conclude that the injury cau sed by the subject imports is greater than or  WT/DS399/R 
 Page E-15 
 
 
  equal to the injury caused by any other factor injuring the industry .  Thus, the standard of section 201 
is higher because it requires a finding that global impor ts be as important as any other cause of serious 
injury to the domestic industry during the period of i nvestigation.  In its argument, China has entirely 
failed to point out this important distinction between the two statutes to the Panel.  
23. Accordingly, it should be clear, then, why Ch ina is mistaken when it asserts that section 421 
permits the ITC to find that imports are a significan t cause of material injury even if they are a 
minimal cause of such injury, simply because se ction 421 provides that those imports "need not be 
equal to or greater than any other cause" of  injury to the industry.  This phrase does not
 mean that 
imports can be considered a "significant cause" if  they are "less than any other cause," including a 
minimal cause of injury, as China asserts.  Instead, this language establishes imports from China need 
not be the most important cause, or equal in effect to the most important cause, of material injury to 
the industry, a concept that is consistent  with the requirements of the Protocol.  
 
V. THE ITC'S CAUSATION ANALYSIS, AS APPLIED, WAS CONSISTENT WITH 
THE PROTOCOL 
 
A. THE ITC REASONABLY FOUND THERE WAS A CAUSAL LINK BETWEEN 
CHINESE IMPORTS AND INJURY 
 
24. As the United States has established, the IT C's analysis of the causal link between 
rapidly increasing imports from China and the indus try's declining condition is fully consistent 
with paragraph 16.4 of the Protocol.  The ITC objectively and thoroughly analyzed the record 
evidence on these issues and established, clearl y and unambiguously, that rapidly increasing 
imports from China were a significant cause of  material injury to the domestic industry.  
 25. In its oral statement, China continues to cl aim that the ITC misinterpreted and distorted the 
conditions of competition in the U.S. market.  The ITC did nothing of the sort.  Rather, the ITC provided a detailed and reasoned expl anation of the pertinent conditions of competition in the U.S. 
tyre market.  The ITC reasonably analyzed issues argu ed by the parties, such as declining demand, the 
industry's business strategy and alle gedly attenuated competition, and found that the record evidence 
did not establish that these issues broke the requisite causal link under the Protocol. 
 
26. In its oral statement, Chin a also mistakenly claims there was "no correlation between imports 
and injury."  As detailed in the U.S. first written submission and its oral statement, this statement 
shows China's fundamental misunderstanding of the ex tensive record that was before the ITC in the 
Tires  investigation.  That evidence established a cl ear overall coincidence between rapidly increasing 
subject imports volumes and the deterioration in th e condition of the domestic industry.  China's bold 
claim of no
 correlation in light of this record, calls into  doubt the validity of China's other arguments 
in this proceeding.  27. At the outset, China continues to claim that  a coincidence analysis is required under the 
Protocol by referring to the requirements under the Safeguards Agreement.  As a legal matter, China 
is seeking to impose obligations on the United States  not found in the language of the Protocol.  China 
asserts that Article 16 of the Protocol involves the same causal analysis as in the Safeguards 
Agreement, which means that a "‘coincidence' anal ysis is logically required under the Protocol."  As 
the United States has explained, China's argu ment ignores the fact that there is different 
language in the Safeguards Agreement and the Protocol.   Moreover, China's argument also 
ignores the fact that the Appellate Body and WT O panels had made clear that investigating 
authorities are not
 required to perform a correlation an alysis even under the Agreement on 
Safeguards.   
 WT/DS399/R 
Page E-16  
 
  28. China's arguments on the lack of coincide nce are also misplaced as a factual matter.  As the 
ITC stated there was a clear overall "coincidence"  in trends between the rapidly increasing 
imports and their effects on  the domestic industry.  This finding was reasoned, fully supported by 
the record, and met the requirements under the Protocol .  As the United States noted in both its first 
written submission and in its oral statement, as Chinese import volumes increased rapidly in every 
year of the period, the record showed that the la rge majority of the domes tic industry's performance 
indicators declined in every year of the period as well.  As the ITC explained in its determination, 
the underselling by large and rapidly increasing  subject Chinese tyres eroded the domestic 
industry's market share, leading to a substant ial reduction since 2004 in domestic capacity, 
production, shipments, and employment. 
 29. The evidence showed that all of these indicator s were at their lowest levels in 2008 when 
subject imports were at their highest.  Even though some factors, such as profitability and 
productivity, improved somewhat in a single year - 2007 - when imports continued to increase, 
numerous other injury factors including capacity, sh ipments, net sales quantities, market share, and 
employment-related factors all continued to decline in that year.  Moreover, even the improvement in 
profitability and productivity was temporary.  The reco rd showed that both factors declined in 2008 to 
levels below the start of the period, at the same ti me subject imports rose to their highest levels both 
in terms of absolute volume and market share.  30. In sum, the ITC found that the significant increase in the volume of subject imports 
throughout the period coincided with significant and pervasive underselling of the domestic like 
product by the subject imports.  The rising volume of subject imports also coincided with the decline in the domestic industry's performance indicators as subject imports from China displaced domestic 
sales, and this displacement led to declining do mestic production, shipments, capacity utilization, 
employment, and profitability.  As a result, the re cord clearly supported the ITC's finding that the 
subject imports were a significant cause of material injury to the domestic industry. 
 B. OTHER FACTORS DID NOT SEVER THE CAUSAL LINK  31. China also claims the ITC "ignored" or decided to "forgo any analysis of other causal 
factors."  Again, this is incorrect.  As discussed in the U.S. First Written Submission , the ITC did 
investigate, consider, and analyze all of the factors that could reasonably be considered significant enough to break the causal link betw een imports and material injury.  Indeed, the 
ITC directly considered and addressed the two oth er factors primarily relied on by China in its 
oral statement, i.e., the industry's alleged  "business strategy" of shifting its U.S. production away from low-end tyres to high-end products, and declines in demand in the U.S. tyres market 
over the period.  The ITC examined these issues  and reasonably concluded that they did not 
indicate that subject imports were not a significant cause of material injury to the industry.   
 
32. China continues to argue that a Member ca nnot determine whether subject imports are "a 
significant cause" of injury as required by the Protocol without examining whether other factors were responsible.  China ignores the fact that the Protocol, unlike the Safeguards Agreement, does not
 
specifically require a Member to consider the possib le effects of other factors causing material 
injury or threat of material injury as part of  its causation analysis.  Instead, the Protocol 
requires a Member, when assessing whether rapi dly increasing imports are a significant cause 
of material injury or threat of material inju ry to the industry, to consider the "volume of 
imports," their "effect . . . on prices for  like or directly competitive articles, and the effect of 
such imports on the domestic industry" producing such articles.  
 
33. Contrary to China's argument, the United States is not asking for the Panel to conclude that 
the United States has unfettered discretion to make such a determination.  Instead, the United States is simply pointing out that Members are only required to perform the specific obligations that are set  WT/DS399/R 
 Page E-17 
 
 
  forth in the relevant legal text.  Since China h as not, and cannot,  demonstrate that the Protocol 
imposes on the United States any obligation to address th e injurious effects of other factors as part of 
its causation analysis, China's claim in this regard must fail.  Moreover, even if such an obligation 
were found to exist, the ITC did consider all of th e other factors that could reasonably be claimed to 
be injuring the domestic industry in a significant manner.    
 
34. For example, China continues to claim the ITC "largely ignored the U.S. tire market's 
prolonged contraction in demand," and failed to acknowledge that changes in demand might have 
been a cause of injury to the industry.  As discu ssed in the U.S. First Written Submission, however, 
the ITC fully addressed demand trends in the mark et, including those in the OEM market, and found 
that demand trends did not break the causal link between the subject imports and injury.  The ITC 
found that, even though apparent U.S. consumption fell in 2008, shipments of low-priced subject 
imports not only remained strong but continued to gr ow during the market contraction in that year.  
The fact that low-priced subject imports were able  to increase both absolute ly and relatively in the 
face of a contracting market in 2008, even as the quantities of domestically produced tyres and non-
subject imports both declined, contradicts China's argument that the domestic industry was injured 
solely by demand declines in 2008.  35. China also claims the ITC "chose to attribute pl ant closings to imports from China, when the 
record does not support such a conclusion."  Again, th is is mistaken.  As the United States previously 
explained, the ITC cited ample record evidence to su pport its finding.  The ITC explained that imports 
of tyres from China were rapidly increasing before
 Bridgestone, Continental, and Goodyear 
announced the closing of plants in 2006 and 2008.  As the producers stated, the decision to close 
those facilities was not  a voluntary decision that was made independently of imports.  It was, 
instead, a direct response to the growing presence in the market of low-cost Chinese imports, 
that had already had a "profound" effect on the U. S. market at the very beginning of the period 
according to contemporaneous press reports.  The ITC's analysis had a strong evidentiary 
foundation.    VI. CHINA HAS NOT MET ITS BURDEN OF PROOF ON REMEDY  
 
36. In its answers to the Panel questions, China acknowledges that paragraph 16.3 of the Protocol 
does not require a Member to "separate and distin guish other causes" and that there "is no specific 
obligation to quantify."  Despite  these admissions, China asserts that "the less compelling the 
authorities' explanation of how it distinguished the role of imports from other causes, the greater the likelihood the authorities improperly imposed a remedy that goes too far."  However, China fails to provide any explanation why an alleged failure to  quantify, where quantification is not required, 
requires a "compelling explanation", and why the e xplanations provided by the United States are not 
adequate.  37. China's argument on remedy seems to be that  it is not satisfied with the explanations 
provided.  In the U.S. First Written Submission a nd in the U.S. reply to Panel question 30, the 
United States has pointed to the detailed explanatio ns provided by the ITC in its report in which it 
explains how its proposed remedy addresses the mark et disruption of which imports from China are a 
significant cause.  In addition, the United States has explained that the remedy actually imposed by 
the United States is less stringent than the remedy  recommended by the ITC.  This was as a result of 
additional information gathered during the remedy  phase and additional fact-finding conducted by the 
Office of the U.S. Trade Representative and other agen cies during this phase.  An explanation of this 
was provided at the time the measure was imposed and was even included by China as one of its 
exhibits.  Finally, as the United States has also e xplained, the remedy imposed is reduced by five 
percentage points in the second and third years.  Ch ina has failed to establish how the measure fails to 
meet the requirements of paragraphs 16.3 and 16.6. 
 WT/DS399/R 
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  VII. CONCLUSION  
 
38. For the reasons set forth above, and in our first written submission and answers to questions 
from the Panel, the United States requests that the Panel reject China's claims in their entirety.