WORLD TRADE  
ORGANIZATION   
WT/DS399/AB/R 
5 September 2011 
 (11-4323) 
 Original:   English 
  
 
     
 
    
 
     
UNITED STATES – MEASURES AFFECTING IMPORTS OF CERTAIN 
PASSENGER VEHICLE AND LIGHT TRUCK TYRES FROM CHINA  
 
  
AB-2011-4 
 
 
    
 
     
Report of the Appellate Body  WT/DS399/AB/R 
 Page i 
 
 
I.  Introduction .................................................................................................................. ............... 1  
II.  Arguments of the Participants and the Third Participants .......................................................... 4  
A.  Claims of Error by China – Appellant  ........................................................................... 4  
1.  Increase in Imports ............................................................................................ 5  
2.  Causation .......................................................................................................... 8  
(a)  Interpretation ........................................................................................ 8  
(b)  Conditions of Competition in the US Tyres Market .......................... 11  
(c)  Correlation between Rapidly Increasing Imports and Material 
Injury.................................................................................................. 12  
(d)  Other Causes of Injury ....................................................................... 14  
(i) The US domestic industry's business strategy – Plant 
closures..................................................................................... 14 
(ii) Declines in demand .................................................................. 17 
(iii) Non-subject imports ................................................................. 19 
(iv) Comparative analysis and cumulative assessment ................... 20 
(e)  Integrated Analysis ............................................................................ 22  
3.  Article 11 of the DSU ..................................................................................... 23  
B.  Arguments of the United States – Appellee  .................................................................. 24  
1.  Increase in Imports .......................................................................................... 24  
2.  Causation ........................................................................................................ 27  
(a)  Interpretation ...................................................................................... 28  
(b)  Conditions of Competition in the US Tyres Market .......................... 30  
(c)  Correlation between Rapidly Increasing Imports and Material 
Injury.................................................................................................. 32  
(d)  Other Causes of Injury ....................................................................... 34  
(i) The US domestic industry's business strategy – Plant 
closures..................................................................................... 34 
(ii) Declines in demand .................................................................. 35 
(iii) Non-subject imports ................................................................. 36 
(iv) Comparative analysis and cumulative assessment ................... 38 
(e)  Integrated Analysis ............................................................................ 39  
3.  Article 11 of the DSU ..................................................................................... 40  
C.  Arguments of the Third Participants  ............................................................................ 41  
1.  European Union .............................................................................................. 41  
2.  Japan ............................................................................................................... 43  
III.  Issues Raised in This Appeal .................................................................................................. .. 44 
IV.  Introduction .................................................................................................................. ............. 45  
A.  China's Accession Protocol and Other WTO Agreements  ........................................... 45  
B.  Standard of Review  ...................................................................................................... 47  
V.  Increase in Imports ........................................................................................................... ......... 49 
A.  The Meaning of "Increasing Rapidly"  ......................................................................... 49  
B.  China's Claim of Error regarding "Increasing Rapidly"  ............................................. 53  
1.  Most Recent Import Increases ........................................................................ 54  
2.  Rates of Increase in Imports ........................................................................... 58  
3.  Rates of Import In creases in Context .............................................................. 61  WT/DS399/AB/R 
Page ii  
 
4.  Conclusion ...................................................................................................... 63  
VI.  Causation ..................................................................................................................... ............. 63  
A.  The Meaning of "A Significant Cause"  ........................................................................ 64  
1.  Interpretation ................................................................................................... 64  
2.  Nature of the Analysis .................................................................................... 68  
(a)  Conditions of Competition and Correlation ....................................... 68  
(b)  Analysis of Other Causes ................................................................... 72  
B.  Conditions of Competition in the US Tyres Market  ..................................................... 74  
1.  Conditions of Competition in the US Replacement Market ........................... 75  
2.  US Producers' Focus on the OEM Market ...................................................... 79  
3.  Conditions of Competition in the Overall US Market .................................... 81  
4.  Conclusion ...................................................................................................... 83  
C.  Correlation between Rapidly Increasing Imports and Material Injury  ....................... 83  
1.  Trend "Disconnect" betw een 2007 and 2008 .................................................. 86  
2.  Correlation between Import Increases, Domestic Prices, and 
Profitability ..................................................................................................... 90  
3.  Conclusion ...................................................................................................... 92  
D.  Other Causes of Injury  ................................................................................................. 92  
1.  The Panel's Approach to the USITC's Analysis of Other Causes of 
Injury ............................................................................................................... 92  
2.  The Panel's Findings relating to the USITC's Consideration of Other 
Causes of Injury .............................................................................................. 95  
(a)  The US Domestic Industry's Business Strategy ................................. 96  
(i) Continental's plant in Charlotte ............................................... 97 
(ii) Bridgestone's plant in Oklahoma City ...................................... 99
 
(iii) Goodyear's plant in Tyler ....................................................... 100 
(iv) Plant closures, change in business strategy, and other 
causes of injury ....................................................................... 101 
(b)  Changes in Demand ......................................................................... 103  
(c)  Non-Subject Imports ........................................................................ 107  
(d)  Comparative Analysis of Alternative Causal Factors ...................... 110  
(e)  Cumulative Assessment, Interplay, and Integrated Analysis ........... 111  
3.  Conclusion .................................................................................................... 116  
E.  Article 11 of the DSU  ................................................................................................. 116  
1.  Totality of the Evidence ................................................................................ 117  
2.  Balanced Assessment of the Evidence .......................................................... 117  
3.  Rationale and Reasoning in th e USITC Determination ................................ 119  
4.  Consideration of Certain Ar guments Made by China ................................... 120  
F.  Conclusion  ................................................................................................................. 121  
VII. Findings and Conclusion ....................................................................................................... .. 122 
  Annex I  Notification of an Appeal by China, WT/DS399/6  WT/DS399/AB/R 
 Page iii 
 
 
CASES CITED IN THIS REPORT 
 
Short Title Full Case Title and Citation 
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, 515 
Argentina – Footwear (EC) Panel Report, Argentina – Safeguard Measures on Imports of Footwear , 
WT/DS121/R, adopted 12 January 2000, as modified by Appellate Body Report WT/DS121/AB/R, DSR 2000:II, 575 
Australia – Apples Appellate Body Report, Australia – Measures Affecting the Importation of 
Apples from New Zealand , WT/DS367/AB/R, adopted 17 December 2010 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of 
Salmon , WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Canada – Wheat Exports and 
Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004, 
DSR 2004:VI, 2739 
Chile – Price Band System 
(Article 21.5 – Argentina) Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Recourse to Article 21.5 of the 
DSU by Argentina , WT/DS207/AB/RW, adopted 22 May 2007, DSR 2007:II, 
513 
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile 
Parts , WT/DS339/AB/R, WT /DS340/AB/R, WT/DS342/AB/R, adopted  
12 January 2009 
China – Publications and 
Audiovisual Products Appellate Body Report, China –  Measures Affecting Trading Rights and 
Distribution Services for Certain Publications and Audiovisual Entertainment Products , WT/DS363/AB/R, adopted 19 January 2010 
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting 
Asbestos and Asbestos-Containing Products , WT/DS135/AB/R, adopted  
5 April 2001, DSR 2001:VII, 3243 
EC – Countervailing 
Measures on DRAM Chips Panel Report, European Communities – Countervailing Measures on Dynamic 
Random Access Memory Chips from Korea , WT/DS299/R, adopted 3 August 
2005, DSR 2005:XVIII, 8671 
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping 
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R, 
adopted 28 July 2011 
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the 
Importation of Certain Poultry Products , WT/DS69/AB/R, adopted 23 July 
1998, DSR 1998:V, 2031 
EC – Sardines Appellate Body Report, European Communities – Trade Description of 
Sardines , WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R, 
adopted 18 August 2003, DSR 2003:VI, 2613 
EC and certain member States 
– Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R, adopted 
1 June 2011 WT/DS399/AB/R 
Page iv  
 
Short Title Full Case Title and Citation 
Japan – Agricultural  
Products II Appellate Body Report, Japan – Measures Affecting Agricultural Products, 
WT/DS76/AB/R , adopted 19 March 1999, DSR 1999:I, 277 
Japan – Alcoholic  
Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 
1996, DSR 1996:I, 97 
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of 
Apples , WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391 
Japan – DRAMs (Korea) Appellate Body Report, Japan – Countervailing Duties on Dynamic Random 
Access Memories from Korea , WT/DS336/AB/R and Corr.1, adopted  
17 December 2007, DSR 2007:VII, 2703 
Korea – Alcoholic Beverages Appellate Body Report, Korea – Taxes on Alcoholic Beverages , 
WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, 3 
Korea – Commercial Vessels Panel Report, Korea – Measures Affecting Trade in Commercial Vessels , 
WT/DS273/R, adopted 11 April 2005, DSR 2005:VII, 2749 
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, DSR 
2000:I, 3 
Mexico – Anti-Dumping 
Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dump ing Measures on Beef 
and Rice, Complaint with Respect to Rice , WT/DS295/AB/R, adopted  
20 December 2005, DSR 2005:XXII, 10853 
US – Anti-Dumping and 
Countervailing Duties (China) Appellate Body Report, United States – Definitive Anti-Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R, 
adopted 25 March 2011 
US – Cotton Yarn Appellate Body Report, United States – Transitional Safeguard Measure on 
Combed Cotton Yarn from Pakistan , WT/DS192/AB/R, adopted 5 November 
2001, DSR 2001:XII, 6027 
US – Countervailing Duty 
Investigation on DRAMS Appellate Body Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, 8131 
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, adopted 23 August 
2001, DSR 2001:X, 4697 
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, 
4051 
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Circular Welded Carbon Quality Line Pipe from Korea , 
WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, 1403 
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998, DSR 
1998:VII, 2755  WT/DS399/AB/R 
 Page v 
 
 
Short Title Full Case Title and Citation 
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R, WT/DS249/AB/R, 
WT/DS251/AB/R, WT/DS252/AB/R, WT /DS253/AB/R, WT/DS254/AB/R, 
WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 
2003:VII, 3117 
US – Steel Safeguards Panel Reports, United States – Definitive Safeguard Measures on Imports of 
Certain Steel Products , WT/DS248/R / WT/DS249/R / WT/DS251/R / 
WT/DS252/R / WT/DS253/R / WT/DS254/R / WT/DS258/R / WT/DS259/R, and Corr.1, adopted 10 December 2003, as modified by Appellate Body 
Report WT/DS248/AB/R, WT/D S249/AB/R, WT/DS251/AB/R, 
WT/DS252/AB/R, WT/DS253/AB/R, WT /DS254/AB/R, WT/DS258/AB/R, 
WT/DS259/AB/R, DSR 2003:VIII, 3273 
US – Tyres (China) Panel Report, United States – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/R, 
circulated to WTO Members 13 December 2010 
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton , 
WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, 3 
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton , WT/DS267/R, 
Corr.1, and Add.1 to Add.3, adopted 21 March 2005, as modified by 
Appellate Body Report WT/DS267/AB/R, DSR 2005:II, 299 
US – Upland Cotton  
(Article 21.5 – Brazil) Appellate Body Report, United States – Subsidies on Upland Cotton – 
Recourse to Article 21.5 of the DSU by Brazil , WT/DS267/AB/RW, adopted 
20 June 2008, DSR 2008:III, 809 
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, 717 WT/DS399/AB/R 
Page vi  
 
LIST OF ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation Description 
Anti-Dumping Agreement  Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994  
China's Accession Protocol  Protocol on the Accession of the People's Republic of China, WT/L/432 
China's Accession Working 
Party Report Report of the Working Party on the Accession of China, 
WT/ACC/CHN/49 and WT/ACC/CHN/49/Corr.1 
COGS Cost of goods sold 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes  
GATT 1994 General Agreement on Tariffs and Trade 1994  
OEM Original equipment manufacturers 
Panel Report Panel Report, United States – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/R, 
13 December 2010 
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
Subject imports Imports of certain passenger and light truck tyres from China 
Tyres measure Safeguard measure imposed by the United States on imports of subject 
tyres in the form of a duty increas e for three years, effective as of 
26 September 2009 
USITC United States International Trade Commission 
USITC Report United States International Trade Commission,  Certain Passenger 
Vehicle and Light Truck Tires from China , Investigation No. TA-421-7, 
Publication 4085 (July 2009) (Panel Exhibit US-1) 
Working Procedures  Working Procedures for Appellate Review , WT/AB/WP/6, 16 August 
2010 
WTO World Trade Organization  WT/DS399/AB/R 
 Page 1 
 
 
WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 United States – Measures Affecting Imports of 
Certain Passenger Vehicle and Light Truck Tyres from China  
 China, Appellant 
United States, Appellee 
 
European Union, Third Participant 
Japan, Third Participant  
Separate Customs Territo ry of Taiwan, Penghu, 
 Kinmen and Matsu, Third Participant   
Turkey, Third Participant 
Viet Nam, Third Participant 
 
  AB-2011-4 
  Present:  
 Hillman, Presiding Member 
 Oshima, Member  Van den Bossche, Member   
  
I. Introduction 
1. China appeals certain issues of law and legal in terpretations developed in the Panel Report, 
United States – Measures Affecting Imports of C ertain Passenger Vehicle and Light Truck Tyres from 
China  (the "Panel Report").
1  The Panel was established on 19 Ja nuary 2010 to consider a complaint 
by China with respect to a safeguard measure im posed by the United States on imports of certain 
passenger vehicle and light truck tyres from China.2 
2. The measure was imposed as a product-specific sa feguard under Section 16 of the Protocol on 
the Accession of the People's Republic of  China to the World Trade Organization3 (the "WTO") 
("China's Accession Protocol" or the "Protocol" ) following an investigation conducted by the 
United States International Trade Commission (the "USITC"). 
                                                      
1WT/DS399/R, 13 December 2010. 
2WT/DS399/3.  In this Report, we use the term "subject tyres" to describe the tyres at issue in this 
dispute, and which were the subject of the United St ates International Trade Commission (the "USITC") 
investigation.  More specifically, such tyres consist of "new pneumatic tires, of rubber, from China, of a kind 
used on motor cars … and on-the-highway light trucks, vans, and sport utility vehicles, provided for in 
subheadings 4011.10.10, 4011.10.50, 4011.20.10, and 4011.20.50 of the Harmonized Tariff Schedule of the 
United States." (USITC, Certain Passenger Vehicle and Light Truck Tires from China , Investigation 
No. TA-421-7, Publication 4085 (July 2009) (Panel Exhibit US-1) (the "USITC Report"), pp. 3-4) 
3WT/L/432.  The product-specific safeguard m echanism is implemented in US law through 
Sections 421-423 of the United States Trade Act of 1974 (Public Law No. 93-618, 3 January 1975, 88 Stat. 1978, as amended (codified in United States Code , Title 19, section 2451, chapter 12), as amended), commonly 
referred to as "Section 421" (added as Public Law No. 106-286, 10 October 2000, 114 Stat. 882 (codified in 
United States Code , Title 19, section 2451)). WT/DS399/AB/R 
Page 2  
 
3. The safeguard investigation in this case was in itiated following receipt of a petition filed by 
the United Steel, Paper and Forestry, Rubber, Manuf acturing, Energy, Allied Industrial and Service 
Workers International Union on 20 April 2009.  Th e petition alleged that certain passenger vehicle 
and light truck tyres from China were being impo rted into the United States in such increased 
quantities or under such conditions as to cause or threaten to cause market disruption to domestic 
producers of like or directly competitive produc ts.  The USITC initiated the investigation 
on 24 April 2009.  The USITC determined that there was market disruption as a result of rapidly 
increasing imports of subject tyres from China that were  a significant cause of material injury to the 
domestic industry.
4  Following a decision by the President of the United States, 
dated 11 September 2009, the United States imposed a safeguard measure on imports of subject tyres 
in the form of additional import duties for a three-year period:  35% ad valorem  in the first year;  
30% ad valorem  in the second year;  and 25% ad valorem  in the third year (the "tyres measure").5  
The measure took effect on 26 September 2009.6 
4. Before the Panel, China claimed that, in impos ing the tyres measure, the United States acted 
inconsistently with Paragraphs  16.1, 16.3, 16.4, and 16.6 of China's Accession Protocol and 
Articles I:1 and II:1(b) of the General Agreement on Tariffs and Trade 1994  (the "GATT 1994").7 
5. The Panel Report was circulated to Members of the WTO on 13 December 2010.  The Panel 
concluded that, in imposing the tyres measure, the United States did not act inconsistently with its 
obligations under Section 16 of the Protocol  and Articles I:1 and II:1(b) of the GATT 1994.8  More 
specifically, the Panel found that: 
                                                      
4See Panel Report, para. 2.2.  More specifically, the USITC determined, on the basis of the information 
obtained in the investigation, "that certain passenger vehicle and light truck tires from China are being imported into the United States in such increased quantities or under such conditions as to cause market disruption to the 
domestic producers of certain passenger vehicle and light truck tires." (USITC Report, p. 3)  All six of the 
USITC commissioners found that subject imports from China were "increasing rapidly" and that the US tyres industry was "materially injured". ( Ibid., pp. 12, 18, and 45)  However, two of the six USITC commissioners 
found that market disruption did not exist, because subject imports from Ch ina were not a significant cause of 
material injury to the domestic industry. ( Ibid., p. 45)  These two commissioners submitted views dissenting 
from the decision of the majority of USITC commissioners.  The determination made by the USITC and the 
views of the commissioners (the views of the majority as well as the dissenting views) are contained in Certain 
Passenger Vehicle and Light Truck Tires from China , Investigation No. TA-421-7, USITC Publication 4085 
(July 2009) (Panel Exhibit US-1), which we refer to in our discussion as the "USITC Report".  The USITC 
Report also includes a report containing the information and data gathered by the USITC staff in the investigation (the "USITC staff report").  In our discussion, we use the term "USITC determination" to refer to 
the collective of the determination of the USITC and the views of the majority of the USITC commissioners. 
5Panel Report, para. 2.2.  
6Panel Report, para. 2.2.  
7Panel Report, paras. 3.1 and 3.2. 
8Panel Report, para. 8.1.  WT/DS399/AB/R 
 Page 3 
 
 
– the USITC did not fail to evaluate properly whether imports from China met the specific 
threshold under Paragraph 16.4 of China's Accession Protocol of "increasing rapidly"9; 
– the US statute implementing the causation standa rd of Section 16 into US law (Section 421 of 
the United States Trade Act of 197410) does not require the United States to establish 
causation in a manner inconsistent with Section 16 of China's Accession Protocol11; 
– the USITC did not fail to establish properly th at rapidly increasing imports from China were  
"a significant cause" of material injury to the domestic industry12; 
– China failed to establish that the tyres measur e exceeds "the extent necessary to prevent or 
remedy" the market disruption caused by rapi dly increasing subject imports, contrary to 
Paragraph 16.3 of China's Accession Protocol13;  and 
– China failed to establish that the tyres meas ure exceeds the period of time necessary to 
prevent or remedy the market disruption, c ontrary to Paragraph 16.6 of China's Accession 
Protocol.14 
6. The Panel also rejected consequential clai ms by China that the United States acted 
inconsistently with Articles I: 1 and II:1(b) of the GATT 1994.15 
7. In a communication dated 27 January 2011, China and the United States jointly requested the 
Dispute Settlement Body (the "DSB") to agree to an extension of the 60-day period provided for in 
Article 16.4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes  (the 
"DSU") for the adoption or appeal of the Panel Report until 24 May 2011.16  At a meeting held on 
7 February 2011, the DSB agreed that, upon request by China or the United States, it would adopt the 
Panel Report no later than 24 May 2011, unless the DSB decided by consensus not to do so, or either 
party to the dispute notified the DSB of its decision to appeal.17 
8. On 24 May 2011, China notified the DSB of its intention to appeal certain issues of law 
covered in the Panel Report and cer tain legal interpretations devel oped by the Panel, pursuant to 
                                                      
9Panel Report, para. 7.110. 
10Supra , footnote 3 of this Report. 
11Panel Report, para. 7.160. 
12Panel Report, para. 7.379. 
13Panel Report, para. 7.399. 
14Panel Report, para. 7.415. 
15Panel Report, para. 7.418. 
16WT/DS399/5. 
17WT/DSB/M/292.  WT/DS399/AB/R 
Page 4  
 
Articles 16.4 and 17 of the DSU, and filed a Notice of Appeal
18 and an appellant's submission 
pursuant to Rules 20 and 21, respectively, of the Working Procedures for Appellate Review  (the 
"Working Procedures ").19  On 14 June 2011, the United States filed an appellee's submission.20  On 
the same day, the European Union and Japan  each filed a third participant's submission21, and the 
Separate Customs Territory of Taiwan, Penghu, Ki nmen and Matsu, Turkey, and Viet Nam each 
notified its intention to appear at th e oral hearing as a third participant.22 
9. The oral hearing in this appeal was held on 7 a nd 8 July 2011.  The participants and one of the 
third participants (the European  Union) made oral statements.23  The participants and third 
participants responded to questions posed by th e Members of the Division hearing the appeal.24 
II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by China – Appellant 
10. China appeals the Panel's finding that the USIT C did not fail to evaluate properly whether 
imports from China were "increasing rapidly" so as to be  "a significant cause" of material injury to the 
domestic industry within the meaning of Paragraphs 16.1 and 16.4 of China's Accession Protocol.  In 
particular, China claims that the Panel erred in its  interpretation and applica tion of Paragraph 16.4 of 
the Protocol in finding that the USITC properly established that imports from China met the "increasing rapidly" threshold set fort h in that provision.  China claims further that the Panel erred in 
its interpretation and application of Paragraph 16.4 in affirming the USITC's determination that 
rapidly increasing imports from China were "a signi ficant cause" of material injury to the domestic 
industry within the meaning of that provision.  Fina lly, China claims that the Panel, in reaching its 
findings regarding the application of the term "a si gnificant cause", acted incons istently with its duty 
to conduct an objective assessment of the ma tter as required under Article 11 of the DSU. 
                                                      
18WT/DS399/6 (attached as Annex I to this Report). 
19WT/AB/WP/6, 16 August 2010. 
20Pursuant to Rule 22 of the Working Procedures . 
21Pursuant to Rule 24(1) of the Working Procedures . 
22Pursuant to Rule 24(2) of the Working Procedures . 
23Japan made concluding remarks at the oral hearing. 
24On 22 July 2011, the Chair of the Appellate Body informed the DSB that the Appellate Body Report 
in this appeal would be circulated to WTO Members no later than Monday, 5 September 2011 (WT/DS399/7).  
On 30 July 2011, we received a letter from the United States indicating that  the United States wished to better 
understand the reasons why the Appellate Body Report in this dispute would not be submitted within the 90-day 
period referred to in Article 17.5 of the DSU.  In the interest of transparency, the Chair of the Appellate Body 
will, at the time of transmittal of the Report, inform the DSB of the reasons for the delay.  WT/DS399/AB/R 
 Page 5 
 
 
1. Increase in Imports 
11. China claims that the Panel erred in finding th at the USITC did not fail to evaluate properly 
whether imports from China met the "increasing rapi dly" threshold set forth in Paragraph 16.4 of 
China's Accession Protocol.  China requests the Appella te Body to reverse this finding, to complete 
the legal analysis, and to find, instead, that th e USITC did not provide a reasoned and adequate 
explanation for its finding that imports from China were "increasing rapidly" within the meaning of 
Paragraph 16.4 of the Protocol for the following reasons.  
12. First, China claims that the Panel erred in finding that Paragraph 16.4 of China's Accession 
Protocol did not require the USITC to focus its anal ysis on import trends during the most recent past.  
China argues that the use of the present continuous  tense "increasing" in Paragraph 16.4 suggests a 
focus on the most recent period of time.25  According to China, the Panel failed to attribute 
significance to the textual distinction between "incre asing" imports in Paragraph 16.4 and "increased" 
imports in Paragraph 16.1.26  In China's view, Paragraph 16.1 sets forth the "general conditions" for 
the application of measures under Section 16 of th e Protocol, and reflects the standard for import 
increases contained in provisions of other WTO ag reements, in particular, Article 2.1 of the 
Agreement on Safeguards , which requires an assessment of past import increases.27  However, when 
providing specific meaning to the general conditi ons of Paragraph 16.1, Paragraph 16.4 uses the 
present continuous tense "increasing", thereby sugges ting that the Protocol provides for a distinct 
standard that requires an assessment of present import increases.28  China emphasizes that the Panel 
should have given "more interpretative weight" to th e more specific language of Paragraph 16.4 than 
to the more general language of Paragraph 16.1, and that only an interpretation that focuses on the 
most recent period of time can be reconciled with both provisions.29 
13. China maintains further that, when applying the "increasing rapidly" standard of 
Paragraph 16.4, the Panel imprope rly upheld the USITC's assessment of import increases over the 
entire 2004-2008 period of investigation.30  According to China, neither the USITC nor the Panel 
adequately explained why import increases over the full five-year period were relevant to a 
determination that imports were "increasing rapidl y", or should be accorded equal weight to more 
recent import trends.31  In China's view, such missing explanation is "particularly troubling" given the 
                                                      
25China's appellant's submission, paras. 58 and 88.  
26China's appellant's submission, paras. 66, 94, 96, 98, and 105.  
27China's appellant's submission, paras. 63, 64, and 100.  
28China's appellant's submission, paras. 65, 77, and 100.  
29China's appellant's submission, paras. 102 and 104.  
30China's appellant's submission, para. 129.  
31Referring to the Appellate Body in US – Lamb , China argues that the USITC had to explain why such 
2004-2008 temporal assessment was adequate. (China's appellant's submission, para. 130 (quoting Appellate 
Body Report, US – Lamb , para. 156)) WT/DS399/AB/R 
Page 6  
 
"sharp difference" between the average 34% im port increase over the entire five-year period of 
investigation and the 10.8%  import increase in 2008.
32  China adds that the USITC did not provide an 
adequate explanation for its conclusion that impor t increases were "large, rapid, and continuing" 
in 2008.33   
14. Second, China claims that the Panel erred in finding that Paragraph 16.4 of China's Accession 
Protocol did not require the USITC to focus on the rates of increase in imports from China.  China 
posits that the Panel failed to attribute proper sign ificance to the term "rapidly" in Paragraph 16.4, 
which connotes imports that are "increasing at a swift rate".34  China emphasizes that Article 4.2(a) of 
the Agreement on Safeguards , Article 3.2 of the Agreement on Implementation of Article VI of the 
General Agreement on Tariffs and Trade 1994 (the " Anti-Dumping Agreement "), and Article 15.2 of 
the Agreement on Subsidies and Countervailing Measures  (the " SCM Agreement ") do not require that 
imports be increasing "rapidly", and that this textual distinction must be given meaning.  According to 
China, the Panel's reference to the ordinary meaning of "rapidly" ("with great speed" or "swiftly") was 
insufficient to dismiss the relevance of the rates of  increase in imports, because "[t]here is no way to 
determine whether an increase is occurring at a 'great speed' without assessing its rate."35  C h i n a  
maintains further that "rapidly" is a relative con cept that conveys the idea of something increasing 
more quickly than something else, and therefore it  is "useful" to focus on the rates of increase in 
imports. 
15. In addition, China claims that the Panel erre d in its application of  Paragraph 16.4 of the 
Protocol when it upheld the USITC determination d espite the fact that the USITC did not adequately 
assess the rates of increase in subject imports.  In particular, China contends that the USITC did not 
provide an adequate explanation fo r its conclusion that imports were "increasing rapidly" despite the 
decline in the rate of increase in subject imports in 2008.36  According to China, the Panel's reasoning 
that the 2008 import increase was in addition to earlier import incr eases was not suffi cient, because 
import increases in every year and market share gains over the full period of investigation do not 
establish that imports were increasing "rapidly". 
16. Third, China claims that the Panel erred in failing to require the USITC to assess the most 
recent rate of increase in subject imports relative to  the rates of increase in earlier periods.  China 
argues that the Panel ignored the m eaning that the terms "increasing"  and "rapidly" in Paragraph 16.4 
of the Protocol impart to one another.  China em phasizes that the term "rapid ly" is a relative concept 
                                                      
32China's appellant's submission, para. 133.  
33China's appellant's submission, para. 136 (quoting USITC Report, p. 12).  
34China's appellant's submission, paras. 59 and 89.  
35China's appellant's submission, para. 111.  
36China's appellant's submission, paras. 142 and 144.   WT/DS399/AB/R 
 Page 7 
 
 
and, when used to qualify the term "increasing", it indicates that imports must be increasing more 
rapidly than some other benchmark, typically the rate that imports have increased in the past.  For this 
reason, the rates of increase in imports must be put in the "factual context" of prior rates of increase in 
imports.37  According to China, the earlier part of the period of investigation provides a "contextual 
baseline" for determining whether the rates of increa se in the latter period can be considered "rapid", 
in that they were greater than the earlier rates of increase.38 
17. China also claims that, in its application of Pa ragraph 16.4 of the Protocol, the Panel erred in 
finding that the USITC properly determined that im ports were "increasing rapidly".  China argues that 
the USITC failed to provide a reas oned and adequate explanation fo r finding that imports from China 
were "increasing rapidly" despite the drop in the rate of increase in imports in 2008 compared to the 
rates of increase in previous years.  According to China, the Panel filled the gap in the USITC's 
reasoning by providing its own analysis of 2008 import increases.  China adds that both the Panel and 
the USITC focused on "[import] increases in every year, the magnitude of the overall increase, and 
the fact that the level of imports was highest at th e end of the period", when the legally relevant issue 
was whether the changes in the rates of increase at the end of the period of investigation were recent 
enough, and of such magnitude, as to be deemed "rapid".39  China stresses further that both the USITC 
and the Panel erroneously focused on the overall change in the market share of subject imports over 
the entire period of investigation, and did not provide an adequate explanation as to why import increases could still be considered "rapid" when the rates of increase in their market share declined 
in 2008. 
18. Finally, China argues that the object and purpose of the Protocol and the balance of rights and 
obligations reflected therein must be considered when interpreting the "increasing rapidly" standard 
contained in Paragraph 16.4.  China emphasizes th e Appellate Body's recognition that measures under 
the Agreement on Safeguards are "extraordinary", in that they restrict "fair" trade.
40  C h i n a  
underscores that the Protocol similarly allows for th e restriction of "fair" trade;  however, unlike the 
Agreement on Safeguards , it provides for the application of trade-restrictive measures exclusively 
against China.  This "'extra'-extra ordinary nature" of the Protocol must be taken into account in the 
interpretation of the distinct "increasing rapi dly" standard set forth in Paragraph 16.4.41 
                                                      
37China's appellant's submission, para. 117.  
38China's appellant's submission, para. 118.  
39China's appellant's submission, para. 155. 
40China's appellant's submission, para. 81 (quoting Appellate Body Report, Argentina  – Footwear 
(EC) , paras. 94 and 95).  
41China's appellant's submission, para. 84.  WT/DS399/AB/R 
Page 8  
 
2. Causation 
19. China claims that the Panel erred in finding that rapidly increasing imports from China were 
"a significant cause" of material injury to the US domestic industry within the meaning of 
Paragraph 16.4 of China's Accession Protocol.  In pa rticular, China argues that the Panel erred in its 
interpretation of the causation standard in Paragra ph 16.4;  erred in finding that the USITC properly 
assessed the conditions of competition in the US mark et;  erred in finding that the USITC was entitled 
to rely, in its causation analysis, on the overall correlation between import increases and declines in 
injury factors;  and erred in finding that the USIT C did not fail to ensure that injury caused by other 
factors was not attributed to imports from China.  China requests the Appellate Body to reverse these 
findings, to complete the legal analysis, and to find,  instead, that the USITC did not properly establish 
that imports from China were "a significant cause" of  material injury to the US industry, as required 
by Paragraph 16.4 of the Protocol. 
(a) Interpretation 
20. China claims that the Panel erred in its inte rpretation of the term "a significant cause" in 
Paragraph 16.4 of the Protocol.  According to Chin a, in failing to distinguish a "significant cause" 
from a "cause", the Panel read the word "significant"  out of the text of Paragraph 16.4.  In China's 
view, the inclusion of the word "significant" to qualify the word "cause" suggests that Paragraph 16.4 
requires "a particularly strong, substantial, and important causal connection" between rapidly 
increasing imports and any material injury to the domestic industry.42  In expanding on the general 
conditions set forth in Paragraph 16.1 of the Prot ocol and paragraph 246(c) of the Report of the 
Working Party on the Accession of China43 (China's "Accession Working Party Report"), 
Paragraph 16.4 of the Protocol specifies that impor ts must be a "significant cause" and not merely a 
"cause" of material injury.  This, in China's vi ew, indicates that Paragraph 16.4 of the Protocol 
requires a higher degree of causality than other WTO ag reements, in particular, Article 4.2(a) of the 
Agreement on Safeguards , which merely requires that imports "c ause" serious injury.  According to 
China, the fact that Paragraph 16.4 provid es for a lower injury threshold than the Agreement on 
Safeguards  ("material" rather than "serious" injury) does not affect this interpretation, because it 
reflects "an overall balance" struck by the Protoc ol between the degree of causation and amount of 
injury required.44  China maintains that, insofar as the Pr otocol permits WTO Members to restrict 
"fair" trade and to apply safeguard measures in  a discriminatory manner, its object and purpose 
suggests that "a significant cause" should be interp reted as setting a distinct standard that requires 
                                                      
42China's appellant's submission, para. 193.  
43WT/ACC/CHN/49 and WT/ACC/CHN/49/Corr.1. 
44China's appellant's submission, paras. 206-208.   WT/DS399/AB/R 
 Page 9 
 
 
more of a Member imposing measures under the Pr otocol than would be required of a Member 
imposing measures under the Agreement on Safeguards . 
21. In China's view, the Panel erred in failing to  establish whether rapidly increasing imports 
from China amounted to "a significant cause" rather th an simply a "cause" of material injury to the 
domestic industry.  China argues that the Panel's reference to the ordinary meaning of the word 
"significant" was not sufficient to address its im plications on the causation analysis required under 
Paragraph 16.4.45  Following the analytical appro ach of the Appellate Body in US – Upland Cotton , 
China posits that the Panel should have assessed first whether the USITC properly established that 
subject imports were a cause of material injury , and second whether the USITC provided a reasoned 
and adequate explanation as to why such cause was "significant".46  Referring to the Appellate Body 
reports in US – Lamb  and US – Cotton Yarn , China maintains further that the Panel erred in failing to 
address how the qualifier "significant" modified the "core obligation" reflected in the term "cause".47  
For China, the Panel's conclusion that reference to "a" significant cause suggests that Paragraph 16.4 
admits of multiple causes does not sufficiently a ddress whether a certain cause is "significant", 
because this assessment is informed by the re lative significance of the other causes at play.48 
22. Furthermore, China argues that the Panel erred in  failing to "refine" its causation analysis to 
meet the distinct "significant cause" standard set forth in Paragraph 16.4.49  China refers to the 
analyses of the conditions of competition, correlation,  and non-attribution as "intermediate step[s]" in 
the Panel's overall causation analysis, and suggests that a "particularly compelling explanation" is 
required from the investigating authority when one of  such analyses suggests that subject imports are 
not "a significant cause" of material injury.50  According to China, the Pa nel erred in failing to explain 
how these analytical steps should be "adjusted or applied" so as to support a finding of "significant 
cause".51   
23. More specifically, with respect to the analysis of the conditions of competition, China submits 
that the "significant cause" standard of Paragra ph 16.4 requires investigating authorities to establish 
the existence of "a greater degree of competitive overlap" between subject imports and the domestic 
industry than is required under the Agreement on Safeguards.52  According to China, this involves a 
                                                      
45China's appellant's submission, paras. 261 and 266 (referring to Panel Report, para. 7.158).  
46China's appellant's submission, paras. 265 and 266 (referring to Appellate Body Report, US – Upland 
Cotton , para. 429). 
47China's appellant's submission, paras. 267-271 (referring to Appellate Body Report, US – Lamb , 
para. 124;  and Appellate Body Report, US – Cotton Yarn , para. 98).  
48China's appellant's submission, paras. 273-275 (referring to Panel Report, para. 7.140).  
49China's appellant's submission, para. 217.  
50China's appellant's submission, para. 218.  
51China's appellant's submission, paras. 278, 279, and 281.  
52China's appellant's submission, para. 224.  WT/DS399/AB/R 
Page 10  
 
two-step analysis whereby investigating authoriti es must determine, first, how the existence of 
different market segments may "attenuate" the degree of competition between subject imports and 
other market participants
53;  and, second, whether the resulting degree of competition indicates that 
subject imports are capable of being a "significant cause" of material injury to the domestic industry.54 
24. In relation to the analysis of correlation, Ch ina argues that the "significant cause" standard 
requires investigating authorities to go beyond mere "'overall' correlation" and assess the "degree of 
correlation" between rapidly increasing imports and injury factors of the domestic industry.55  
According to China, Paragraph 16.4 requires a speci fic correlation both in year-by-year changes and 
in the degree of magnitude between increases in im ports and decreases in the performance indicators 
of the domestic industry. 
25. In relation to the analysis of other causes, Chin a argues that "there is an inherent requirement 
to consider other causes [of injury] when finding a causal link between imports and the condition of 
the domestic industry."56  In China's view, the term "significan t" in Paragraph 16.4 of the Protocol 
"requires more than just considering other causal factors in some generalized way".57  In particular, 
China contends that an assessment of both the magn itude of "effects" attribut able to subject imports 
and an assessment of the magnitude of "effects" attributable to other factors is required.58  C h i n a  
asserts that this involves "separating not just the causes, but also the effects of those causes".59  
Moreover, the investigating authority is required to determine whether the separate effects properly 
associated with imports from China ri se to the level of "significant". 
26. China recognizes that the Protocol does not set forth any specific method for determining 
when the effects properly associated with subject imports rise to the level of being "a significant 
cause".60  For China, this situation is therefore like those under other WTO agreements, where the 
absence of any specific guidance has meant that WTO Members have discretion as to the "methods 
and approaches" they employ.61  In China's view, one approach would be to "weigh the different 
causes".62  China recognizes that Paragraph 16.4 "does not specifically require the effects of imports 
from China to be larger than  the effects of other causes".63  Yet, in cases where "the effects of imports 
                                                      
53China's appellant's submission, para. 225.  
54China's appellant's submission, para. 226.  
55China's appellant's submission, para. 229. (emphasis omitted) 
56China's appellant's submission, para. 240. 
57China's appellant's submission, para. 247. 
58China's appellant's submission, para. 251. 
59China's appellant's submission, para. 252. 
60China's appellant's submission, para. 254.  
61China's appellant's submission, para. 254 (referring to Appellate Body Report, US – Hot-Rolled Steel , 
para. 224;  and Appellate Body Report, US – Lamb , para. 181).  
62China's appellant's submission, para. 255.  
63China's appellant's submission, para. 256. (original underlining)   WT/DS399/AB/R 
 Page 11 
 
 
from China are less than [the effects of] other causes, the investigating authority must pause and 
consider the situation very carefully" and "must take  particular care in fulfilling its duty to provide a 
reasoned and adequate explanation"  if it concludes that imports from China are "a significant cause".64  
According to China, a finding of "significant cause"  when the effects of imports from China are less 
than the effects of other causes would also require a "very compelling analysis".65 
(b) Conditions of Competition in the US Tyres Market 
27. China argues that the Panel erred in finding that the USITC properly assessed the conditions 
of competition in the US market.  According to China, both the Panel and the USITC failed to explain 
adequately how imports from China could be "a  significant cause" of material injury under 
Paragraph 16.4 of the Protocol, when approximate ly 60% of US production in 2008 went into 
two market segments where Chinese imports had only a 2-3% combined market share.66  
28. More specifically, China maintains that bot h the Panel and the USITC failed to assess 
adequately the existence of "atte nuated competition" between subject imports and domestic tyres in 
the US replacement market.67  In China's view, the Panel's conclu sion that there were no "bright-line 
distinctions" between tiers 1, 2, and 3 of the US replacement market does not sufficiently address the attenuated degree of competition between impor ted and domestic tyres in that market.
68  In addition, 
both the Panel and the USITC failed to assess adequa tely data indicating that, in 2008, Chinese 
imports represented less than 1% of total shipment s into tier 1 of the replacement market where 
US producers concentrated 51% of their shipments.69  Such "limited presence" of Chinese imports in 
tier 1 suggests that a "majority" of US productio n "faced virtually no competition from subject 
imports".70  Moreover, the Panel's finding that competition in tiers 2 and 3 was more than "vestigial" 
did not, in China's view, provide a sufficient basi s for concluding that subject imports were "a 
significant cause" of material injury, insofar as those segments represented "less than half" of the 
US replacement market.71  China posits further that the Panel "went beyond the proper bounds of 
                                                      
64China's appellant's submission, para. 256.   
65China's appellant's submission, para. 256 (referring to Panel Report, Argentina – Footwear (EC) , 
para. 8.238).   
66China's appellant's submission, para. 309.  
67China's appellant's submission, para. 311.  
68China's appellant's submission, para. 313 (referring to Panel Report, para. 7.197).  
69China's appellant's submission, para. 316.  China adds that "the competitive tension in this key tier 1 
segment was overwhelming between the U. S. producers with 69.3 percent of the shipments and the non-subject 
imports with 29.9 percent of the shipments to this segment." ( Ibid., para. 317) 
70China's appellant's submission, paras. 318 and 325.  
71China's appellant's submission, para. 320 (referring to Panel Report, para. 7.197). WT/DS399/AB/R 
Page 12  
 
review" by providing its own analysis as to why competition between domestic tyres and subject 
imports was "significant" in tiers 2 and 3.
72  
29. Furthermore, China contends that the Panel erred in upholding the USITC's conclusion that 
subject imports had a "significant" competitive imp act on domestic tyre production in the original 
equipment manufacturers ("OEM") market.  Accordi ng to China, the Panel erroneously focused on 
increasing trends in Chinese imports to the OEM market, when it should have instead assessed 
whether competition between Chinese and US tyr es in that segment was significant.  China 
underscores that its market share in the OEM mark et remained below 5% during the entire period of 
investigation.  According to China, the Panel's e nd-point-to-end-point analysis obscures the fact that 
most of China's market share gains occurred by 2 006.  In addition, China stresses that non-subject 
imports had a larger and increasing share of the OE M market than subject imports, and that market 
share gains by non-subject imports in the OEM market occurred during a period in which they lost 
market share in the overall US market.   
30. China maintains further that the Panel e rred in separately assessing the conditions of 
competition in the replacement market and the OE M market, but failing to address their combined 
implication for the degree of competition in th e overall US market.  For China, the "extremely 
limited"73 presence of Chinese imports in tier 1 of the replacement market and in the OEM market, 
where US producers concentrated approximately 60%  of their total shipments, suggested that 
competition in the overall US market was "highly attenuated".74  Moreover, the Panel ignored the fact 
that subject imports in the OEM market had no competitive effect on domestic tyres in the 
replacement market, and that tier 1 of the replacement  market was more clearly delineated than tiers 2 
and 3.  In China's view, both the Panel and the USITC failed to provide a reasoned and adequate 
explanation as to how these data could support a finding that subject imports were "a significant 
cause" of material injury to the US industry. 
(c) Correlation between Rapidly Increasing Imports and Material Injury 
31. China argues that the Panel erred in finding that the USITC was entitled to rely on an "overall 
coincidence" between rapidly increasing imports a nd declines in injury factors in support of its 
conclusion that subject imports were a significant ca use of material injury to the domestic industry.75  
According to China, the "significant cause" standard  of Paragraph 16.4 of the Protocol requires a 
more specific degree of correlation between import in creases and declines in injury factors.  In 
                                                      
72China's appellant's submission, paras. 322 and 323 (referring to Panel Report, para. 7.195).  
73China's appellant's submission, para. 343.  
74China's appellant's submission, para. 336.  
75China's appellant's submission, para. 350 (quoting Panel Report, para. 7.234).    WT/DS399/AB/R 
 Page 13 
 
 
particular, the Panel erroneously affirmed the US ITC's end-point-to-end-point comparison, when it 
should have assessed instead "year-to-year relative changes" between imports and injury factors.76  In 
addition, the Panel failed to assess adequately a "d isconnect" between trends in 2007 and 2008, when 
the rate of increase in volume of imports declined , but injury factors such as production, shipments, 
and net sales nonetheless further deteriorated.77  China adds that a similar "disconnect" existed 
between declines in the rate of increase in imports  and declines in other injury factors such as 
operating profits, productivity, capacity u tilization, and research and development.78  According to 
China, the Panel failed to explain adequately whet her these inconsistencies in trends suggested that 
injury was caused by other factors, such as the 2008 recession and the domestic industry's strategic 
decision to cede the low-end segment of the repl acement market to imports from China and other 
countries. 
32. Furthermore, China argues that the Panel inco rrectly upheld the USITC's finding that subject 
imports had adverse effects on domestic prices and pr ofitability.  China stresses that the cost of goods 
sold ("COGS")/sales ratio improved by 5.3% in 2007 , when the rate of increase in subject imports 
was at its highest, but declined by 5.8% in 2008, wh en the rate of increase in subject imports also 
declined.79  In China's view, the Panel uncritically a ccepted the USITC's conclusion that there was 
a "sharp increase in this ratio in 2008", and ig nored the sharp decrease in the COGS/sales ratio 
in 2007.80  Similarly, the Panel failed to address year-by- year changes in finding that "underselling by 
subject imports generally had a highly detrimental impact on the domestic industry".81  China 
emphasizes that, when the margin of underselling was greatest in 2007, the profitability of the 
domestic industry improved.  In contrast, when th e margin of underselling decreased in 2008, the 
profitability of the domestic industry also declined .  China adds that the margin of underselling 
remained relatively high in 2008 because domestic hi gher-value branded tyres have higher prices than 
unbranded Chinese tyres.  Thus, the Panel did no t take into account the effects of "attenuated 
                                                      
76China's appellant's submission, para. 350.  
77China's appellant's submission, paras. 354-358.  China emphasizes that, when imports increased 
by 53.7% in 2007, US production decreased by 2.4%;  US shipments decreased by 5%;  and net sales decreased 
by 5.5%.  However, in 2008 when imports increased by 10.8%, US production decreased by 11.1%;  US shipments decreased by 12.1%;  and net sales decreased by 11.7%. ( Ibid., para. 355) 
78China's appellant's submission, para. 359.  China underscores that, when imports increased by 53.7% 
in 2007, the domestic industry's operating profits increased by 5.6%;  productivity increased by 0.1 tyres 
per hour;  capacity utilization increased by 6.0%;  a nd research and development increased by 6.4%.  In 
contrast, when imports grew by 10.8% in 2008, operating profits declined  by 6.9%;  productivity declined by 
0.2 tyres per hour;  capacity utilization declined by 5.9%;  and research and development declined by 0.1%. 
(Ibid., para. 359) 
79China's appellant's submission, para. 368.  
80China's appellant's submission, para. 369 (quoting USITC Report, p. 24).  
81China's appellant's submission, para. 371 (quoting Panel Report, para. 7.258). (emphasis added 
by China) WT/DS399/AB/R 
Page 14  
 
competition on underselling"
82, and failed to address adequately the fact that non-subject imports also 
undersold domestic tyres. 
(d) Other Causes of Injury 
33. China attributes the injury suffered by the US dom estic industry, at least in part, to three 
factors other than subject imports from China, namely :  (i) the domestic industry's business strategy of 
shifting to higher-value products;  (ii) demand declin es in the market;  and (iii) non-subject imports.  
China contends that the Panel erre d in finding that the USITC prope rly considered and addressed the 
effects of these other factors that were allegedly cau sing injury to the industry.   China asserts that the 
Panel's focus was more on identifying some "residua l effect" from imports, rather than understanding 
how each other factor might be affecting the cond ition of the domestic industry, and whether any 
remaining effects could properly be deemed "a significant cause" of material injury.83  I n  C h i n a ' s  
view, under the Panel's standard, any injurious e ffects—including "residual effects"—could constitute 
"a significant cause".  In other words, if the othe r causal factors "do not explain everything", and 
instead leave some residual injurious effects to s ubject imports, then those residual effects somehow 
constitute "a significant cause" of material injury.  Ch ina refers to this as an "all or nothing" approach 
to other causes.84 
34. China also alleges that certain preliminary ob servations made by the Panel regarding China's 
arguments on other causes "suffer from the Panel's rep eated tendency to look at one fact in isolation, 
and not put that fact into the broader context of other competitive dynamics".85  According to China, 
nothing in these preliminary observations "calls into doubt the importance of the changed business 
strategy for understanding the competitive dynamics in  the industry, and the extent to which imports 
from China could properly be considered a 'significant cause' of injury".86   
(i) The US domestic industry's business strategy – Plant 
closures 
35. China emphasizes that there is no dispute in this case that the US industry changed its 
business strategy by withdrawing from low-value se gments of the replacement market and shifting 
production in the United States towards the higher-value segments of the market.  According to China, the issue is instead "why the strategy chan ged and what significance the new strategy and the 
                                                      
82China's appellant's submission, para. 377.  
83China's appellant's submission, para. 285 (referring to Panel Report, para. 7.177). 
84See China's appellant's submission, paras. 284, 289, 433, and 436. 
85China's appellant's submission, para. 391 (referring to Panel Report, paras. 7.292-7.296).  
86China's appellant's submission, para. 402.   WT/DS399/AB/R 
 Page 15 
 
 
resulting plant closures had for analyzing causation".87  For China, the USITC improperly attributed 
the plant closures in the United States to imports fro m China, ignoring the effect of the change in 
business strategy. 
36. At a general level, China submits that the Pa nel committed error when it rejected the USITC's 
finding that Chinese imports played a role in th e closure of Continental's plant in Charlotte, 
North Carolina, but then failed to assess whether this conclusion undermined the USITC's overall 
conclusion concerning the reasons for plant closures, including the reasons for the closure of 
Bridgestone's plant in Oklahoma City, Oklahoma, a nd Goodyear's plant in Tyler, Texas.  China 
further alleges that both the Panel and the USITC fail ed to ensure that the injurious effects resulting 
from the closure of Continental's plant in Charlotte  were not improperly attributed to imports from 
China. 
37. With respect to the reasons for the closure of  Bridgestone's plant in Oklahoma City, China 
argues, on several grounds, that the Panel erred in finding that the USITC properly could have 
understood reference in Bridgestone's official pr ess release to "fierce competition from low-cost 
producing countries" to include competition from subject imports from China.88  First, China observes 
that the press release by Bridgestone refers only to "low-cost producing countr ies", and does not refer 
explicitly to imports from China as a reason for shutting down the plant.89  Second, China asserts that 
the Panel erred in suggesting that a contemporane ous news report relied upon by the USITC in its 
report "quoted" a Bridgestone employee as identif ying "low-cost Korean- and Chinese-made tires 
flooding the US market as one of the reasons for the plant's economic troubles".90  Third, China 
claims that the Panel erred by relying on a stat ement made in the USITC staff report (which the 
USITC did not cite to in its determination) in  assessing whether the USITC could properly attribute 
the closure of Bridgestone's plant to imports from China.91  Fourth, China obser ves that "non-subject 
imports held between 78.8 and 87.1 percent of the import market during the period relevant for the 
plant closure decisions."92  In China's view, the Panel "downplayed" the significant and increasing 
presence of such non-subject imports.93  Yet, given the relative magnitude of non-subject imports, it 
                                                      
87China's appellant's submission, para. 387. (original underlining) 
88China's appellant's submission, footnote 326 to para. 409 (quoting "Bridgestone Firestone to Close 
Oklahoma City Tire Plant", press release of 13 July 2006 (Panel Exhibit China-45)). 
89China's appellant's submission, para. 409. 
90China's appellant's submission, para. 410 and footnote 327 thereto (referring to Panel Report, 
para. 7.303, in turn quoting United States' response to Panel Question 52, para. 55).  
91China's appellant's submission, para. 411 (referring to USITC Report, footnote 62 at p. III-16). 
92China's appellant's submission, para. 414.  
93China's appellant's submission, para. 415.  WT/DS399/AB/R 
Page 16  
 
was improper to conclude that s ubject imports were "a significant cause" of the closures in 2006 and 
to "ignore" the effect of non-subject imports.
94  
38. China makes similar arguments regarding the Pane l's analysis of the reasons for closure of 
Goodyear's plant in Tyler.  First, China alleges that there was no factual basis for the Panel's assertion 
that "competition from subject imports was clear ly greater than the competition from non-subject 
imports".95  For China, given that non-subject imports represented more than 80% of the total import 
volume, priced on average approximately 17% below US price levels, and largely imported by 
US domestic producers themselves, it made "no sense" for the USITC and the Panel to read a generic 
reference to "low-cost imports" as a reference to imports from China.96  China also criticizes the Panel 
for its "selective" approach in dealing with certa in evidence, not only by equating "low-cost imports" 
to "subject imports" from China, but also by ignor ing certain other factors behind Goodyear's plant 
closure that were identified by the USITC.97  According to China, such an  approach calls into question 
the Panel's "neutrality" in this dispute.98   
39. China further contends that the Panel used the split between the majority and dissenting 
determinations of the USITC to "tak e a pass" on the plant closure issue.99  In China's view, "the Panel 
never fully assessed whether the majo rity or the dissent was correct."100  Instead, it merely found that 
plant closures "may well have been" linked to competition from imports and the decision to locate production in China "might well have been" the resu lt of an independent business strategy, but the 
decision to close plants "might well have been" a response to imports.
101  China asserts that this 
conclusion was "wholly inadequate" and contends that the Panel s hould have considered critically 
whether the USITC majority sufficiently explained it s conclusion to "ignore" the effect of the change 
in business strategy.102  According to China, the Panel failed to do so and, instead, "simply deferred" 
to the USITC majority.103 
40. China argues that, "even if one assumes the USITC could properly find that imports from 
China played some role in the d ecision to close the plants, that do es not justify attributing the entire 
consequences of the plant closures to the imports from China."104  In China's view, under the Panel's 
                                                      
94China's appellant's submission, para. 415.  
95China's appellant's submission, para. 419 (quoting Panel Report, para. 7.305). 
96China's appellant's submission, para. 426. 
97China's appellant's submission, paras. 420 and 421 (referring to USITC Report, footnote 62 at 
p. III-16).  
98China's appellant's submission, para. 421.  
99China's appellant's submission, para. 429.  
100China's appellant's submission, para. 429.  
101China's appellant's submission, para. 429 (quoting Panel Report, para. 7.321).  
102China's appellant's submission, para. 430.  
103China's appellant's submission, para. 430.  
104China's appellant's submission, para. 433. (original underlining)  WT/DS399/AB/R 
 Page 17 
 
 
logic, "insignificant residual effects become si gnificant effects without any proper factual basis 
—much less a reasoned or adequate explanation".105   
41. Referring to the multiple reasons behind the US industry's changed business strategy, the fact 
that the domestic producers did not support the petiti on in this case, and "given the importance of the 
finding on plant closures for the overall conclusion a bout 'significant cause'", China argues that the 
USITC had an obligation to provide a "particularly  compelling justification" for its conclusion to 
attribute the plant closures to imports from China.106  China asserts that it failed to do so and the Panel 
therefore should not have affirmed the USITC's "defective" explanation.107 
(ii) Declines in demand 
42. China takes issue with the Panel's analysis of  declines in demand, arguing that both the Panel 
and the USITC failed to "evaluate seriously" demand  declines as a possible alte rnative cause of injury 
to the domestic industry.108  China claims that a contracti on in demand over the full period of 
investigation, combined with a sharp decline in demand in 2008 due to the recession, accounted for "a 
sizeable portion"—albeit not all—of the injury  suffered by the industry over the period of 
investigation.109  According to China, however, the Panel conducted a rigid "all or nothing" analysis 
of other causes, "believing that if an alternative cause did not explain everything then it explained 
nothing".110  For China, because "the contraction in de mand did not explain the entire injury suffered 
by the domestic industry, the Panel impermissibly gave it short shrift."111 
43. China alleges multiple errors in the Panel's review  of the USITC's determination.  First, China 
claims that, save for its consideration of the e ffects of the recession in 2008, the USITC did not 
address "the longer term trend in demand".112  China asserts that the Panel, in its analysis, referred to 
statements by the USITC that addressed the trends in the market share of subject imports but did not 
say anything about trends in demand or trends in apparent consumption.  Second, China argues that 
the USITC improperly assumed that an increasing ma rket share held by imports from China meant 
that imports were having an adverse effect distinct  from the effect of changing levels of demand.  
According to China, there were, however, many other factors at play affecting market shares that 
called into question this "simplistic assumption".113  Third, China submits that the Panel "substituted 
                                                      
105China's appellant's submission, para. 434.  
106China's appellant's submission, para. 435. 
107China's appellant's submission, para. 435. 
108China's appellant's submission, para. 437. 
109China's appellant's submission, para. 436. 
110China's appellant's submission, para. 436. 
111China's appellant's submission, para. 436. 
112China's appellant's submission, para. 438.  
113China's appellant's submission, para. 439. WT/DS399/AB/R 
Page 18  
 
its own analysis" instead of anal yzing the USITC's determination.
114  For example, the Panel 
compared the changing levels of apparent consumption with the ch anging levels of subject import 
penetration, although the USITC did not conduct such an  analysis in its determination.  China further 
submits that the data before the USITC suggested that market demand was shifting to all imports in 
general and not just imports from China.  In such circumstances, it was "more misleading than useful" 
to compare a 42.7% increase in imports from China w ith a 0.8% decrease in overall consumption, as 
the Panel did.115  Fourth, China argues that the Panel "confu sed the distinction between average trends 
over time and the fluctuations that  inevitably occur year-by-year".116  China recalls that the Panel 
acknowledged that consumption droppe d by 10.3%, reflecting a decline of almost 32 million tyres, 
and that there was a decline in three out of four years of the period of investigation.  According to China, these data indicate that total consumption fe ll significantly over the period of investigation, 
despite year-by-year variations.  In China's vi ew, this decline represents a significant competitive 
factor that the Panel and the USITC should have considered "more carefully".
117   
44. With respect to declines in demand resulting from the 2008 recession, China argues that the 
USITC did not explain how it "connected" certain fact s to its specific conclusions, nor did it explain 
how its "consideration" of this issue represented a reasoned and adequate explanation of how it 
distinguished the contribution of imports from China from those of the 2008 recession on the overall condition of the industry.
118  Instead, in China's view, "the USITC simply stated its conclusion 
without any discussion or explanation."119   
45. China asserts that the Panel a ddressed the 2008 recession in a similar fashion.  In particular, 
China contends that, in its analysis of this issue,  the Panel suggested that, if the sharp decline in 
demand "could not explain all of the injury to the dom estic industry, then it could explain none of the 
injury".120  According to China, rather than expect the USITC to consider and explain the relative 
contribution of each causal factor, the Panel "gave the USITC the far easier task of simply proving 
that declining demand did not explain everything".121  China faults the Panel for stating that 
"significantly increased" imports "forced" the US dom estic industry to absorb the fall in demand that 
was due to the 2008 recession.122  In China's view, the data before the USITC in fact suggested that 
US producers "switched" their source of imports, "as imports from China increased by 
                                                      
114China's appellant's submission, para. 440. 
115China's appellant's submission, para. 441. 
116China's appellant's submission, para. 443. 
117China's appellant's submission, para. 443.  
118China's appellant's submission, para. 449.  
119China's appellant's submission, para. 449. 
120China's appellant's submission, para. 451. (original underlining) 
121China's appellant's submission, para. 451. 
122China's appellant's submission, para. 452 (referring to Panel Report, para. 7.354).   WT/DS399/AB/R 
 Page 19 
 
 
2.0 million tires while imports from other countries by the U.S. producers dropped by 
5.1 million tires".123  China suggests that additional tyres fro m China in 2008 simply "replaced" other 
imports brought in by US producers, and did not displace US production or shipments.124  
(iii) Non-subject imports 
46. China further argues that the USITC failed to  address the competitive effect of non-subject 
imports in the US market, despite the fact that the non-subject imports held a larger share of the 
market than Chinese imports and were lower priced  than the tyres produced in the United States.  
China also argues that the Panel erred by upholdin g the USITC's determination, despite the USITC's 
failure to provide any reasoned a nd adequate explanation for findi ng that non-subject imports were 
not an alternative cause of injury.125 
47. In particular, China takes issue with the Panel' s statement that "the dominant feature of the 
U.S. market was the rise of subject imports from Ch ina at the expense of both non-subject imports and 
the U.S. industry."126  According to China, the USITC never ma de such a statement and thus the Panel 
"impermissibly substituted its judgment for that of the USITC".127 
48. In addition, China alleges that the Panel's an alysis of price effects "ignored" the relative 
volumes of subject and non-subject imports.128  In relation to the US replacement market, China 
recalls that "imports from China in 2008 were less than 1 percent of the tier 1 market while imports 
from other countries made up 39 percent of the market."129  In China's view, the Panel's analysis 
therefore "essentially assumed that one tire from Chin a at $40 had more of an adverse impact than 
thirty nine tires from other countries at $55" per tyre.130  China adds that "there were approximately 
nine times  as many non-subject imports in the OEM ma rket in 2008" as there were imports from 
China, and non-subject imports grew from 30.2% to 43.5% of the OEM market between 2004 and 
2008.131  Noting that together the OEM market and the tier 1 segment of the replacement market 
                                                      
123China's appellant's submission, para. 465.  
124China's appellant's submission, para. 465. (emphasis omitted) 
125At the oral hearing, China disagreed with the Unite d States' assertion that it failed to identify before 
the Panel the issue of non-subject imports as a possible "o ther" factor causing injury th at the USITC should have 
addressed in its analysis.  China added that, in any event, it does not matter whether non-subject imports are 
examined as part of a "conditions of competition" analys is or as a possible "other" cause of injury.  China 
explained that, in either case, the anal ysis is directed at understanding what is going on in the market and the 
effect, if any, that this has on the adequacy  of the investigating authority's reasoning. 
126China's appellant's submission, para. 473 (quoting Panel Report, para. 7.367). 
127China's appellant's submission, para. 473. 
128China's appellant's submission, para. 477. 
129China's appellant's submission, para. 477. 
130China's appellant's submission, para. 477. (original underlining) 
131China's appellant's submission, para. 478 (referring to USITC Report, Table V-3 at p. V-4). (original 
underlining) WT/DS399/AB/R 
Page 20  
 
represent approximately 60% of US shipments, China asserts that the Panel ignored the fact that non-
subject imports remained the "overwhelming competitive factor facing U.S. producers".
132 
(iv) Comparative analysis and cumulative assessment 
49. China acknowledges that Section 16 of China's Accession Protocol does not require that an 
investigating authority compare or "weigh" the causal  effects of various injury factors against one 
another.133  However, China maintains that such analys is would provide an alternative way for an 
investigating authority appropriately to determine that imports from China are "a significant cause" in 
the light of other factors.134  Moreover, even if this approach is  not required, China contends that a 
consideration of the relative importance of othe r causes would "reinforce[ ]" the conclusion that 
imports from China were not in fact "a significant cause" of injury.135  In China's view, this is because 
other factors reduced any residual contribution by im ports from China to a level that no longer meets 
the standard of "significant cause".136   
50. According to China, the USITC relied exclus ively on its holistic explanation—based on 
conditions of competition, overall correlation,  and other causes—without any assessment of the 
relative importance of each of the various causes at work.  China makes refere nce to the US industry's 
alleged business strategy, declines in demand, and th e role of non-subject imports, maintaining that 
the evidence before the USITC "strongly suggested " that these other possible causes of injury were 
more important than imports from China.137  In particular, China asserts that US producers closed 
certain plants for a "broader set of economic and bus iness reasons", and that subject imports were just 
one of many factors being considered by these firms.138  China considers, therefore, that it does not 
make sense to attribute the entire effect of the US  plant closures to imports from China.  For China, 
approximately 61% of the reduction in US shipments must be attributed solely to the decline in 
consumption.  Furthermore, there was no reason to conclude that "the smaller volume of imports from 
China were having a more significant price effect th an the much higher volume of imports from other 
countries."139  In China's view, "[i]t was error for the USITC to give so  little attention to these other 
causes, and it was error for the Panel to affirm the inadequate USITC conclusions on this key 
issue."140 
                                                      
132China's appellant's submission, para. 478.  
133China's appellant's submission, paras. 480-482.  
134China's appellant's submission, para. 481.  
135China's appellant's submission, para. 481.  
136China's appellant's submission, para. 481.  
137China's appellant's submission, para. 492.  
138China's appellant's submission, para. 485.  
139China's appellant's submission, para. 491. 
140China's appellant's submission, para. 492.   WT/DS399/AB/R 
 Page 21 
 
 
51. China also argues that the Panel improperly di smissed China's argument concerning the need 
to conduct a cumulative assessment of the effects of the other causes of injury.  Referring to the 
Appellate Body's finding in EC – Tube or Pipe Fittings  that "there may be cases where because of the 
specific factual circumstances therein, the failure to  undertake an examination of the collective impact 
of other causal factors would result in the investigat ing authorities improperly attributing the effect of 
these other causal facts to dumped imports", China al leges that it provided the Panel with the "unique 
factual circumstances by which other causes worked in an interrelated manner in this case to sever or 
diminish the magnitude of any causal link" between Chinese imports and material injury.141 
52. In China's view, the "interplay" between va rious factors—namely, business strategy, demand 
trends, and non-subject imports—reduced the possib ility for subject imports to be a "significant 
cause" of domestic injury.142  China argues, for instance, that import levels in 2007 and 2008 
reflected, "at least in part", the consequences of earlier decisions by US producers to globalize and 
create more demand for imports.143  According to China, the "void" left by US producers "became 
particularly important during the recession in 2008 as demand shifted to lower-priced value tires and 
thus shipments of those imported tires at a lower pr ice-point held up signifi cantly better than domestic 
shipments of the more expensive U.S.-manufactured tires."144  China asserts that it was therefore 
"improper to assume imports from China displaced U.S. production at the end of the period when 
many of the U.S. production lines of the most dire ctly competitive products had already been shut 
down for broader reasons that only par tially related to imports from China."145  With regard to 
non-subject imports, China asserts that it was "imprope r to attribute significant effects to the smaller 
volume of imports from China while ignoring the effects of the larger volume of imports from other countries that also undersold U.S. tire prices by a wide margin."
146  China adds that "the domestic 
industry itself was responsible for imports of bo th subject and non-subject imports, and therefore 
U.S. producers themselves had some control over the relative magnitude of those imports."147  China 
argues that, given the importance of non-subject impor ts in the overall US market and their ability to 
undersell the US-based production of lower-end tyres,  US producers themselves "had to find lower 
cost places to produce".148  According to China, this "reinfor ced the need for a new business strategy 
to globalize production".149  In China's view, "[i]t makes little sense to blame this need on the smaller 
                                                      
141China's appellant's submission, para. 494 (original underlining) and footnote 424 thereto (quoting 
Appellate Body Report, EC – Tube or Pipe Fittings , para. 192). 
142China's appellant's submission, para. 494. 
143China's appellant's submission, para. 495.  
144China's appellant's submission, para. 495.  
145China's appellant's submission, para. 495.  
146China's appellant's submission, para. 496.  
147China's appellant's submission, para. 496.  
148China's appellant's submission, para. 499. 
149China's appellant's submission, para. 499. WT/DS399/AB/R 
Page 22  
 
volume of imports from China", when "[a]ll imports—not just those from China—offered more 
price-competitive options and drove the new business strategy."
150  China further argues that the 
longer-term decline in overall US demand created the need for US producers to shift production to 
where the markets were strongest and "reinforc[ed ] the need for a new business strategy to globalize 
production".151  China adds that the "decline in U. S.-based automobile production drove down 
production for the OEM market" and further "reinforced the need to produce in other markets".152 
(e) Integrated Analysis  
53. China further argues that the Panel erred by  considering each causation argument raised by 
China in isolation, and never addressing th em together in an "integrated analysis".153  According to 
China, this approach led the Panel to "internal in consistencies" that coul d have been avoided by 
assessing the competitive dynamics and alleged causal connection more "holistically".154  In China's 
view, the lack of correlation and the existence of  attenuated competition in this case "reinforced each 
other" and "undermined" any conclusion that subject  imports might be a significant cause of material 
injury.155  China further argues that the US domestic industry's business strategy "helped explain why 
attenuated competition was an accelerating phenome non in the market over the period of 
investigation".156  China also refers to the "continuing large presence" of non-subject imports and 
improvements in the performance of the domestic indust ry in 2007, arguing that the Panel focused too 
little on how these factors interrelated.157 
54. Finally, China argues that Paragraph 16.4 of the Protocol requires linking the condition of the 
domestic industry to imports that ar e found to be "increasing rapidly".158  In China's view, both the 
USITC and the Panel failed to do so.  In particular , the Panel largely focused  its causation analysis on 
the overall period of investigation instead of focusi ng on the end of the period so as to establish the 
causal linkage between imports that are "increasing rapidly" and the condition of the industry at the 
end of the period.  In doing so, the Panel drew many of its inferences from changes earlier, rather than 
later, in the period.  According to  China, this constitutes error.  China notes, for example, that, in 
discussing attenuated competition in the replacement market, the Panel analyzed only data from 2008, 
but did not link this discussion to the trend in imports during that year.  In addition, when discussing 
non-attribution, the Panel provided no analysis of how plant closures earlier in the period of 
                                                      
150China's appellant's submission, para. 499.  
151China's appellant's submission, para. 497. 
152China's appellant's submission, para. 497.  
153China's appellant's submission, para. 502. 
154China's appellant's submission, para. 502.  
155China's appellant's submission, para. 506.  
156China's appellant's submission, para. 507.  
157China's appellant's submission, paras. 508-510.  
158China's appellant's submission, para. 512.   WT/DS399/AB/R 
 Page 23 
 
 
investigation affected trends in both subject and non -subject imports later in the period, particularly 
in 2007 when apparent consumption increased. 
3. Article 11 of the DSU 
55. China submits that the Panel acted inconsis tently with its duty to conduct an objective 
assessment under Article 11 of the DSU in its revi ew of the USITC's determination that subject 
imports from China were "a significant cause" of materi al injury to the US domestic industry.  China 
submits several arguments in s upport of its allegation.   
56. First, China alleges that the Panel failed to consider the "totality of the evidence" on the 
question of causation.159  China faults the Panel for failing to see how the various causation elements 
are interrelated, and argues that the Panel also failed to consider the way in which other causes 
interacted with each other.160  Noting that the USITC itself "embraced a holistic approach to the 
causation issue", China submits that it was theref ore error for the Panel to address each causation 
issue in isolation.161 
57. Second, China contends that the Panel faile d to conduct a balanced assessment of the 
evidence on the question of causation, and disregar ded evidence that was not consistent with the 
conclusions reached by the USITC.  In particul ar, China takes issue with the Panel's use of 
footnote 62 of the USITC staff report.  According to China, the Panel "went out of its way to find and 
cite evidence the USITC majority did not cite or  rely upon" and "extracted only those pieces of 
evidence that supported the USITC conclusion and i gnored those other pieces of evidence that were 
not consistent with the USITC conclusion".162  Referring to the Appellate Body Report in US – 
Upland Cotton (Article 21.5 – Brazil) , China submits that panels mu st be "even-handed" in their 
review and consider all of the arguments a nd evidence in a balanced and consistent way.163 
58. Third, China submits that the Panel went be yond the rationale contained in the USITC 
determination on the question of causation, and relied on post hoc  clarifications provided by the 
United States or the analysis developed by th e Panel to "bolster the USITC determination".164  I n  
                                                      
159China's appellant's submission, heading III.E.2(a), p. 148.  
160China's appellant's submission, para. 567.  
161China argues that the situation in this case is thus analogous to the Appellate Body's guidance in 
US – Countervailing Duty Investigation on DRAMS , where the Appellate Body explained that, "when the 
authorities considered evidence as a whole, a panel must use the same approach when evaluating the WTO consistency of the decision reached by the authority." (China's appella nt's submission, para. 568 (referring to 
Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , paras. 188-190)) 
162China's appellant's submission, para. 569.   
163China's appellant's submission, paras. 49 and 562 (referring to Appellate Body Report, US – Upland 
Cotton (Article 21.5 – Brazil) , para. 293). 
164China's appellant's submission, para. 572.   WT/DS399/AB/R 
Page 24  
 
support of its claim, China refers to certain argumen ts it made earlier in its submission dealing with 
conditions of competition, declining consumption over  the period of investigation, the 2008 recession, 
and the role of non-subject imports.
165 
59. Fourth, China asserts that the Panel acted incons istently with its oblig ations under Article 11 
of the DSU by failing to consider China's argu ments on how "other causes interacted with each 
other".166  China also submits that the Panel disregarde d China's argument concerning the existence of 
"attenuated competition" between subject imports an d domestic tyres in the US replacement market, 
including evidence provided by the United States to the Panel indicating a limited presence of Chinese 
imports in tier 1 of that market segment.167  Finally, China maintains that the Panel failed to consider 
China's argument that it was necessar y to distinguish the Protocol's standard of "a significant cause" 
from the mere "cause" standard of other WTO agreements. 
B. Arguments of the United States – Appellee  
60. The United States submits on appeal that the Panel did not err in upholding the USITC's 
finding that imports from China were "increasing rapidly" so as to be "a significant cause" of material injury to the domestic industry within the meaning of Paragraphs 16.1 and 16.4 of the Protocol.  The 
United States argues further that, in reaching these findings, the Panel did not act inconsistently with its duty to conduct an objective assessment of the matter as required under Article 11 of the DSU.
   
61. The United States requests the Appellate Body to  uphold the Panel's findings and to reject 
China's claims on appeal.  In the event that the A ppellate Body were to reverse certain findings or 
conclusions of the Panel, the United States submit s that the Appellate Body should decline to 
complete the analysis, given that this would requi re the Appellate Body to review a number of 
contested facts or the weight to be ascribed to those facts.  
1. Increase in Imports 
62. The United States argues that the Panel did not err in finding that the USITC properly 
established that imports from China met the "increasing rapidly" threshold set fo rth in Paragraph 16.4 
of China's Accession Protocol.   
63. First, the United States argues that the Panel properly concluded that the USITC was not 
required to focus its analysis on the most recent import increases.  The United States emphasizes that 
the text of Paragraph 16.4 does not provide, explicitly or implicitly, that an authority must focus 
                                                      
165China's appellant's submission, paras. 574-577.  
166China's appellant's submission, para. 579. 
167China's appellant's submission, para. 580.   WT/DS399/AB/R 
 Page 25 
 
 
solely on import data for the "most recent" period.168  The absence of any explicitly prescribed 
timeframe in Paragraph 16.4 suggests that investiga ting authorities have the discretion to select any 
period of investigation, provided that it allows for an assessment of import increases during a "recent 
period".169  For the United States, the Panel's conclusion th at the use of the present continuous tense in 
Paragraph 16.4 does not require an exclusive fo cus on the most recent past finds support in 
Argentina – Footwear (EC) , where the Appellate Body interprete d the use of the present continuous 
tense in Article 2.1 of the Agreement on Safeguards  to require "sudden and recent" import 
increases.170  The United States further rejects China's argument that Paragraph 16.4 should be given 
"controlling effect", and argues instead that th e Panel's interpretation gave effect to both 
Paragraphs 16.1 and 16.4 of the Protocol.171 
64. The United States adds that, contrary to China' s assertion, the USITC and the Panel examined 
2008 import data in arriving at the conclusion that im port increases were "large, continuing and rapid" 
at the end of the period of investigation.172  The USITC specifically indicat ed that the highest quantity 
and value of subject imports were in 2008.173  The USITC also expressly reasoned that the two largest 
"year-to-year increases" in the ratio of the "subject  imports to U.S. production" and in the "market 
share of the Chinese imports" occurred "at th e end of the period  in 2007 and 2008".174  The Panel, for 
its part, explained that a 10.8% import increas e in 2008 was neither "modest" nor "preclude[d] a 
finding that imports [were] 'incre asing rapidly'", particularly because such increase was in addition to 
import increases in each previous year of the period of investigation.175  The United States contends 
that, contrary to China's argument, the USITC and the Panel "focus[ed] appropriately" on the 
"significant, continuing increases in Chinese imports that occurred in 2008" and found the increases to 
be "rapid".176   
65. Second, the United States argues that the Panel did not err in finding that the USITC was not 
required to focus its analysis on the rates of increase in subject imports.  The Panel correctly held that 
the ordinary meaning of the term "rapidly" ("with great  speed" or "swiftly") neither refers to the "rate" 
of increase in subject imports, nor requires that imports be increasing at an "accelerating rate".177  
According to the United States, the term "rapidly " does not embody a "relative concept", as suggested 
                                                      
168United States' appellee's submission, paras. 36 and 45.  
169United States' appellee's submission, paras. 46 and 47.  
170United States' appellee's submission, para. 49 (quoting Panel Report, para. 7.88, in turn quoting 
Appellate Body Report, Argentina – Footwear (EC) , para. 130).  
171United States' appellee's submission, para. 51.  
172United States' appellee's submission, para. 55 (referring to USITC Report, pp. 10-11, and 22). 
173United States' appellee's submission, para. 55 (referring to USITC Report, p. 12). 
174United States' appellee's submission, para. 55 (referring to USITC Report, p. 12). 
175United States' appellee's submission, para. 57 (quoting Panel Report, para. 7.93). 
176United States' appellee's submission, paras. 55-57. 
177United States' appellee's submission, paras. 60 and 61 (referring to Panel Report, para. 7.92).  WT/DS399/AB/R 
Page 26  
 
by China, because it does not mean "'more swiftly ', 'more quickly', or 'with greater speed'".
178  The 
United States considers China's argument that the addition of the term "rapidly" indicates that 
Paragraph 16.4 reflects a more rigorous standard fo r import increases than other WTO agreements to 
be "misplaced".179  This is because there are "significant di stinctions" between the text of the Protocol 
and other WTO agreements that render the comparis on with other WTO agreements "difficult, if not 
pointless".180  The United States adds that the absence of  a specific non-attribution requirement and 
the inclusion of a lower injury threshold undermine Ch ina's argument that the Protocol reflects a more 
rigorous standard for import increases than the Agreement on Safeguards . 
66. Moreover, despite China's assertions to the c ontrary, the United States underscores that the 
USITC did examine the rates of increase in subject imports over the period of investigation.  The United States stresses that the USITC explicitly refe rred in its analysis to "rates of increase" both in 
volume and value of subject imports, with particular emphasis on the rates of increase in the last two 
years of the period of investigation.
181  The United States adds that the USITC also reviewed the rates 
of increase in the market share of subject imports, and in their ratio to domestic production.182  
67. Third, the United States contends that the Panel did not err in failing to require the USITC to 
assess the rates of increase in imports in 2008 relativ e to the rates of increase in earlier periods.  The 
Panel correctly held that Paragraph 16.4 did not requi re a "swift progression in the rate of increase" in 
Chinese imports, and that a "decline in the rate of increase [did not] necessarily preclude[ ] a finding 
that imports are 'increasing rapidly'".183  In any event, the United States stresses that the USITC, in its 
analysis, specifically referred to the percentage ra tes of increase in subject imports in the last two 
years of the period of investigation, and placed such  rates of increase within the context of previous 
years in noting that the "two largest increases" in market share and ratio to domestic production 
occurred in 2007 and 2008.184 
68. Furthermore, the United States maintains that  the USITC provided a reasoned and adequate 
explanation for its finding that imports were "inc reasing rapidly", both absolutely and relatively, 
within the meaning of Paragraph 16.4.  The Un ited States stresses that the USITC assessed both 
absolute and relative import increases on a year-on-year  basis, the rates of increase in each year, and 
                                                      
178United States' appellee's submission, para. 62 (referring to China's appellant's submission, 
paras. 113, 117, and 118). 
179United States' appellee's submission, para. 69.  
180United States' appellee's submission, para. 65.  
181United States' appellee's submission, para. 72 (referring to USITC Report, p. 12). 
182United States' appellee's submission, para. 72 (referring to USITC Report, p. 12). 
183United States' appellee's submission, para. 71 (quoting Panel Report, para. 7.92).  
184United States' appellee's submission, para. 73 (quoting USITC Report, p. 12).   WT/DS399/AB/R 
 Page 27 
 
 
emphasized the rapid increases that occurred in the last two years of the period of investigation.185  
The USITC further addressed—and rejected—China's contention that import increases had "abated" 
in 2008, on the basis of the "large, rapid, and continuing" import increases in 2007 and 2008.186  
Contrary to China's assertion, the import data di d not contain any "complexities" that warranted a 
more detailed analysis by the USITC or the Panel,  because "all of the possible metrics" indicated a 
"clear and uninterrupted upward trend in im port volumes" during the period of investigation.187  
69. Finally, the United States rejects China's argument that the object and purpose of the Protocol 
supports a more rigorous interpretation of the "increasing rapidly" threshold set forth in 
Paragraph 16.4.  For the United States, unlike the Agreement on Safeguards  and Article XIX of the 
GATT 1994, the Protocol does not contain language  suggesting that the transitional safeguard 
mechanism was intended as an "emergency action", or that import increases must be the result of 
"unforeseen developments".188  These distinctions, in the United St ates' view, do not suggest that the 
Protocol provides for an "extraordinary remedy" such as the one provided for under the Agreement on 
Safeguards .189  In addition, the fact that the Protocol provides for a lower "material injury" standard 
than the "serious inju ry" standard of the Agreement on Safeguards undermines China's argument that 
the Protocol embodies a more rigorous threshold for import increases than the Agreement on 
Safeguards .   
2. Causation 
70. The United States argues that the Panel did not err in finding that the USITC properly 
established that rapidly increasing imports from China we re "a significant cause" of material injury to 
the domestic industry within the meaning of Paragra ph 16.4 of the Protocol.  More specifically, the 
United States argues that the Panel did not err in its  interpretation of the term "a significant cause" in 
Paragraph 16.4;  did not err in finding that th e USITC properly assessed the conditions of competition 
in the US market;  did not err in finding that th e USITC was entitled to rely on the overall correlation 
between import increases and injury factors in conc luding that imports from China were "a significant 
cause" of material injury;  and did not err in finding that the USITC properly ensured that injury 
caused by other factors was not attributed to the injury caused by imports from China.  The 
United States further submits that the Panel acted c onsistently with Article 11 of the DSU in reaching 
these findings.  The United States requests the Appellate  Body to reject the entirety of China's appeal 
                                                      
185United States' appellee's submission, para. 75.  
186United States' appellee's submission, para. 76 (quoting USITC Report, p. 12).  
187United States' appellee's submission, para. 77 (quoting Panel Report, para. 7.103). 
188United States' appellee's submission, para. 53. 
189United States' appellee's submission, para. 53 (referring to Appellate Body Report, Argentina – 
Footwear (EC) , paras. 93-95;  and Appellate Body Report, US – Line Pipe , para. 81). WT/DS399/AB/R 
Page 28  
 
and to uphold the Panel's finding that the USITC did not fail to establish that imports from China were 
"a significant cause" of material injury to the dom estic industry under Paragraph 16.4 of the Protocol. 
(a) Interpretation 
71. The United States argues that the Panel did not err in its interpretation of the term 
"a significant cause" in Paragraph 16.4 of the Protocol .  The United States contends that nothing in the 
text of the Protocol indicates that its causation standard was intended to be more rigorous or 
demanding than the causation standards contained in other WTO agreements, as suggested by China.  
The United States notes that neither Paragraph 16.1  nor Paragraph 16.4 of the Protocol contains 
language specifying that a Member must be able to  establish that imports from China are the "sole", 
"primary", or "most important" cause of injury to the domestic industry.
190  This, in the United States' 
view, supports the Panel's conclusion that the tr ansitional mechanism provided under Section 16 of 
the Protocol is available when imports from Chin a are "one, but not the only, significant cause of 
material injury".191 
72. The United States rejects China's argument that Paragraph 16.4 sets forth a more rigorous 
causation standard than other WTO agreements be cause, in Paragraph 16.4, the word "cause" is 
modified by the word "significant".  According to the United States, China's argument is predicated 
on other WTO agreements, such as the Agreement on Safeguards , which requires no more than 
imports being "a cause" of injury.  However, the Appellate Body has made clear that the Agreement 
on Safeguards  requires investigating authorities to establish a "genuine and substa ntial relationship of 
cause and effect" between subject imports and the requis ite level of injury.  Th is, in the United States' 
view, suggests that the Agreement on Safeguards requires, at a minimum, a "significant" causal link 
between imports and the requisite level of injury.192  The United States adds that the ordinary meaning 
of the word "significant" ("important, notable, [ ] co nsequential") does not support China's view that a 
"particularly strong" causal link is required under the Protocol.193  The United States emphasizes 
further that previous WTO panels have interpreted the word "significant" to mean simply more than 
"nominal or marginal" or "unimportant".194  Moreover, the United States di sagrees with China that the 
object and purpose of the Protocol implies a more demanding causation standard than other 
WTO agreements, because the Protocol does not refe r to measures as "emergency actions", does not 
                                                      
190United States' appellee's submission, para. 90. 
191United States' appellee's submission, para. 90 (referring to Panel Report, paras. 7.139-7.147).  
192United States' appellee's submission, para. 104. 
193United States' appellee's submission, para. 105. 
194United States' appellee's submission, paras. 106 and 107 (referring to Panel Report,  EC – 
Countervailing Measures on DRAM Chips , para. 7.307;  and Panel Report, Korea – Commercial Vessels , 
paras. 7.567-7.571).  WT/DS399/AB/R 
 Page 29 
 
 
contain an "unforeseen developments" requirement, and provides for a lower threshold of injury than 
the Agreement on Safeguards .195 
73. The United States underscores further that the Protocol does not require an investigating 
authority to apply any particular methodology in  assessing whether subject imports have been a 
significant cause of material injury or threat of ma terial injury to the domestic industry.  Moreover, 
unlike the Agreement on Safeguards , the Anti-Dumping Agreement , and the SCM Agreement , 
Section 16 of the Protocol does not direct an inves tigating authority to consider the effects of other 
factors that also may be causing injury to the domestic  industry, or direct the authority to ensure that it 
does not attribute the effects of these other factors to subject imports.  Therefore, an investigating 
authority has the discretion to develop and use "an appropriate methodology that allows it to address 
these factors in a reasoned manner"196, as long as it provides the "reasons" and "an explanation for the 
basis" for its determination that subject imports are a significant cause of material injury to the 
domestic industry.197  
74. Accordingly, in the United States' view, the Pane l correctly rejected China's argument that the 
Protocol required a more rigorous analysis of th e conditions of competition and correlation than other 
WTO agreements.  The United States stresses that the Protocol neither requires an investigating 
authority to apply "a greater degree of care" when performing its analysis of the conditions of competition and correlation, nor requires a WTO panel to apply "a higher degree of scrutiny" in its 
review of that analysis.
198  More specifically, the Panel correctly  rejected China's argument that it was 
required to establish a correspondence between th e magnitude of changes in imports and the 
magnitude of changes in injury factors.  According to the United States, the Panel correctly held that a 
"coincidence of trends" analysis was "appropriate ly founded on a temporal relationship between 
movements in imports and movements in the injury  factors", and that no Appellate Body or panel 
finding suggests that "the orders of magnitude [in the changes] are key" to a correlation analysis.199  In 
addition, the United States agrees with the Panel th at it would be "unrealistic" to expect a "precise 
correlation between the degree of change in imports and the degree of change in the injury factors", 
particularly where "there may be other causes of injury at work".200 
75. With respect to the need to cons ider other causes and ensure that  their injurious effects are not 
attributed to rapidly increasing imports, the Unite d States argues that China "relies heavily" on the 
                                                      
195United States' appellee's submission, paras. 109-111.  
196United States' appellee's submission, para. 89 (referring to Appellate Body Report, EC – Tube or 
Pipe Fittings , para. 189;  and Appellate Body Report, US – Hot-Rolled Steel , para. 224).  
197United States' appellee's submission, para. 92 (referring to Panel Report, para. 7.18).   
198United States' appellee's submission, para. 120.  
199United States' appellee's submission, para. 122 (referring to Panel Report, paras. 7.230-7.232).  
200United States' appellee's submission, para. 123 (quoting Panel Report, para. 7.229).  WT/DS399/AB/R 
Page 30  
 
Appellate Body's findings in pr evious disputes arising under the Agreement on Safeguards  and the 
Anti-Dumping Agreement , such as US – Lamb  and US – Hot-Rolled Steel .
201  The United States points 
out, however, that the Appellate Body gr ounded those findings on "express language" in 
Article 4.2(b) of the Agreement on Safeguards  and Article 3.5 of the Anti-Dumping Agreement  "that 
specifically requires an authority not to attribute to imports the injury caused by other factors".202  
According to the United States, given the lack of a similar requirement in the Protocol, "there is no 
basis for China's assertion … that the USITC wa s required to perform the same 'separate and 
distinguish' analysis required by the Appellate Body" under the Agreement on Safeguards  and the 
Anti-Dumping Agreement .203 
76. However, the United States agrees with the Pa nel that "the USITC was required to perform 
some analysis of the effects of other factor s that have caused injury to the industry."204  Referring to 
the report of the Appellate Body in US – Upland Cotton , the United States notes, however, that, 
"when an agreement does not contain specific non-attr ibution language, an authority has the discretion 
to adopt an appropriate and reasonable analys is to assess the effects of other factors."205  T h e  
United States submits that a competent authority' s need to address the effects of other possibly 
injurious factors will depend on the facts and circumst ances of the particular ca se.  In some cases, "a 
factor might arguably be so significant a cause of inju ry to the industry that  the competent authority 
will need to perform a detailed and reasoned e xplanation of the effects of that factor."206  In other 
cases, "the factor may be contributing to inju ry in a considerably less significant fashion."207  For the 
United States, in "those circumstances, the competen t authority could reasonably reference the factor 
and indicate in a reasonable fashion why the factor does not explain the injury  caused to the pertinent 
industry."208 
(b) Conditions of Competition in the US Tyres Market 
77. The United States argues that the Panel did not err in finding that the USITC properly 
assessed the conditions of competition in the US mark et.  According to the United States, the Panel 
correctly rejected China's contention that co mpetition in the overall US market was "highly 
                                                      
201United States' appellee's submission, para. 128. 
202United States' appellee's submission, para. 128 (referring to Appellate Body Report, US – Lamb , 
paras. 162-181;  and Appellate Body Report, US – Hot-Rolled Steel , paras. 216-236). 
203United States' appellee's submission, para. 128. 
204United States' appellee's submission, para. 132 (referring to Panel Report, paras. 7.176 and 7.177). 
205United States' appellee's submission, para. 132 (referring to Appellate Body Report, US – Upland 
Cotton , para. 436). 
206United States' appellee's submission, para. 133. 
207United States' appellee's submission, para. 133. 
208United States' appellee's submission, para. 133.  WT/DS399/AB/R 
 Page 31 
 
 
attenuated" because of the "extremely limited co mpetition" between Chinese and domestic tyres in 
tier 1 of the US replacement market and in the OEM market.209  
78. More specifically, the United States posits that the Panel correctly concluded that there was 
"significant competition" in the replacement market, given the "significant qua ntities" of both US and 
Chinese tyres that were shipped into tie rs 2 and 3 of that market in 2008.210  Although market 
participants generally agreed that the US repla cement market could be divided into three broad 
segments or tiers, the record evid ence suggested there were no "clear dividing lines" among the tiers 
because there was no consensus among producers, importers, and purchasers on which tyre brands 
belonged in the different tiers.211  Therefore, there was no reason for the USITC, or for the Panel upon 
reviewing this evidence, to find that the products so ld in the various tiers were so distinct from one 
another that they were "unlikely to compete in a m eaningful way across the tiers that characterized the 
replacement market".212  The United States adds that the Panel did not rely on the "mere presence" of 
Chinese imports in the US replacement market, as suggested by China, because both the USITC and 
the Panel determined that the "significant presence" of Chinese tyres in tiers 2 and 3 suggested that 
there was "significant competition" in the replacement market.213 
79. The United States maintains further that it was reasonable for the USITC to rely on China's 
growing presence in the US OEM market in support  of its finding that co mpetition in the overall 
US market was significant.  The United States em phasizes that Chinese imports increased their share 
of the OEM market consistently over the period of investigation, growing from a "minimal 0.8 
percent of the market in 2004 to a no longer minimal level of 5.0 percent in 2008", while the domestic 
industry consistently lost market share over that period.214  Because these trends were consistent with 
the trends in the overall US market, the USITC was entitled to rely on import trends in the OEM 
market as support for its analysis of the conditions of competition in the US market.215  In addition, 
the Panel correctly rejected China's argument th at competition in the OEM market was "negligible" 
on the basis of evidence suggesting that Chin ese imports grew from 121,000 tyres in 2004 to 
2.3 million tyres in 2008 in that market.216   
                                                      
209United States' appellee's submission, para. 149.  
210United States' appellee's submission, para. 150 (quoting Panel Report, para. 7.195). 
211United States' appellee's submission, para. 151 (referring to USITC Report, pp. 15 and 27). 
212United States' appellee's submission, para. 151. 
213United States' appellee's submission, para. 153 (quoting Panel Report, para. 7.195;  and USITC 
Report, p. 27).  
214United States' appellee's submission, para. 154 (referring to USITC Report, Table V-2 at p. V-3).  
215United States' appellee's submission, para. 154 (referring to USITC Report, p. 27).   
216United States' appellee's submission, para. 155 (referring to Panel Report, para. 7.203).   WT/DS399/AB/R 
Page 32  
 
80. Finally, the United States rejects China's argu ment that the Panel was only able to uphold the 
USITC's analysis by creating its "own, new analysis" of the data.
217  Instead, the United States 
maintains that the Panel performed a "detailed a nd thorough" review of the USITC's findings, and 
correctly concluded that the USITC reasonably dete rmined that there was "significant competition" 
between Chinese and domestic tyres in tiers 2 and 3 of  the US replacement market;  that there was no 
"clear dividing line" between the tiers of the repl acement market, with the result that Chinese imports 
in one tier could impact volumes and prices of domestic tyres in another tier;  and that Chinese tyres 
were taking a "growing, though smaller" share of the OEM market.218 
(c) Correlation between Rapidly Increasing Imports and Material Injury 
81. The United States argues that the Panel did not err in finding that the USITC properly 
established a coincidence between increases in Ch inese imports and declines in the performance 
indicators of the US domestic industry.  For the Un ited States, the Panel properly concluded that the 
USITC's analysis of correlation was both reasoned and adequate, and fully consistent with the record 
data.  The United States rejects China's arguments that Paragraph 16.4 of the Protocol required the 
Panel to apply "a heightened standard of revi ew" in its examination of the USITC's correlation 
analysis, and to determine whether there was a strong correlation in the "degrees of relative 
magnitude" of the changes in imports and industry trends.219  The United States recalls that both the 
Appellate Body and panels have made clear that an  analysis of "coincidence of trends" requires only 
an assessment of the temporal relationship betw een upward movements in imports and downward 
movements in the injury factors.220   
82. The United States maintains that both the Panel and the USITC properly found that there was 
a clear overall "coincidence" in trends between rapidly increasing imports and their effects on the 
domestic industry.221  The United States emphasizes that in jury indicators such as market share, 
production, capacity, shipments, net sales, number of production-related workers, hours worked, and 
wages declined in every year of the period of investigation.222  According to the United States, 
improvements in the profitability, productivity, and capacity utilization of the domestic industry 
                                                      
217United States' appellee's submission, para. 156 (quoting China's appellant's submission, para. 321).  
218United States' appellee's submission, para. 156 (referring to Panel Report, paras. 7.185-7.195 
and 7.201-7.205;  and USITC Report, pp. 21 and 27).  
219United States' appellee's submission, para. 159 (referring to China's appellant's submission, paras. 30 
and 297). 
220United States' appellee's submission, para. 160 (referring to Panel Report, paras. 7.230-7.233, in turn 
quoting Panel Report,  Argentina – Footwear (EC) , para. 8.229;  Appellate Body Report, Argentina – Footwear 
(EC) , para. 145;  and Panel Reports, US – Steel Safeguards , paras. 10.299 and 10.302). 
221United States' appellee's submission, para. 161 (referring to USITC Report, p. 29). 
222United States' appellee's submission, para. 161 (referring to USITC Report, pp. 15-18, 23-26, and 
Table C-1).   WT/DS399/AB/R 
 Page 33 
 
 
in 2007 do not undermine the Panel's overall coincide nce finding because other injury factors such as 
market share, capacity and production level, shipme nts, sales quantities, production-related workers, 
hours worked, and wages continued to fall in that same year.223  With respect to China's arguments 
regarding an absence of correlation in 2008, the United States observes that, despite an almost 
7% decline in apparent consumption, subject im ports increased by more than 10% over 2007 levels, 
while "virtually every injury factor" examined by the USITC fell to its lowest level for the period.224  
The United States dismisses China's argument that the Panel erroneously affirmed the USITC's 
"simplistic end-point-to-en d-point analysis", because the Panel an d the USITC reviewed year-to-year 
trends in imports and industry indicators during the period.225  The United States adds that the Panel 
and the USITC did not rely exclusively on volume- based indicators, which, according to China, 
declined as a result of the domestic industry's busin ess strategy.  Rather, the Panel and the USITC also 
considered other factors such as the impact of impor ts on the domestic industry's pricing, productivity, 
and profitability levels during the period of investigation.226 
83. The United States further submits that the Panel did not err in upholding the USITC's finding 
that subject imports adversely impacted the domes tic industry's prices and profitability.  In the 
United States' view, the Panel sufficiently addr essed and rejected China's argument that an 
improvement in the COGS/sales ratio in 2007 suggest ed an absence of correlation, and correctly held 
that improvements in the profitability of the US do mestic industry in 2007 did not suggest an absence 
of correlation, because the domestic industry's operating margins declined in three out of four years of 
the period of investigation.227  In addition, the Panel correctly found that the USITC's finding of 
overall coincidence was not invalidated merely be cause "annual movements in every single injury 
factor did not precisely track annual movements in subject imports."228  Moreover, the United States 
explains that the USITC reasonably found that "lev els of pervasive underselling" by subject imports 
suppressed prices in the US market, thereby i ndicating that there was "significant pricing 
competition" in the replacement market.229  The United States also stresses that subject imports 
consistently undersold no n-subject imports over the period of investigation. 
                                                      
223United States' appellee's submission, para. 162 (referring to USITC Report, Table C-1) and 
para. 163.   
224United States' appellee's submission, para. 164 (referring to USITC Report, Table C-1). 
225United States' appellee's submission, para. 166 (quoting China's appellant's submission, para. 363;  
and referring to Panel Report, para. 7.234).  
226United States' appellee's submission, para. 167 (referring to Panel Report, paras. 7.235 
and 7.239-7.261;  and USITC Report, pp. 23-24). 
227United States' appellee's submission, para. 173 (referring to Panel Report, para. 258).  
228United States' appellee's submission, para. 170 (quoting Panel Report, para. 7.244).  
229United States' appellee's submission, para. 175.  WT/DS399/AB/R 
Page 34  
 
(d) Other Causes of Injury 
84. The United States considers that, in its determin ation, the USITC properly addressed all of the 
factors that could reasonably be considered si gnificant enough to break the causal link between 
subject imports and material injury.  Moreover,  in the United States' view, the Panel properly 
examined China's arguments concerni ng the causal effects of other factors to determine whether these 
arguments seriously undermined the USITC's conc lusion that rapidly increasing imports were a 
significant cause of material injury to the US tyres industry.  
 
85. With respect to the Panel's "general observati ons", the United States notes that they were not 
a necessary component of the Panel's conclusion that the USITC reasonably found that Chinese 
imports played an important role in the US plan t closures that occurred in 2006.  Yet, they do 
"highlight the inherent weaknesses" of China's arguments regarding the US industry's voluntary withdrawal from low-value production.
230  The United States considers, for example, that the Panel 
reasonably questioned why Chinese imports would con tinue to be sold at prices significantly below 
those of domestically produced tyres if they were "simply filling a void left by the industry", as China had suggested.
231  The United States further argues that the record before the USITC showed that the 
domestic industry was not turning to Chinese imports because it had made a "voluntary decision to shift some production to China".
232  Instead, it was turning to these imports because it concluded that 
it could no longer compete with low-cost imports  from China.  The United States concludes, 
therefore, that the fact that the domestic industr y was required to turn increasingly to Chinese imports 
reflects the injurious effects of the rapidly growing Chinese imports. 
(i) The US domestic industry's business strategy – Plant 
closures 
86. The United States argues that the USITC had an "ample factual foundation" for its conclusion 
that Chinese imports played an "important part" in  the decisions taken by several US producers to 
close their domestic production facilities.233  For example, as the USITC explained, "imports of tires 
from China had been increasing rapidly before Bri dgestone, Continental, and Goodyear announced 
the closing of plants in 2006 and 2008."234  Moreover, the record indicated that "fierce competition" 
from "low-cost … Chinese-made tyres" caused Br idgestone to close down its facility in 2006235, while 
                                                      
230United States' appellee's submission, para. 194.  
231United States' appellee's submission, para. 195. 
232United States' appellee's submission, para. 199.  
233United States' appellee's submission, para. 183 (quoting USITC Report, p. 26). 
234United States' appellee's submission, para. 183 (referring to USITC Report, p. 26 and Table C-1).  
235United States' appellee's submission, para. 186.   WT/DS399/AB/R 
 Page 35 
 
 
Goodyear closed down its facility in 2006 due to "significant competition from Chinese imports".236  
In support of its argument, the United States contends  that, by 2006, Chinese imports were the largest 
of two "low-price" sources for tyre imports in the US market.237  Furthermore, between 2004 and 
2006, Chinese imports gained approximately 4.6 pe rcentage points of market share, whereas non-
subject imports gained 2.6 percentage points.238  This, according to the United States, "suggests that 
Chinese imports were having a more significant impa ct" on the US industry's market share than non-
subject imports.239  In addition, these facts supported the US ITC's conclusion that "low-cost imports" 
included Chinese imports.  The United States further submits that the issue for the Panel was not 
whether Chinese imports were the "'sole' or 'primary ' reason" for the material injury but, rather, 
whether they were "a signifi cant cause" of such injury.240   
87. The United States further argues that, even if factors other than subject imports had some 
impact on the plant closure decisions in 2006, this does not undermine in any significant way a 
conclusion that Chinese imports played an "important part" in these decisions.241  Although the 
United States disagrees with the Panel's finding that  the closure of Continental's plant in Charlotte, 
North Carolina, was not a result of competition fro m Chinese imports, the United States recalls the 
Panel's finding that the record s howed that Chinese imports "played a significant role in the facility 
closures announced by Bridgestone and Goodyear in 2006".242  These two closures represented a 
reduction in the industry's capacity of approximately 30.1 million tyres in 2006, which, according to the United States, provided sufficient justification for the USITC's finding that the US industry's 
overall capacity were "significantly affected" by Chinese imports.
243 
(ii) Declines in demand 
88. The United States disagrees with China's asserti on that the USITC and the Panel both "failed 
to evaluate seriously" demand declines in the US ma rket as a possible alternative cause of injury to 
the domestic industry.244  The United States considers that the USITC properly found that subject 
imports had injurious effects independent of any inju ry caused by changes in demand.  In its analysis, 
the USITC addressed the factors that affected dema nd in the market and how demand, as measured by 
                                                      
236United States' appellee's submission, para. 187.  
237United States' appellee's submission, para. 189.  
238United States' appellee's submission, para. 190.  
239United States' appellee's submission, para. 190.  
240United States' appellee's submission, para. 191.  
241United States' appellee's submission, para. 192 (referring to USITC Report, p. 26).  
242United States' appellee's submission, para. 193 (referring to Panel Report, paras. 7.298-7.310). 
243United States' appellee's submission, para. 193. 
244United States' appellee's submission, para. 200 (referring to China's appellant's submission, 
paras. 436-469). WT/DS399/AB/R 
Page 36  
 
apparent US consumption, change d over the period of investigation.
245  The USITC also found that 
demand "fluctuated" from 2004 to 2007, but then fell considerably in 2008 in response to the 
recession.  Moreover, after examining the impact of the 2008 recession on the increasing volumes of 
subject imports, and on the volume trends for US  production and for non-subject imports, the USITC 
determined that the 2008 recession "did not indicat e that the subject imports were not a significant 
cause of material injury to the industry".246 
89. The United States rejects China's notion of a "c onsistent demand decline" in the US tyres 
market over the period of investigation, noting that  the record rather indicated "fluctuat[ions]" in 
demand, with the "bulk" of the overall decline in consumption occurring during the recession in 2008.
247  The United States contends that the demand changes during the period of investigation did 
not explain "to any significant degree" the declin es in the industry's cond ition, as the industry's 
performance worsened consistently while Chinese im ports increased consistently, irrespective of the 
trends in demand.248  The United States further submits that  it was reasonable for the USITC to find 
that the increasing volumes of Chinese imports were  necessarily having a considerable effect on the 
industry's production, market share, sales, and othe r condition metrics in 2008 that went well beyond 
the effects that could be attributed to any de mand decline caused by the recession in that year.249 
90. The United States disagrees with China that the Panel substituted its analysis for that of the 
USITC, arguing that the Panel simply cited to the USITC's findings and the underlying record evidence in its discussion.  The Un ited States also rejects China's argument that demand was "shifting 
to all imports in general, not just imports from China".
250  Rather, the United States contends, demand 
was "shifting clearly and indisputably to China".251   
(iii) Non-subject imports 
91. The United States views China's arguments regarding the competitive significance of 
non-subject imports as "unfounded" , and contends that China did not identify before the Panel 
non-subject imports as a possible "other" factor causing injury to the domestic industry that the 
                                                      
245United States' appellee's submission, para. 201 (referring to USITC Report, p. 15). 
246United States' appellee's submission, para. 202 (referring to USITC Report, p. 29).  
247United States' appellee's submission, para. 203 (quoting Panel Report, para. 7.339;  and USITC 
Report, p. 15). 
248United States' appellee's submission, para. 204.  
249United States' appellee's submission, para. 207 (referring to USITC Report, p. 26). 
250United States' appellee's submission, para. 210 (quoting China's appellant's submission, para. 441). 
251United States' appellee's submission, para. 210.   WT/DS399/AB/R 
 Page 37 
 
 
USITC should have addressed in its analysis.252  The United States thus considers it "inappropriate" 
for China to raise this issue on appeal.253   
92. The United States further argues that the US ITC specifically addressed the issue of the 
presence of non-subject imports in the market and re asonably found that they did not sever the causal 
link between Chinese imports and material injury.  Thus, for example, in its discussion of conditions 
of competition in the US market, the USITC pointed out that the "quantity of U.S. imports from China 
rose each year during the period examined and was 215.5 percent higher in 2008 than in 2004."254  
The USITC explained that these trends stood "in cont rast" to trends for non-subject imports, whose 
quantity level "declined in each year since 2005 (after increasing initially in 2005), and was 
5.4 percent lower in 2008 than 2004".255  In these circumstances, the United States submits, it was not 
particularly surprising that the USITC and the Panel both concluded that the non-subject imports were 
not a significant cause of injury to the domestic i ndustry that could "sever the link" between Chinese 
imports and material injury.256 
93. The United States disagrees with China's asse rtion that, in its analysis, the Panel 
impermissibly substituted its own reasoning for that of  the USITC.  According to the United States, 
the Panel instead specifically relied on the USIT C's findings and report, emphasizing the USITC's 
findings on the market shares and pricing levels of  the Chinese, US, and non-subject tyres on this 
issue and "actively engaged with the evidence before  it in light of the arguments of the parties".257 
94. The United States rejects China's argument that  non-subject imports had a more significant 
impact on the domestic industry's prices than subject imports in tier 1 of the US replacement market.  
The United States submits that, because of the st rong degree of substitutability between the Chinese, 
US and non-subject tyres, the sale of significantly lower-priced tyres by one source in that part of the tyres market can have a significant adverse effect  on prices of other competitors in that market 
segment, "since purchasers can use the lower price of  the Chinese tire[s] to negotiate down prices of 
other tires in the market".
258  The United States further points ou t that China focuses exclusively on 
one segment of the overall market.  Yet, under the Protocol, the issue for the USITC was not whether 
Chinese imports in tier 1 of the US replacement ma rket had significant effects on domestic prices in 
that tier alone.  Instead, the issue before the USITC was whether all of the Chinese tyre imports in the 
                                                      
252United States' appellee's submission, para. 216. 
253United States' appellee's submission, para. 216. 
254United States' appellee's submission, para. 219 (quoting USITC Report, p. 22).  
255United States' appellee's submission, para. 219 (quoting USITC Report, p. 22).  
256United States' appellee's submission, para. 220 (refe rring to USITC Report, p. 29;  and Panel Report, 
paras. 7.364-7.367).  
257United States' appellee's submission, para. 222 (referring to Panel Report, paras. 7.364 and 7.365). 
258United States' appellee's submission, para. 223. WT/DS399/AB/R 
Page 38  
 
US market, including the significant volumes sold in  tiers 2 and 3 of the replacement market, were 
having significant effects on domestic pr ices for tyres in the entire US market.
259  Moreover, the 
United States points out that the USITC also conclu ded that the low prices of Chinese tyres in tier 2 
and tier 3 of the market were likely having effects not only on tyres in those tiers, but also on tyres 
sold in tier 1 of the market.260  The United States adds that, even  within the OEM market, the record 
showed that Chinese imports increased their market sh are, just as they had in the overall US market, 
and took market share from the domestic industry, w hose market share declined in that segment.  The 
United States submits that, in these circumstances,  the USITC was not obliged to perform a more 
specific analysis of non-subject import competition in the OEM market than it did.261 
(iv) Comparative analysis and cumulative assessment 
95. The United States submits that the Panel correc tly rejected China's assertion that the USITC 
was required to perform a "cumulative" analysis of the effects of declines in demand, non-subject 
imports, and the domestic industry's alleged "busin ess strategy" before it could find that Chinese 
imports were a significant cause of material injury.262  Referring to the Appellate Body report in EC – 
Tube or Pipe Fittings , the United States asserts that a complain ant is required to identify the "specific 
factual circumstances" that warrant the use of a cumulative analysis in any particular case.263  In the 
present case, however, China failed to demonstrate that  a collective consideration of other factors was 
required.  Instead, China's arguments before the Pane l consisted of "a brief statement setting forth its 
position on the issue, and two broad assertions about the need for such an analysis".264  The United 
States adds that China did not attempt to provide th e Panel with the more detailed factual discussions 
that are included in China's appellant's submission.265  In these circumstances, the Panel reasonably 
rejected China's assertion that both the USITC and the Panel should have assessed whether the 
cumulative effects of other factors were signifi cant enough to break the causal link between Chinese 
imports and the injury being su ffered by the domestic industry. 
96. The United States adds that, as the USITC and the Panel both concluded, the record of the 
USITC's investigation showed that the industry's a lleged "business strategy" was not a cause of injury 
                                                      
259United States' appellee's submission, para. 224 (referring to USITC Report, pp. 23-24;  and Panel 
Report, para. 7.195). 
260United States' appellee's submission, para. 225 (referring to USITC Report, p. 27).  
261United States' appellee's submission, para. 226 (referring to USITC Report, p. 26, Table II-2, and 
Figure II-1). 
262United States' appellee's submission, paras. 227 and 228. 
263United States' appellee's submission, paras. 228 and 229 (referring to Appellate Body Report, EC – 
Tube or Pipe Fittings , paras. 191 and 192).  
264United States' appellee's submission, para. 229 (ref erring to China's first written submission to the 
Panel, paras. 235-238;  and China's second writte n submission to the Panel, paras. 345-347).  
265United States' appellee's submission, para. 229 (referring to China's appellant's submission, 
paras. 495-500).   WT/DS399/AB/R 
 Page 39 
 
 
to the domestic industry because the industry's de cision to shift supply from the United States to 
China was taken in response to price competition from Chinese imports.266  Similarly, as the USITC 
and the Panel also concluded, the record did not indicate that non-subject imports were a significant 
cause of the decline in the industry's condition over th e period of investigation.  In the light of these 
facts, the United States submits that "there was simply nothing for the USITC and the Panel to collectively assess."
267   
97. Finally, the United States rejects China's cont ention that the USITC should have performed a 
"comparative analysis" of the effects of the Chin ese imports and the injurious effects of the other 
factors allegedly causing injury to the industry.268  The United States po ints out that China 
acknowledges that "the Protocol does not itself require  that an authority compare or 'weigh' the causal 
effects of various injury factors against one another."269  In addition, China app ears to concede that the 
Protocol does not require an authority to establish that Chinese imports are the "sole", "primary", or 
"most important" cause of injury to the domestic industry.270  The issue in this case, therefore, was not 
whether Chinese imports were a more important or mo re significant cause of injury than any other 
alleged causes.  Rather, the issue was whether th e Chinese imports were a significant, that is, an 
important, cause of material injury to the US domestic industry.271 
(e) Integrated Analysis 
98. With respect to China's argument that the USITC acted improperly by not performing an 
"integrated" analysis of the relationship between imports that are increasing rapidly and the condition 
of the domestic industry, the United States submit s that the USITC's causation analysis explained 
exactly that the rapid increases in Chinese imports we re a significant cause of material injury to the 
US domestic industry.272  The United States further argues that, as the Panel clarified, "the USITC's 
entire analysis was designed to establish the clear link between these imports and injury."273 
                                                      
266United States' appellee's submission, para. 230 (referring to USITC Report, pp. 26-27). 
267United States' appellee's submission, para. 230.  
268United States' appellee's submission, para. 231 (referring to China's appellant's submission, 
paras. 480-482). 
269United States' appellee's submission, para. 231 (referring to China's appellant's submission, 
para. 480). 
270United States' appellee's submission, para. 231.  
271United States' appellee's submission, para. 231.  
272United States' appellee's submission, footnote 730 to para. 231 (referring to China's appellant's 
submission, paras. 502-531;  and USITC Report, pp. 22-29).   
273United States' appellee's submission, footnote 730 to para. 231.   WT/DS399/AB/R 
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3. Article 11 of the DSU 
99. The United States disagrees with China's assertion that the Panel acted in consistently with its 
obligations under Article 11 of the DSU in its review  of the USITC's determination that imports from 
China were "a significant cause" of material injury  to the US domestic industry.  According to the 
United States, China's arguments regarding its clai m under Article 11 "are merely a repetition of its 
arguments in respect of the Panel's interpretation of the substantive requirements of the Protocol 
regarding causation".274 
100. First, the United States disagrees with China's ar gument that the Panel failed to consider the 
totality of the evidence on the question of causation.   The United States contends that the Panel did 
address the entirety of the evidence and arguments  before it and, in doing so, conducted a proper 
assessment as required by Article 11 of the DSU.275 
101. Second, the United States submits that the Panel did not, as China alleges, deliberately 
disregard evidence that did not support the conclu sion reached by the USITC.  The United States 
considers that a panel cannot realistically refer to all pieces of evidence and must be allowed a 
"substantial margin of discretion" in  how it assesses the evidence before it.276   
102. Third, the United States rejects China's argument that the Panel relied on post hoc  
clarifications provided by the United States or the an alysis developed by the Panel instead of by the 
USITC.  The United States maintains that China's arguments are a "mere recitation" of its arguments 
on causation, with cross-references  to the various sections of its submission addressing conditions of 
competition, demand changes, and non-subject imports.277  The United States emphasizes, however, 
that the Panel conducted an objective assessment of th e facts before it.  Specifically, with respect to 
the alleged use of post hoc  rationalization regarding non-subject imports, the United States reiterates 
that non-subject imports were dealt with by the US ITC and formed part of the record upon which the 
Panel based its analysis.  
                                                      
274United States' appellee's submission, para. 232.  
275The United States further submits that China's reference to the Appellate Body Report in US – 
Countervailing Duty Investigation on DRAMS  is inapposite.  The United States explains that, in that case, the 
Appellate Body found that "the pane l had examined whether certain pieces of circumstantial evidence were 
sufficient to establish certain conclusions that the invest igating authority had not sought to draw, at least based 
solely on those pieces of evidence."  The United States submits, however, that this "is not [the] case here". 
(United States' appellee's submission, footnote 742 to para. 237 (referring to China's appellant's submission, para. 567, in turn referring to Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , 
paras. 188-190)) 
276United States' appellee's submission, para. 239 (referring to Appellate Body Report, EC – Hormones , 
para. 138). 
277United States' appellee's submission, para. 240 (referring to China's appellant's submission, 
paras. 573-577).  WT/DS399/AB/R 
 Page 41 
 
 
103. Fourth, with respect to China's allegation that the Panel acted in consistently with Article 11 of 
the DSU by failing to consider certain arguments that  China made before the Panel, the United States 
submits that the Appellate Body need not address this allegation, as it is "merely subsidiary" to 
China's argument that the Panel failed to apply the correct substantive standard.278 
C. Arguments of the Third Participants 
1. European Union 
104. The European Union does not "take a position on the facts of this case", but rather focuses its 
comments on the interpretation of the terms "i ncreasing rapidly" and "significant cause" in 
Paragraph 16.4 of Chin a's Accession Protocol.279  The European Union also makes additional 
observations in relation to China's claims under Article 11 of the DSU. 
105. On a preliminary basis, the European Union expresses the view that China's appeal is 
"entirely dependent" on whether the Panel erred in its interpretation of the terms "increasing rapidly" 
and "a significant cause", because China does not ta ke issue with the manner in which the Panel 
applied its own interpretation of the law to the facts of this case.280  Thus, according to the 
European Union, the Appellate Body would not be required to examine whether the Panel erred in its 
application of the law to the facts of the case were it to uphold the Panel's interp retation of both terms.  
However, if the Appellate Body were to decide otherwise, it should only complete the analysis if 
factual findings by the Panel or undisputed facts in  the record provide a sufficient basis to do so.281   
106. In addition, the European Union considers that China's "distinct and stricter" interpretation of 
Paragraph 16.4 fails to take into  account the most important differences between that provision and 
the Agreement on Safeguards and Article XIX of the GATT 1994.282  The European Union notes that, 
unlike Article XIX of the GATT 1994, China's Acce ssion Protocol does not characterize measures as 
"emergency actions" that are the result of "unforeseen developments".283  This, in the European 
Union's view, indicates that Section 16 of the Protocol  is not "an 'extraordinary' remedy", as suggested 
by China.284  According to the European Union, this is  confirmed by the fact that Paragraph 16.4 
                                                      
278United States' appellee's submission, para. 241. 
279European Union's third participant's submission, para. 7. 
280European Union's third participant's submission, paras. 5 and 6.  
281European Union's third participant's submission, paras. 5 and 6 (referring to Appellate Body Report, 
US – Hot-Rolled Steel , para. 235;  Appellate Body Report, EC – Hormones , paras. 222ff;  Appellate Body 
Report, EC – Poultry , paras. 156ff;  Appellate Body Report,  Australia – Salmon , paras. 117 and 193ff;  
Appellate Body Report, US – Shrimp , paras. 123ff;  Appellate Body Report, Japan – Agricultural Products II , 
paras. 112ff;  and Appellate Body Report, EC – Asbestos , paras. 133ff). 
282European Union's third participant's submission, para. 8.  
283European Union's third participant's submission, para. 9. 
284European Union's third participant's submission, para. 9.  WT/DS399/AB/R 
Page 42  
 
provides for a lower "material injury" standard than  the "serious injury" standard that applies under 
the Agreement on Safeguards .
285  Thus, viewed in the proper context, the increase in imports required 
under the Protocol is "less recent, less sudden, less sharp and less significant"286 than that required 
under the Agreement on Safeguards  and Article XIX of the GATT 1994.  The European Union adds 
that the object and purpose of the Protocol does not support China's restrictive interpretation of it, 
because the Protocol constitutes a single "package" of rights and obligations that imposes obligations 
on China that are not imposed on other Members under the WTO agreements.287 
107. Turning to the interpretation of the term "inc reasing rapidly", the European Union disagrees 
with China that the use of the present continuous te nse in Paragraphs 16.1 and 16.4 implies a focus on 
the most recent period of investigation.  Accord ing to the European Uni on, the present continuous 
tense simply indicates that the period of investig ation must be "recent" and that investigating 
authorities must consider "trends" in imports.288  The European Union adds that Paragraphs 16.1 
and 16.4 must be interpreted ha rmoniously, and that the Appellate  Body has found that language 
similar to that contained in Paragraph 16.1 "does not require that imports need to be increasing at the 
time of the determination".289  Moreover, the European Union does not consider that the term 
"rapidly" implies an assessment of  the "speed or rate" of import increases, because Paragraphs 16.1 
and 16.4 clearly admit of rapid import increases in volum e terms.  For this reason, a decline in the rate 
of increase in imports at the end of the period of investigation does not necessarily preclude a finding that imports are "increasing rapidly".
290 
108. In addition, the European Union notes that Section 16 of the Protocol does not impose any 
specific methodology on how to determine whethe r rapidly increasing imports are "a significant 
cause" of material injury.  However, in the Eur opean Union's view, Paragraph 16.4 incorporates the 
requirement to conduct a non-attribution analysis, insofar as the impact of other known factors has to be assessed in order to determine whether rapidly increasing imports can amount to a "significant" 
cause.  According to the European Union, the u se of the word "significant" before "cause" in 
paragraph 16.4 does not imply a stricter causation st andard than the one reflected in Articles 2.1 
and 4.2(a) and (b) of the Agreement on Safeguards , which the Appellate Body has interpreted to 
require a "genuine and substan tial relationship of cause and effect" between import increases and 
                                                      
285European Union's third participant's submission, para. 10 (referring to Appellate Body Report, US – 
Lamb , para. 124;  and Appellate Body Report, US – Wheat Gluten , para. 149). 
286European Union third participant's submission, para. 12 (referring to Appellate Body Report, 
Argentina – Footwear (EC) , para. 131). 
287European Union's third participant's submission, para. 14.   
288European Union's third participant's submission, para. 25 (referring to Appellate Body Report, 
Argentina – Footwear (EC) , paras. 129 and 131).  
289European Union's third participant's submission, para. 26 (quoting Appellate Body Report, US – 
Steel Safeguards , para. 367 (original emphasis)).  
290European Union's third participant's submission, para. 29.   WT/DS399/AB/R 
 Page 43 
 
 
serious injury.291  Therefore, China's argument that the analysis of the conditions of competition and 
correlation should be stricter under the Protocol than under the Agreement on Safeguards is 
inapposite.  The European Union adds that referen ce to "a" significant cause implies that rapidly 
increasing imports must be " one cause but not the only or main" cause of material injury.292 
109. Finally, the European Union observes that, s hould the Appellate Body reverse the Panel's 
finding on the basis of a violation of Article 11 of the DSU, China has neither requested completion of 
the legal analysis, nor provided "a detailed description … as to how uncontested facts or factual 
findings made by the panel" would a llow the Appellate Body to do so.293  
2. Japan 
110. Japan's arguments focus on the Panel's interpreta tion of the terms "incre asing rapidly" and "a 
significant cause" in Paragraph 16.4 of China's Accession Protocol.   
111. Referring to the Appellate Body report in US – Anti-Dumping and Countervailing Duties 
(China) , Japan submits that the use of the present con tinuous tense "increasing" in Paragraph 16.4 and 
the past tense "increased" in Paragraph 16.1 should be given meaning.294  However, Japan considers 
that the use of the present continuous tense in Paragraph 16.4 does not necessarily mean that 
authorities have to rely on "the present data and may not rely on … data sometime in the past".295  
Japan does not take any specific position with respect to the appropriate time period to be used as the 
proxy for the present situation in this case, but ne vertheless observes that the Panel did in fact 
examine 2008 import increases in reaching its conclu sion that imports were "increasing rapidly".296 
112. In addition, Japan does not agr ee with China that the term "r apidly" requires a focus on the 
rates of increase in imports.297  Japan submits that the express language in Paragraph 16.4 that 
increases may be assessed "either absolutely or re latively" undermines China's arguments in this 
respect.298  In Japan's view, the term "either absolutely or relatively" in Paragraph 16.4 indicates that  
                                                      
291European Union's third participant's submission, para. 44 (quoting Appellate Body Report, US – 
Wheat Gluten , paras. 67 and 69;  and Appellate Body Report, US – Lamb , paras. 168 and 179).  
292European Union's third participant's submission, para. 46. (original emphasis) 
293European Union's third participant's submission, para. 49 (referring to Appellate Body Report, US – 
Countervailing Measures on DRAMs , para. 197;  and Appellate Body Report, Japan – DRAMs (Korea) , 
para. 142). 
294Japan's third participant's submission, paras. 3 and 4 (referring to Appellate Body Report, US – 
Anti-Dumping and Countervailing Duties (China) , para. 558). 
295Japan's third participant's submission, para. 5. 
296Japan's third participant's submission, para. 6 (referring to Panel Report, para. 7.93). 
297Japan's third participant's submission, para. 10. 
298Japan's third participant's submission, para. 11.  WT/DS399/AB/R 
Page 44  
 
the assessment could be based either on an abso lute increase of import volumes over a certain period 
of time, or on an increase of the subject imports relative to other sources, such as domestic production 
or imports from other countries.
299 
113. Japan maintains further that Ch ina's interpretation extends beyond the ordinary meaning of 
the term "a significant cause" and therefore "exaggerate[s]" the causation requirement of Paragraph 16.4.
300  In Japan's view, the article "a" indicates that imports from China may be one of 
various factors that cause material  injury to the domestic industry.301  Japan notes further that the 
panel in EC – Countervailing Measures on DRAM Chips  interpreted the word "significant" as "more 
than just a nominal or marginal movement".302  Japan considers that a determination of whether 
imports make "more than just a nominal or marginal " contribution to material injury can only be made 
where the investigating authority reviews the effects of other factors.303  However, because the 
Protocol does not set forth any particular methodol ogy for conducting this assessment, it is sufficient 
for the investigating authority to provide a reas oned and adequate explana tion for finding that the 
effects of Chinese imports on the domestic industr y are "more than just nominal or marginal".304 
114. The Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu, Turkey, and 
Viet Nam did not file third participants' submissions , but attended the oral hearing in this appeal.  
III. Issues Raised in This Appeal 
115. The following issues are ra ised in this appeal: 
(a) whether the Panel erred in finding that the USITC properly determined that subject 
imports were "increasing rapidly" within the meaning of Paragraph 16.4 of China's 
Accession Protocol;  and 
(b) whether the Panel erred in finding that the USITC properly established that rapidly 
increasing imports from China were "a significan t cause" of material injury to the US 
domestic industry within the meaning of Paragraph 16.4 of the Protocol, and in 
particular: 
                                                      
299Japan's third participant's submission, para. 11. 
300Japan's third participant's submission, para. 16.  
301Japan's third participant's submission, para. 16.  
302Japan's third participant's submission, para. 18 (quoting Panel Report, EC – Countervailing 
Measures on DRAM Chips , para. 7.307).  
303Japan's third participant's submission, para. 20. 
304Japan's third participant's submission, para. 21.   WT/DS399/AB/R 
 Page 45 
 
 
(i) whether the Panel erred in finding no error in the USITC's assessment of the 
conditions of competition in the US market; 
(ii) whether the Panel erred in finding that  the USITC was entitled to rely on an 
overall correlation between rapidly incr easing imports and declines in injury 
factors;  
(iii) whether the Panel erred in finding that China had failed to establish that the 
USITC's analysis improperly attributed  injury caused by other factors to 
subject imports;  and 
(iv) whether, in reaching these findings, the Panel acted inconsistently with its 
obligations under Artic le 11 of the DSU. 
IV. Introduction 
116. Before commencing our analysis of the issues of law and legal interpretations raised in this 
appeal, we briefly introduce the relevant provisions  of the Protocol on the Accession of the People's 
Republic of China to the WTO (the "Protocol" or "China's Accession Protocol").305 
A. China's Accession Protocol and Other WTO Agreements 
117. China's appeal focuses on the disciplines that apply under Section 16 of China's Accession 
Protocol for the application of a transitional pr oduct-specific safeguard mechanism and the Panel's 
assessment of whether the United States Interna tional Trade Commission (the "USITC") properly 
determined that imports of cer tain passenger vehicle and light truck tyres from China ("subject 
imports") were "increasing rapidly" as to be "a significant cause" of material injury within the 
meaning of Paragraph 16.4 of the Protocol. 
118. Paragraph 1.2 of China's Accession Protocol provi des that the Protocol "shall be an integral 
part"306 of the WTO Agreement .  As such, the customary rules of interpretation of public international 
law, as codified in Articles 31 and 32 of the Vienna Convention on the Law of Treaties (the " Vienna 
                                                      
305WT/L/432. 
306This language mirrors Article II:7 of the GATT 1994 and Article XX:3 of the General Agreement on 
Trade in Services  (the "GATS").  Specifically, Article II:7 of the GATT 1994 states that "[t]he Schedules 
annexed to this Agreement are hereby made an integral  part of Part I of this Agreement."  Similarly, 
Article XX:3 of the GATS provides that "Schedules  of specific commitments shall be annexed to this 
Agreement and shall form an  integral part thereof." WT/DS399/AB/R 
Page 46  
 
Convention ")
307, are, pursuant to Article 3.2 of the DSU, a pplicable in this dispute in clarifying the 
meaning of Paragraphs 16.1 and 16.4 of the Protocol.308 
119. Paragraphs 16.1 and 16.4 of China's Accession Protocol provide as follows: 
1. In cases where products of Chinese origin are being imported 
into the territory of any WT O Member in such increased 
quantities or under such conditions as to cause or threaten to 
cause market disruption to the domestic producers of like or 
directly competitive products, the WTO Member so affected may request consultations with China with a view to seeking a mutually satisfactory solution, including whether the affected WTO Member should pursue application of a measure under the 
Agreement on Safeguards.  Any such request shall be notified 
immediately to the Committee on Safeguards. 
4. Market disruption shall exist whenever imports of an article, like 
or directly competitive with an article produced by the domestic industry, are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of 
material injury to the domestic industry.  In determining if 
market disruption exists, the affected WTO Member shall consider objective factors, including the volume of imports, the effect of imports on prices for like or directly competitive articles, and the effect of such imports on the domestic industry 
producing like or directly competitive products. 
120. Section 16 of China's Accession Protocol sets out the conditions for the imposition of a 
product-specific safeguard measure on imports from China and provides that application of this 
transitional safeguard mechanism shall be terminated 12 years after the date of China's accession, that 
is, in December 2013.  The text of Section 16 of th e Protocol resembles to some extent the language 
found in provisions of other WTO agreements, such as the Agreement on Safeguards .  Yet, there are 
important textual and contextual differences between  Section 16 of the Protocol and the relevant 
provisions of other WTO agreements that will inform our interpretative analysis.  In the light of these 
differences, and as we explain further below, we vi ew Paragraphs 16.1 and 16. 4 of the Protocol as 
establishing a distinct standard for the imposition of safeguard measures as compared to the standards 
set out in other WTO agreements.
309 
121. An analysis of the particular obligations set out under Section 16 of China's Accession 
Protocol must begin with, and focus upon, the actual language used in the Protocol itself, including 
the phrases "increasing rapidly" and "a significant cause".  The provisions of other WTO agreements 
                                                      
307Done at Vienna, 23 May 1969, 1155 UNTS 331;  8 International Legal Materials 679. 
308See Appellate Body Report, US – Gasoline , p. 17, DSR 1996:I, 3, at 16;  and Appellate Body 
Report, Japan – Alcoholic Beverages II , p. 31, DSR 1996:I, 97, at 122-123. 
309See infra , paras. 131-140 and 176-185 of this Report.   WT/DS399/AB/R 
 Page 47 
 
 
provide context, within the meaning of Article 31(1) and (2) of the Vienna Convention , to the 
interpretation of Paragraphs 16. 1 and 16.4 of the Protocol.310  Such context is relevant to the extent 
that it sheds light on the interpretativ e issues to be resolved in this case.311   
B. Standard of Review 
122. Article 11 of the DSU states in relevant part that: 
... a panel should make an objective assessment of the matter before 
it, including an objective assessment of the facts of the case and the applicability of and conformity with  the relevant covered agreements, 
and make such other findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in the covered agreements. 
123. Article 11 of the DSU sets out the standard of review applicable in WTO panel proceedings.  
It is well established that, in examining an inves tigating authority's determination, a panel must 
neither conduct a de novo  review nor simply defer to the conclu sions of the investigating authority.  
Rather, a panel should examine whether the conclusi ons reached by the investigating authority are 
reasoned and adequate in the light of the eviden ce on the record and other plausible alternative 
explanations.
312  A panel's examination of an investigati ng authority's conclusions must be critical, 
and be based on the information contained in the reco rd and the explanations gi ven by the authority in 
its published report.313  As the Appellate Body has explaine d, what is "adequate" will depend on the 
facts and circumstances of the particular case and the claims made.314  I n  US – Lamb , the 
Appellate Body provided guidance on how pa nels should assess the conclusions of national 
investigating authorities under Article 4.2(a) of the Agreement on Safeguards : 
A panel must find, in particular, that an explanation is not reasoned, 
or is not adequate, if some alternative explanation  of the facts is 
plausible, and if the competent authorities' explanation does not seem adequate in the light of that altern ative explanation.  Thus, in making 
an "objective assessment" of a claim under Article 4.2(a), panels 
must be open to the possibility that the explanation given by the 
                                                      
310Appellate Body Reports, China – Auto Parts , para. 151.  
311Appellate Body Reports, China – Auto Parts , para. 151.   
312See Appellate Body Report, Argentina – Footwear (EC) , paras. 119-121;  Appellate Body Report, 
US – Cotton Yarn , paras. 74-78;  Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , 
paras. 183 and 186-188;  Appellate Body Report, US – Hot-Rolled Steel , para. 55;  Appellate Body Report, US – 
Lamb , paras. 101 and 105-108;  Appellate Body Report, US – Steel Safeguards , para. 299;  Appellate Body 
Report, US – Wheat Gluten , paras. 160 and 161;  Appellate Body Report, US – Softwood Lumber VI 
(Article 21.5 – Canada) , para. 93;  and Appellate Body Report, US – Anti-Dumping and Countervailing Duties 
(China) , para. 516. 
313See Appellate Body Report, US – Lamb , para. 106. 
314Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93. WT/DS399/AB/R 
Page 48  
 
competent authorities is not reasoned or adequate.
315 (original 
emphasis) 
124. In articulating the standard of review that it a pplied in this dispute, the Panel referred to, and 
quoted from, the above guidance of the Appellate Body, and made certain additional statements.  
Importantly, the Panel recalled that the standard of review to be applied by a panel in a given case is 
also a function of the substantive provisions of the specific covered agreement that is at issue in the 
dispute, and thus "must be understood in the ligh t of the obligations of the particular covered 
agreement at issue".316  The Panel noted that, under Paragra ph 16.4 of China's Accession Protocol, an 
investigating authority is required to "consider objective factors" in determining whether market 
disruption exists, and that, under Paragraph 16.5, the importing Member "shall provide written notice 
of the decision to apply a measure, including the reasons for such measure".317  The Panel further 
observed that "a panel's standard of review is nece ssarily distinct from the substantive and procedural 
obligations of the investigating authority."318  On this basis, the Panel considered that, in order to 
review whether the reasoning of the USITC was ad equate, the Panel was required to "assess whether 
the reasoning provided by the USITC in its determin ation seem[ed] adequate in light of plausible 
alternative explanations of the record evidence or data advanced  by China in this proceeding."319  The 
USITC made an affirmative determination that certain passenger vehicle and light truck tyres from China are being imported into the United States in  such increased quantities or under such conditions 
as to cause market disruption.
320  In the present case, the Panel was therefore required to assess 
whether the USITC provided a reasoned and adequate  explanation to suppor t this determination.321 
125. The participants do not contest the Panel's articulation  of the standard of review to be applied 
in assessing claims brought under Section 16 of the Pr otocol.  In its appeal, China contends, rather, 
                                                      
315Appellate Body Report, US – Lamb , para. 106. 
316Panel Report, para. 7.15 (referring to Appellate Body Report, US – Countervailing Duty 
Investigation on DRAMS , para. 184). 
317Panel Report, para. 7.18.  
318Panel Report, para. 7.18.  
319Panel Report, para. 7.18 (referring to, inter alia , Appellate Body Report, US – Lamb , para. 106). 
320USITC Report, p. 29. 
321USITC Report, p. 29.  As noted above in footnote 4 of this Report, the determination of the USITC, 
the views of the USITC commissioners, and the "USITC staff report" containing the information and data 
gathered by the USITC staff in the investigation are set forth in Certain Passenger Vehicle and Light Truck 
Tires from China , Investigation No. TA-421-7, USITC Publication 4085 (July 2009) (Panel Exhibit US-1) (the 
"USITC Report").  All six of the USITC commissioners fo und that subject imports from China were "increasing 
rapidly" and that the US tyres industry was "materially injured". (USITC Report, pp. 12, 18 and 45)  However, 
two of the six USITC commissioners found that market disruption did not exist, because subject imports from China were not a significant cause of material injury to the domestic industry. ( Ibid., p. 45)  These two 
commissioners submitted views dissenting from the decision of the majority of USITC commissioners.  The 
determination of the USITC, the views of the majority , and the separate views of  the dissenting commissioners 
were accompanied by the USITC staff report.  We address the relevance of the separate views of the dissenting 
USITC commissioners and the information and data contained in the USITC staff report in paragraphs 211 
and 326 of this Report, respectively.  WT/DS399/AB/R 
 Page 49 
 
 
that the Panel erred in its application  of the standard of review pre scribed by Article 11 of the DSU, 
and as clarified by the Appellate Body in previous disputes.322 
V. Increase in Imports 
126. Against this background, we turn to the issues ra ised by China in this appeal.  We begin our 
analysis with China's claim that the Panel erred in finding that the USITC properly determined that 
subject imports were "increasing rapidly" within th e meaning of Paragraph 16.4 of China's Accession 
Protocol.  Because China and the United States offe r conflicting views on the proper interpretation of 
the term "increasing rapidly" in Paragraph 16.4, we find it useful to address the meaning of this legal 
standard before turning to the speci fic issues raised by China on appeal. 
A. The Meaning of "Increasing Rapidly" 
127. China claims that the use of the present continuous tense "increasing" requires investigating 
authorities to focus on the most recent past, wher eas the ordinary meaning of the term "rapidly" 
implies a focus on the rates of increase in imports.323  According to China, Paragraph 16.4 provides 
specific meaning for the more general langua ge, "in such increased quantities", found in 
Paragraph 16.1 of the Prot ocol.  China contends that imports must be "increasing rapidly" and not 
merely be in an "'increased' state".324  China also contrasts the "i ncreasing rapidly" standard of 
Paragraph 16.4 with the standards contained in othe r WTO agreements, all of which use the past tense 
to provide for an assessment of previous—r ather than current—increases in imports.325   
128. China emphasizes further that the object and purpose of the Protocol supports its contention 
that Paragraph 16.4 provides for a higher thr eshold for increases in imports than other 
WTO agreements.  China notes the Appellate Body's recognition that measures under the Agreement 
on Safeguards are "extraordinary" because they restrict "fair" trade.326  China stresses that the 
Protocol similarly allows for the restric tion of "fair" trade;  however, unlike the Agreement on 
Safeguards , it further allows for the derogation of the most-favoured nation ("MFN") principle, 
because it provides for the application of trade-rest rictive measures exclusively against China.  For 
                                                      
322China refers to, for example, the Appellate Body Report, US – Countervailing Duty Investigation on 
DRAMS , para. 188;  Appellate Body Report, US – Lamb , paras. 148 and 149;  Appellate Body Report, US – 
Wheat Gluten , paras. 160-162;  and Appellate Body Report, US – Anti-Dumping and Countervailing Duties 
(China) , para. 526. (China's appellant's submission, paras. 557-564) 
323China's appellant's submission, paras. 58 and 59. 
324China's appellant's submission, para. 63.  
325China's appellant's submission, paras. 64-66.  
326China's appellant's submission, para. 81 (quoting Appellate Body Report, Argentina  – Footwear 
(EC) , paras. 94 and 95).  WT/DS399/AB/R 
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China, this "'extra'-extraordinary" nature of measure s under the Protocol must be taken into account in 
the interpretation of the distinct "increasing ra pidly" standard provide d in Paragraph 16.4.
327 
129. The United States responds that the text of Paragraph 16.4 does not support the "increasing 
rapidly" standard articulated by China.  For the Un ited States, the absence of any explicitly prescribed 
period of investigation in Paragraph 16.4 suggests th at investigating authorities have the discretion to 
select any period, provided that it allows for an assessment of import increases during a "recent 
period".328  The United States argues further that the or dinary meaning of the term "rapidly" ("with 
great speed" or "swiftly") does not embody a "comparative or relative concept"329, and that, for this 
reason, rates of increase in imports are not relevant .  In the United States ' view, the standards for 
import increases articulated by other covered agreem ents are significantly different from the specific 
standard provided for under the Protocol, and therefore are of limited contextual relevance.330 
130. Moreover, the United States argues that the object and purpose of the Protocol does not 
support a "heightened standard" for import increases.331  According to the United States, the 
Appellate Body's conclusion that a safeguard meas ure is an "extraordinary remedy" stems from the 
express reference to "emergency actions" and "unforeseen  developments" in the text of Article XIX of 
the GATT 1994, and neither of these terms are present in the text of Section 16 of the Protocol.332  
The United States also emphasizes that the "material in jury" threshold provided for in the Protocol is 
lower than the "serious injury" threshold under the Agreement on Safeguards , thus undermining 
China's argument that the Protocol provides for a higher threshold for import increases than the 
Agreement on Safeguards .333   
131. Paragraph 16.1 sets forth the general conditio ns for the imposition of product-specific 
safeguard measures provided for unde r Section 16 of the Protocol.  It establishes that such measures 
may be applied in cases "where products of Chinese orig in are being imported into the territory of any 
WTO Member in such increased quantities or under such  conditions as to cause or threaten to cause 
market disruption to the domestic producers of  like or directly competitive products".   
                                                      
327China's appellant's submission, para. 84.  
328United States' appellee's submission, para. 46.  
329United States' appellee's submission, para. 62 (referring to China's appellant's submission, 
paras. 113, 117, and 118).  
330United States' appellee's submission, paras. 64-68.  
331United States' appellee's submission, para. 52.  
332United States' appellee's submission, para. 53.  
333United States' appellee's submission, para. 54.   WT/DS399/AB/R 
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132. Paragraph 16.4 specifies the conditions in which "market disruption" within the meaning of 
Paragraph 16.1 shall exist, in the following terms:  
Market disruption shall exist whenever imports of an article, like or 
directly competitive with an ar ticle produced by the domestic 
industry, are increasing rapidly , either absolutely or relatively, so as 
to be a cause of material injury, or threat of material injury to the domestic industry.  In determini ng if market disruption exits, the 
affected WTO Member shall consider objective factors, including the volume of imports, the effect of imports on prices for like or directly 
competitive articles, and the effect of such imports on the domestic 
industry producing like or directly  competitive products. (emphasis 
added) 
133. The first sentence of Paragraph 16.4 thus estab lishes that market disruption shall exist when 
the following three conditions are met.  First, imports from China are "increasing rapidly, either 
absolutely or relatively".  Second, the domestic  industry producing like or directly competitive 
products is materially injured, or threatened with  material injury.  Third, rapidly increasing imports 
are "a significant cause" of material injury to the dom estic industry, or threat thereof.  This part of 
China's appeal concerns only the first condition, which constitutes a threshold requirement for the 
existence of "market disruption" within the meani ng of Paragraphs 16.1 and 16.4 of the Protocol. 
134. We begin our analysis with the ordinary me aning of the term "increasing rapidly".  The 
ordinary meaning of the verb "increase" is to "m ake or become greater in size, amount, duration or 
degree".
334  As noted by China, when specifying th e conditions under whic h products "are being 
imported in such increased quantities" under Pa ragraph 16.1, Paragraph 16.4 uses the present 
continuous tense "are increasing".  In our view , the use of the present continuous tense "are 
increasing" connotes import increases that are still in progress at the present time.335  The use of the 
present continuous tense "are increa sing" also suggests that imports follow an upward trend, in that 
they have increased in the past a nd continue to increase at present.  
135. The first sentence of Paragraph 16.4 employs th e adverb "rapidly" to describe the nature of 
increases in imports that could give rise to "marke t disruption".  The ordinary meaning of the term 
"rapid" is "with great speed, swift, developed or completed within a short time".336  Therefore, the 
adverb "rapidly" refers both to the speed with whic h, and to the short period of time in which, such 
                                                      
334Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 1, p. 1350. 
335However, as noted in paragraph 146, infra , since investigating authoritie s do not have access to real-
time import data, they must review imports over a suff iciently recent period, whic h is used as a proxy for 
present imports. 
336Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 2, p. 2465.   WT/DS399/AB/R 
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increase is occurring.  Thus, the ordinary meaning of the term "increasing rapidly" seems to suggest 
that imports are presently becoming greater in amount or degree, at great speed or swiftly, and within 
a short period of time. 
136. Paragraph 16.4 further provides that market di sruption exists where imports are increasing 
rapidly " either absolutely or relatively ".  This suggests that either an  absolute or a relative increase 
may be relevant in determining whether imports ar e increasing "rapidly" within the meaning of that 
provision.  In our view, a rapid increase in absolute  terms occurs when the volume of imports 
increases significantly over a short period of time.  Paragraph 16.4 provides no express guidance as to which benchmarks may be used in assessing whet her imports are "increasing rapidly" in relative  
terms.  However, to the extent that Paragraph 16.4 defines "market disruption" with reference to 
imports that are increasing rapidly "so as to be a significant cause of material injury … to the 
domestic industry", any benchmark that compares in creases in imports from China vis-à-vis relevant 
indicators of the domestic industry, such as consump tion (that is, market share) or production, could 
be appropriate.  Therefore, imports will be increasing "rapidly" in relative  terms when the share of 
imports from China relative to consumption or other relevant benchmarks increases significantly over 
a short period of time. 
137. Paragraph 16.4 must be read together with Paragraph 16.1, which establishes that market 
disruption may arise where products from China "are  being imported … in such increased quantities" 
as to cause market disruption.  In our view, Paragr aph 16.1 imparts two distinct elements that are 
relevant for the interpretation of Paragraph 16.4.  First, Paragra ph 16.1 requires that Chinese products 
"are being imported ".  The fact that Paragraph 16.1, li ke Paragraph 16.4, employs the present 
continuous tense further buttresses our conclusion th at the term "increasing rapidly" in Paragraph 16.4 
connotes increases in imports that continue at th e present time.  Similar language contained in 
Article 2.1 of the Agreement on Safeguards ("is being imported") was in terpreted by the Appellate 
Body in Argentina – Footwear (EC) as implying that the increase in imports "must have been sudden 
and recent".
337 
138. Second, Paragraph 16.1 establishes that Chinese imports are being imported " in such 
increased quantities " as to cause market disruption.  Reference to " increased  quantities" suggests a 
comparative assessment, in that imports must have become greater than they once were.  The term 
"such", in turn, establishes a threshold requirement in relation to the magnitude or degree of import 
increases that could cause market  disruption under Paragraph 16. 1.  Market disruption under 
Paragraph 16.1 arises not when Chinese products ar e being imported merely in "increased quantities", 
                                                      
337Appellate Body Report, Argentina – Footwear (EC) , para. 130.   WT/DS399/AB/R 
 Page 53 
 
 
but rather "in such increased quantities" as to cause market disruption.  This, in our view, suggests 
that, in order to cause market disruption, imports mu st be at significantly higher levels than they once 
were.338 
139. Finally, the "increasing rapidly" threshold of Paragraph 16.4 must  be interpreted consistently 
with the object and purpose of the Protocol, as refl ected in Section 16 thereof.  This object and 
purpose is to afford temporary relief to domestic i ndustries that may be exposed to market disruption 
as a result of a rapid increase in Chinese imports of like or directly competitive products, subject to 
the terms and conditions provided fo r in Section 16.  Viewed in this light, Paragraph 16.4 strikes a 
particular and distinct balance between, on the one hand, imports that are increasing significantly in a 
short period of time and, on the other hand, the requi site level of injury to the domestic industry 
("material injury") and the causal link between impor ts that are increasing rapidly and material injury 
to the domestic industry (rapidly increasing imports mu st be a "significant cause" of material injury). 
140. In sum, imports from China will be "increasing rapidly" under Paragraph 16.4 of the Protocol 
when they are increasing at great speed or swiftly, e ither in relative or absolute terms.  Such import 
increases must be occurring over a short and recent period of time, and must be of a sufficient 
absolute or relative magnitude so as to be a sign ificant cause of material injury to the domestic 
industry. 
B. China's Claim of Error regarding "Increasing Rapidly" 
141. With this interpretative guidance in mind, we tu rn to the specific issu es raised by China on 
appeal.  China claims that the Panel erred in findi ng that the USITC properly determined that subject 
imports met the "increasing rapidly" threshold set  forth in Paragraph 16.4 of China's Accession 
Protocol.  China essentially argues that a decline in the rate of increase in subject imports in the last 
year of the 2004-2008 period of investigation indicated that subject imports were not "increasing 
rapidly" within the meaning of Paragraph 16.4.  China develops three lines of argumentation in 
                                                      
338In the same vein, the Appellate Body found, in Argentina – Footwear (EC) , that the term "in such 
increased quantities" in Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 
implied a minimum threshold requirement for the level of imports which would suffice to cause "serious injury" 
within the meaning of these provisions.  In  particular, the Appellate Body found that: 
… not just any increased quantities of imports will suffice.  There must be 
"such increased quantities" as to cause or threaten to cause serious injury to 
the domestic industry in order to fulfil this requirement for applying a 
safeguard measure.  And this language … requires that the increase in 
imports must have been recent enough, sudden enough, sharp enough, and significant enough, both quantitatively and qualitatively, to cause or threaten 
to cause "serious injury". 
(Appellate Body Report, Argentina – Footwear (EC) , para. 131) (original emphasis)) WT/DS399/AB/R 
Page 54  
 
support of this contention, styled as parallel claims of  error in relation to the Panel's interpretation and 
its application of the term "increasing rapi dly" in Paragraph 16 .4 of the Protocol. 
1. Most Recent Import Increases 
142. First, China claims that the Panel erred in its interpretation of Paragraph 16.4 of the Protocol 
in finding that the USITC was not required to focus its analysis on import trends during the most 
recent period, in this case, the year 2008.  China argu es that the use of the present continuous tense 
"increasing" in Paragraph 16.4 requires a focus on th e most recent past, and that the Panel erred in 
failing to distinguish between "increasing" imports  in Paragraph 16.4, and "increased" imports in 
Paragraph 16.1.339  China adds that the Panel's reliance on the contextual guidance provided in 
Article 2.1 of the Agreement on Safeguards  was misplaced, insofar as that provision clearly focuses 
on past, rather than present, import increases.340  China further maintains that the more specific 
language of Paragraph 16.4 should prevail over the mo re general language of Pa ragraph 16.1, and that 
interpreting "increasing" as requiring a focus on the mo st recent period is the only interpretation that 
can be reconciled with both provisions.341 
143. In addition, China claims that the Panel erred in its application of the "increasing rapidly" 
standard of Paragraph 16.4 by improperly upholding the USITC's assessment of import increases over 
the entire 2004-2008 period of investigation.  Accord ing to China, neither the USITC nor the Panel 
adequately explained why import increases over the full five-year period of investigation were 
relevant to a determination that imports were "inc reasing rapidly", or should be accorded equal weight 
to the most recent import trends.342  China maintains further that the USITC did not provide an 
adequate explanation for its conclusion that impor t increases were "large, rapid, and continuing" 
in 2008, and that the Panel filled this gap by provi ding its own analysis of the 2008 increase viewed in 
isolation.343 
144. The United States responds that the Panel properly concluded that the USITC was not 
required to focus its analysis on the most recent im port increases.  For the United States, the absence 
of any explicitly prescribed period of investigati on in Paragraph 16.4 suggests that investigating 
authorities have the discretion to select any period, provided that it allows for an assessment of import 
increases during a "recent period".344  The United States rejects China's argument that Paragraph 16.4 
                                                      
339China's appellant's submission, para. 94.  
340China's appellant's submission, para. 100.  
341China's appellant's submission, paras. 102 and 104.   
342China's appellant's submission, paras. 132-134.  
343China's appellant's submission, para. 136.  
344United States' appellee's submission, paras. 46 and 47 (quoting Panel Report, para. 7.88).   WT/DS399/AB/R 
 Page 55 
 
 
should prevail over Paragraph 16.1, and argues instead that the Panel's interpretation gave effect to 
both Paragraphs 16.1 and 16.4 of the Protocol.345 
145. The United States maintains further that, contrary  to China's assertion, both the USITC and 
the Panel did in fact examine 2008 import data in arriving at the conclusion that import increases at 
the end of the period of investigation were "large, continuing and rapid".346  In its analysis, the USITC 
indicated that the highest "quantity" and "aggregate value" of subject imports was in 2008.347  The 
United States underscores further that the USITC also expressly reasoned that the two largest 
"year-to-year increases" with resp ect to the ratio of the "subject imports to U.S. production" and 
"market share of the Chinese imports" occurred "at the end of the period in 2007 and 2008".348  
146. We are not persuaded that the use of the present continuous tense "are increasing" in 
Paragraph 16.4 of the Protocol requires investig ating authorities to focus exclusively on import 
increases that occurred during the most recent past.  As noted earlier, th e use of the present continuous 
tense in both Paragraph 16.4 ("are increasing") a nd Paragraph 16.1 ("are being imported") connotes an 
upward trend in imports that continues at th e present time.  However, because investigating 
authorities normally do not have access to real-time import data, they have to examine the behaviour 
of imports during a sufficiently recent period in the p ast, which is used as a proxy for current imports.  
For this reason, the period of investigation selected by the investigating authority must be sufficiently 
recent  to provide a reasonable indication of current  trends in imports.  As the Appellate Body noted in 
Argentina – Footwear (EC) :  
[T]he use of the present tense of the verb phrase "is being imported" 
in both Article 2.1 of the Agreement on Safeguards and 
Article XIX:1(a) of the GATT 1994 indicates that it is necessary for the competent authorities to examine recent  imports, and not simply 
trends in imports during the past five years—or, for that matter, during any other period of several years.
349 (emphasis added) 
147. Thus, the Appellate Body made clear that the u se of the present continuous tense in the phrase 
"is being imported" requires investigating authoritie s to examine "recent" import trends.  For this 
reason, investigating authorities must select a period of investigation that is sufficiently recent to 
                                                      
345United States' appellee's submission, para. 51.  
346United States' appellee's submission, para. 55 (referring to USITC Report, p. 12). 
347United States' appellee's submission, para. 55 (referring to USITC Report, p. 12). 
348United States' appellee's submission, para. 55 (referring to USITC Report, p. 12). 
349Appellate Body Report, Argentina – Footwear (EC) , para. 130.  WT/DS399/AB/R 
Page 56  
 
provide a reasonable indication of current trends in imports.
350  Or, as the Appellate Body put it, "the 
investigation period should be the recent past".351  However, once the period of investigation is 
selected, and is sufficiently recent to provide a r easonable indication of current trends in imports, 
nothing in the use of the present continuous tense "a re increasing" in Paragr aph 16.4 and "are being 
imported" in Paragraph 16.1 implies that the analys is must be limited to import data relating to the 
very end of the period of investigation. 
148. Moreover, Paragraph 16.1 establishes that market  disruption, as defined in Paragraph 16.4, 
may be caused when Chinese products "are being im ported … in such increased quantities".  As noted 
earlier, reference to "in such increased quantities" suggests a comp arative assessment, indicating that 
imports must be at significantly higher levels than ear lier in the period of inves tigation.  Investigating 
authorities would not be able to determine whether imports have increased, and whether the level of 
such increase in imports meets the threshold requirement implied by the terms "in such increased 
quantities", if they were to focus excl usively on the most recent period.   
149. In the light of these considerations, we see no e rror in the Panel's conclusion that "there is 
nothing in the use of the present continuous tense in  Paragraphs 16.1 and 16.4 of the Protocol that 
would require an investigating authority to focus on the movements in imports during the most  recent 
past, or during the period immediately preceding the authority's decision."352  
150. Moreover, the Panel and the USITC did assess 2008  import data in determining that imports 
from China were "increasing rapidly" under Paragra ph 16.4.  The Panel reviewed absolute import data 
collected by the USITC for each year of the 2004- 2008 period of investigation and the percentage 
increase in imports from China year-on-year between 2005 and 2008.353  The Panel observed that 
there were absolute import increases in each year of  the period of investigation, with the greatest 
increase occurring in the last two years of the period, when subject imports increased by 14.5 million units and 4.5 million units, respectively.
354  On the basis of this data, the Panel saw no 
error in the USITC's conclusion that imports from Ch ina were "increasing rapidly" in absolute terms, 
for the following reasons:  
                                                      
350We note that China does not argue on appeal that th e USITC selected a period of investigation that is 
not sufficiently recent to pr ovide an indication of the current behaviou r of imports.  Rather, China argues that 
the USITC should have focused its analysis on import data  for 2008, which is the mo st recent calendar year of 
the five-year 2004-2008 period of investigation.  Before the Panel, China also argued that the USITC erred in 
not including interim data for the first quarter of 2009 in the period of investigation.  The Panel found that the USITC was not "obliged to collect and incorporate absolute and relative data for the first quarter of 2009 into its 
period of investigation". (Panel Report, para. 7.109)  China does not challenge this finding on appeal.   
351Appellate Body Report, Argentina – Footwear (EC) , footnote 130 to para. 130. (original emphasis) 
352Panel Report, para. 7.90. (original emphasis) 
353Panel Report, para. 7.83.  
354Panel Report, para. 7.84 and footnote 175 thereto.   WT/DS399/AB/R 
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In absolute terms, imports of  subject tires from China increased 
throughout the period of investigation and were the highest, in terms 
of both quantity and value, in 2008, at the end of the period .  The 
quantity of subject imports rose by 215.5 percent between 2004 and 2008, by 53.7 percent between 2006 and 2007, and by 10.8 percent 
between 2007 and 2008 .  The value of subject imports rose even 
more rapidly, increasing by 294.5 percent between 2004 and 2008, by 60.2 percent between 2006 and 2007, and by 19.8 percent between 
2007 and 2008 .
355 (emphasis added) 
151. We agree with the Panel that the USITC's finding that imports were "increasing rapidly" in 
absolute  terms would have, on its own, satisfi ed the requirements of Paragraph 16.4.356  Nonetheless, 
the USITC took the additional step of reviewing data on import increases in relative  terms, and the 
Panel accordingly reviewed that analysis.  The Pa nel observed that the USITC reviewed both import 
data relative to total domestic consumption (that is, market share) and import data relative to domestic 
production.  The Panel noted the USITC's finding that the relative import data also supported a 
finding that subject imports were "increasing rapidly", for the following reasons:  
Both the ratio of subject imports to U.S. production and the ratio of 
subject imports to U.S. apparent consumption rose throughout the period examined, and both ratios were at their highest levels of the 
period in 2008 .  The ratio of subject imports to U.S. production 
increased by 22.0 percentage point s between 2004 and 2008, with the 
two largest year-to-year increases occurring at the end of the period 
in 2007 and 2008 .  The ratio of subject imports to U.S. apparent 
consumption increased by 12.0 percentage points during the period examined, with the  two largest year-to-yea r increases also occurring 
at the end of the period in 2007 and 2008 .
357 (emphasis added) 
152. The Panel added that both the market share of s ubject imports and the ratio of subject imports 
relative to domestic production increased in every y ear of the period of investigation, including in 
2008.358  The Panel noted that, over the period of inves tigation, the market share of subject imports 
increased by 12%, whereas the market share of non- subject imports remained "more or less stable".359  
Similarly, the ratio of subject imports relativ e to domestic production increased by 22% over the 
entire period.360  On this basis, the Panel concluded that "regardless of a focus on imports relative to 
market share or relative to domestic production there were increases from year to year and significant 
increases over the period of investigation".361 
                                                      
355Panel Report, para. 7.85.  
356Panel Report, para. 7.100.  
357Panel Report, para. 7.94 (quoting USITC Report, p. 12).  
358Panel Report, paras. 7.96 and 7.98.  
359Panel Report, para. 7.96.  
360Panel Report, para. 7.98.  
361Panel Report, para. 7.98. WT/DS399/AB/R 
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153. In the light of the above, we do not agree with Ch ina that the Panel erred in its application of 
the "increasing rapidly" standard of Paragraph 16.4 by upholding the USITC's assessment of import 
increases over the entire 2004-2008 period of investiga tion.  In any event, as the Panel noted, the 
USITC separately examined absolute and relative im port data for the last two calendar years of the 
period of investigation. 
2. Rates of Increase in Imports 
154. Second, China claims that the Panel erred in its interpretation of Paragraph 16.4 of the 
Protocol in finding that the USITC was not required to focus its analysis on the rates  of increase in 
subject imports.  China argues that the term "rapid ly" in Paragraph 16.4 requires that investigating 
authorities focus on the rates  of increase in subject imports.  According to China, the Panel's reference 
to the ordinary meaning of "rapidly"—"with great speed" or "swiftly"—was insufficient to dismiss the 
relevance of rates of increase, because "[t]here is no way to determine whether an increase is 
occurring at a 'great speed' without assessing its rate."362  China emphasizes that "rapidly" is a relative 
concept, which conveys the idea that something is  increasing more quickly than something else, and 
therefore it is "useful" to assess the rates of increase in subject imports.363 
155. Moreover, China claims that the Panel erred in  its application of Paragraph 16.4 when it 
upheld the USITC's "inadequate" assessment of the rates  of increase in subject imports.364  China 
contends that the USITC did not provide an adequate  explanation for its conclusion that imports were 
"increasing rapidly", despite a decline in the rate of increase in subject imports in 2008.365  According 
to China, the Panel's reasoning that the 2008 rate of increase was in additi on to increases in prior 
years was not sufficient, because increases in every year of the period of investigation and market 
share gains over the full period of investigati on do not establish that increases were "rapid".366 
156. The United States responds that the Panel correctly held that the ordinary meaning of the term 
"rapidly" does not refer to the "rate" of increase in subject imports.367  For the United States, the Panel 
correctly rejected China's attempt to read into the term "rapidly" a requirement that imports be 
increasing not only "swiftly" or "quickly" but also "at an accelerating rate of increase".368  T h e  
                                                      
362China's appellant's submission, para. 111.  
363China's appellant's submission, para. 113.  
364China's appellant's submission, paras. 130, 133, and 134. 
365China's appellant's submission, paras. 140 and 144.  
366China's appellant's submission, paras. 145 and 146 (referring to Panel Report, para. 7.93).  
367United States' appellee's submission, para. 60.  
368United States' appellee's submission, para. 61.   WT/DS399/AB/R 
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United States further rejects China's contention that  the term "rapidly" necessar ily involves a "relative 
concept", because the word "rapidly" does not mean "'more swiftly', 'more quickly' or 'with greater 
speed'".369  
157. In addition, the United States notes that the USITC did examine the rates of increase in 
subject imports in the final years of the period of investigation.  The United States emphasizes that the 
USITC "explicitly" referred in its analysis to "rat es of increase" both in volume and value, and 
specifically addressed the rates of increase in the last two years of the period.370  The United States 
adds that the USITC also reviewed the rates of incr ease in the market share of subject imports, and in 
their ratio to domestic production, and emphasized th at the "two largest year-to-year increases" in 
these metrics occurred in 2007 and 2008.371  
158. Like the Panel, we do not find that the ordinary meaning of the term "rapidly" ("with great 
speed" or "swiftly") suggests an exclusive focu s on the rates of increase in subject imports.372  In our 
view, the text of Paragraph 16.4 requires that imports —and not the rates  of increase in imports—be 
increasing "rapidly".  While it might be useful for in vestigating authorities to review rates of increase 
in imports in assessing whether imports are "increas ing rapidly", we cannot agree with China that 
imports will only be increasing "rapidly" when they are increasing at progressively accelerating rates.  
To the contrary, we agree with the Panel that a decline in the yearly rate of increase does not 
"necessarily preclude a finding that imports are 'increasing rapidly'".373  This is particularly so 
because, under Paragraph 16.4, rapid absolute import increases suffice to es tablish that imports are 
"increasing rapidly".  Moreover, one might expect th at the rate of increase in imports will normally 
decline as imports grow from an increasingly larger  base.  Yet this alone would not, in our view, 
preclude a finding that imports are "increasing rapidly" in absolute terms.   
159. As noted earlier, the term "rapidly" in Paragr aph 16.4 connotes both the speed with which, 
and the short time period in which, imports are incr easing.  Accordingly, imports will be "increasing 
rapidly" in absolute  terms when the volume of imports increases significantly over a short period of 
time.  Conversely, imports will be increasing "rapidly" in relative  terms when the share of subject 
imports relative to production, consumption, or other appropriate  benchmarks increases significantly 
over a short period of time.  Viewed in this light, the term "rapidly" does not require that the rates  of 
increase in either the volume or market share of subject imports progressively increase over the period 
                                                      
369United States' appellee's submission, para. 62. 
370United States' appellee's submission, paras. 72 and 73. 
371United States' appellee's submission, para. 72 (quoting USITC Report, p. 12). 
372Panel Report, para. 7.92 (quoting Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, 
A. Stevenson (eds) (Oxford University Press, 2002), Vol. 2, p. 2465). 
373Panel Report, para. 7.92.  WT/DS399/AB/R 
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of investigation.  This is because the volume or  market share of subject imports may still be 
increasing significantly over a short period of time in situations where the rate of increase in a given 
year decelerates in comparison to previous years.  In this sense, we agree with the Panel that the 
relative change  in either the volume or the market share of subject imports is "a step further away" 
from the text of Paragraph 16.4, which requires rapid increases in either the volume or market share of 
subject imports.
374 
160. In any event, the Panel's analysis indicates that  the USITC took sufficient account of the rates 
of increase in imports at the end of the period of inve stigation, both in absolute and relative terms.  As 
the Panel noted, the USITC expressly found that "[t]he quantity of subject imports rose … by 
53.7 percent between 2006 and 2007, and by 10.8 percent between 2007 and 2008".375  The USITC 
also expressly noted that "[t]he value of subject imports rose even more rapidly, increasing … by 
60.2 percent between 2006 and 2007, and by  19.8 percent between 2007 and 2008".376  Turning to the 
USITC's analysis of relative import data, the Pa nel expressly referred to the USITC's finding that 
"[t]he ratio of subject imports to U.S. produc tion increased by 22.0 percentage points between 2004 
and 2008, with the two largest year-to-year incr eases occurring at the end of the period in 2007 and 
2008 ."377  Similarly, the Panel also noted the USITC's fi nding that "[t]he ratio of subject imports to 
U.S. apparent consumption increased by 12.0 percenta ge points during the period examined, with the 
two largest year-to-year increases also occurring at the end of the period in 2007 and 2008."378   
161. Moreover, the Panel expressed the view that a decline in the rate of increase in subject 
imports in 2008 did not undermine the USITC's findi ng that subject imports were "increasing rapidly" 
within the meaning of Paragraph 16 .4.  The Panel explained that:  
… the fact that the 10.8 per cent increase in 2008 was lower than the 
increase in the preceding year does no t mean that imports were not 
"increasing rapidly" in 2008.  An increase of 10.8 per cent in 2008 by 
no means precludes a finding that imports are "increasing rapidly", 
especially when that increase is asses sed in context.  Nor is it a 
"modest" increase.  In this regard, we recall that the 10.8 per cent increase in absolute volumes between 2007 and 2008 was in addition  
to an increase of 53.7 per cent between 2006 and 2007, which was 
in addition to an increase of 29.9 per cent between 2005 and 2006, 
which was in addition to an increase of 42.7 per cent between 2004 
and 2005.  In our view, the 10 .8 per cent increase in absolute 
volumes from 2007 to 2008 reinforces the USITC's conclusion that 
                                                      
374Panel Report, para. 7.99.  
375Panel Report, para. 7.85 (quoting USITC Report, pp. 11-12). 
376Panel Report, para. 7.85 (quoting USITC Report, pp. 11-12). 
377Panel Report, para. 7.94 (quoting USITC Report, p. 12).  
378Panel Report, para. 7.94 (quoting USITC Report, p. 12).   WT/DS399/AB/R 
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imports were "increasing rapidly" du ring the period, and continued to 
be "increasing rapidly" at the end of the period.379 (original emphasis) 
162. We see no error in the Panel's reasoning.  We agr ee, in particular, with the Panel's reasoning 
that a decline in the rates  of increase in imports towards the end of the period of investigation does 
not detract from the USITC's conclusion that imports from China were "increasing rapidly", 
particularly when import increases at the end of th e period of investigation remained significant both 
in relative and in absolute terms. 
3. Rates of Import Increases in Context 
163. Third, and finally, China claims that the Panel erred in its interpretati on of Paragraph 16.4 of 
the Protocol in finding that the USITC was not re quired to assess the most recent rate of increase in 
subject imports relative  to the rates of increase in earlier peri ods.  China argues that the Panel ignored 
the meaning that the words "increasing" and "rapidly " impart to one another.  China emphasizes that 
"rapidly" is a relative concept and, when qualifyi ng the term "increasing", it indicates that imports 
must be increasing more rapidly than some other be nchmark, typically the rate of import increases in 
the past.380  For this reason, the earlier part of the period of investigation provides a "contextual 
baseline" for determining whether later rates of incr ease can be considered "rapid", in that they are 
greater than prior rates of increase.381  
164. China argues further that the Panel erred in a ffirming the USITC's determination, despite the 
fact that the USITC failed to provide a reasoned a nd adequate explanation for finding that imports 
were "increasing rapidly" when the rate of incr ease in subject imports in 2008 was lower than the 
rates of increase in previous years.  China char ges the Panel with filling the gap in the USITC's 
reasoning by providing its own analysis of the 2008 increases.382  According to China, neither the 
USITC nor the Panel provided an adequate e xplanation as to why import increases could be 
considered "rapid" when the rates  of increase in market share and in subject imports relative to 
domestic production fell in 2008.383  
165. The United States responds that the Panel correctly rejected China's argument that an increase 
can only be rapid under Paragraph 16.4 where there con tinues to be a "swift progression in the rate of 
increase" of imports or "if the rate of increase in  the final year does not lessen from the rate of 
                                                      
379Panel Report, para. 7.93.  
380China's appellant's submission, paras. 60 and 117.  
381China's appellant's submission, para. 118.  
382China's appellant's submission, para. 153.  
383China's appellant's submission, paras. 159-163.  WT/DS399/AB/R 
Page 62  
 
increase in the prior year".
384  For the United States, the term "i ncreasing rapidly" does not require an 
"accelerating rate of increase" over the period of investigation.385  
166. The United States adds that the USITC provided a reasoned and adequate explanation for its 
finding that imports were increasing rapidly, both in  absolute and relative terms.  The United States 
stresses that the USITC assessed import increases on a year-on-year basis and the rate of increase in 
each year, and emphasized the rapid increases that o ccurred in the last two years of the period of 
investigation.386  For the United States, the import data did not contain any "complexities" that 
warranted a more detailed analysis by the USITC or  the Panel, because "all of the possible metrics" 
indicated a "clear and uninterrupted upward trend in import volumes" during the period of 
investigation.387  
167. We have earlier disagreed with China that the term "increasing rapidly" requires investigating 
authorities to focus on import increases during the most recent past, and to focus their analysis on the 
rates  of increase in imports from China.  Instead, we concluded that Paragraph 16.4 requires 
investigating authorities to assess import trends over a sufficiently recent period, and to determine 
whether imports are increasing significantly, either in  absolute or relative terms, within a short period 
of time.  We have also expressed the view that the de cline in the rate of increase in subject imports in 
2008 did not preclude a finding that imports were "inc reasing rapidly", particularly in the light of the 
fact that Paragraph 16.4 refers to rapid import in creases either in absolute or relative terms.  
Accordingly, we cannot agree with China that the Panel erred in not requiring the USITC to focus on 
the rate of increase in subject imports in 2008, and to  compare it with the rates of increase earlier in 
the period of investigation. 
168. In any event, contrary to China's allegation, the Panel's analysis demonstrates that the USITC 
provided a reasoned and adequate e xplanation for its conclusion that  subject imports continued to 
increase rapidly at the end of the period of invest igation.  As the Panel noted, the USITC properly 
assessed import increases over the last two years of th e period of investigation in finding that "[t]he 
quantity of subject imports rose … by 53.7 per cent between 2006 and 2007, and by 10.8 percent 
between 2007 and 2008".388  Similarly, turning to the USITC's assessment of relative import data, the 
Panel expressly referred to the USITC's finding that both the market share of subject imports and the 
                                                      
384United States' appellee's submission, para. 60 (quoting Panel Report, para. 7.92).  
385United States' appellee's submission, para. 61.  
386United States' appellee's submission, para. 75.  
387United States' appellee's submission, para. 77 (quoting Panel Report, para. 7.103). (underlining 
omitted) 
388Panel Report, para. 7.85 (quoting USITC Report, pp. 11-12).  The USITC also expressly noted that 
"[t]he value of subject imports rose even more rapidly, increasing by 294.5 percent between 2004 and 2008, by 
60.2 percent between 2006 and 2007, and by 19.8 percent between 2007 and 2008." ( Ibid.)  WT/DS399/AB/R 
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ratio of subject imports relative to domestic production increased in every year of the period of 
investigation, " with the two largest year-to- year increases occurring at the end of the period in 2007 
and 2008 ".389  Moreover, we cannot agree with China that  the Panel impermissi bly filled the gap in 
the USITC's analysis simply by noting that the 10.8% increase in imports in 2008 came in addition to 
earlier increases in each year of the period of investigation.390  In our view, the Panel was simply 
reciting data contained in the USITC record, and de termining whether the USIT C's assessment of that 
data supported the USITC's ultimate conclusion that  imports from China met the "increasing rapidly" 
threshold of Paragraph 16.4. 
4. Conclusion 
169. On this basis, we find no error in the Panel's finding that the USITC did not fail to provide a 
reasoned and adequate explanation for determining that subject imports were "increasing rapidly" 
under Paragraph 16.4 of the Protocol.  The an alysis above reasonabl y supports the Panel's 
endorsement of the USITC's ultimate conclusion that: 
... subject imports increased, both absolutely and relatively 
throughout the period by significant amounts in each year and, as 
stated above, were at their highest levels at the end of the period 
in 2008.  Whether viewed in absolu te or relative terms, and whether 
viewed in terms of the increase from 2007 to 2008 alone or the increase in the last two full years (o r even the last three years), the 
increases were large, rapid, and continuing at the end of the period—
and from an increasingly large base.
391  
170. Based on all of the above, we uphold  the Panel's finding, in pa ragraph 7.110 of the Panel 
Report, that the USITC did not fail to evaluate properly whether imports from China met the specific 
threshold under Paragraph 16.4 of China's Accession Protocol of "increasing rapidly". 
VI. Causation 
171. We turn next to China's appeal of the Panel' s finding that the USITC did not fail to establish 
properly that rapidly increasing impor ts from China were "a significant cause" of material injury to 
the domestic industry under Paragraph 16.4 of Chin a's Accession Protocol.  China argues that this 
finding is in error for several reasons.  First, Chin a claims that the Panel erred in finding that the 
USITC properly assessed the conditions of competition in the US tyres market, which, according to 
China, demonstrate the existence of "attenuated"  competition between subject imports and domestic 
tyres.  Second, China claims that the Panel erred in finding that the USITC was entitled to rely on an 
                                                      
389Panel Report, para. 7.94 (quoting USITC Report, p. 12). (emphasis added) 
390Panel Report, para. 7.93.  
391Panel Report, para. 7.85 (quoting USITC Report, pp. 11-12).   WT/DS399/AB/R 
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"overall coincidence" between import increases and d eclines in injury factors in finding that subject 
imports were a significant cause of material injury to  the domestic industry.  Third, China claims that 
the Panel erred in finding that the USITC did not  fail to address adequately the individual and 
cumulative effects of other causal factors in findi ng that subject imports were a significant cause of 
material injury to the domestic industry.  Fu rthermore, China claims that the Panel acted 
inconsistently with its obligati on to conduct an objective assessmen t of the matter under Article 11 of 
the DSU in upholding the USITC's finding that subject imports were a significant cause of material 
injury to the domestic industry unde r Paragraph 16.4 of the Protocol. 
172. Before turning to the specific issues raised by China on appeal, we find it useful to address 
the meaning of the term "a significant cause" in Paragraph 16.4 of the Protocol, in the light of the conflicting arguments raised by the participants in this respect. 
A. The Meaning of "A Significant Cause" 
1. Interpretation 
173. China claims that the Panel erred in its interp retation of Paragraph 16.4 of the Protocol in 
failing to give meaning to the term "significant".392 China contends that the inclusion of the term 
"significant" to qualify the term "cause" indicates th at Paragraph 16.4 of the Protocol imposes a more 
rigorous causation standard than other WTO agreements, which simply refer to "cause".393  According 
to China, Paragraph 16.4 requires a "particularly st rong, substantial, and important causal connection" 
between rapidly increasing imports and mate rial injury to the domestic industry.394  China adds that 
the object and purpose of the Protocol weighs in favour of a more rigorous  causation standard under 
Paragraph 16.4.  This is because of the "'extra'-e xtraordinary" nature of the measures provided under 
the Protocol, which restrict "fair" trade in a discriminatory manner.395 
174. The United States responds that the Panel properl y interpreted the meaning of "a significant 
cause" in Paragraph 16.4 of the Protocol.  The United  States maintains that the ordinary meaning of 
the term "significant" does not imply a causation standa rd that is more rigorous than the "genuine and 
substantial" causation standard c ontained in other WTO agreements.396  In the United States' view, the 
object and purpose of the Protocol does not sup port a more rigorous causation standard, because 
measures under the Protocol are not "emergency actions" resulting from "unforeseen developments", 
                                                      
392China's appellant's submission, para. 184.  
393China's appellant's submission, paras. 188-210.  
394China's appellant's submission, para. 193.  
395China's appellant's submission, paras. 211-214.  
396United States' appellee's submission, paras. 104 and 105.    WT/DS399/AB/R 
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and because the Protocol provides for a lower injury threshold than the Agreement on Safeguards  
("material" rather than "serious" injury).397 
175. As we noted above, Paragraph 16.4 specifies the conditions in which products from China 
"are being imported … in such increased quan tities" as to cause "market disruption" under 
Paragraph 16.1 of the Protocol.  Pursuant to Paragr aph 16.4, "market disruption" shall exist where the 
following three conditions are met:  (i) imports of products from China are increasing rapidly, either 
absolutely or relatively;  (ii) the domestic industry is materially injured, or threatened with material 
injury;  and (iii) such rapidly increasing imports are a significant cause  of material injury or threat 
thereof.398  This part of China's appeal concerns only the last condition. 
176. The ordinary meaning of "significant" is  "important, notable, [ ] consequential".399  The term 
"significant" qualifies the term "a cause" in Para graph 16.4, thus suggesting that rapidly increasing 
imports must be a cause that is "important" or "notable".400  The term "cause", in turn, has been 
interpreted by the Appellate Body in  other contexts as "denot[ing] a relationship between, at least, two 
elements, whereby the first element has, in some way, 'brought about', 'produced' or 'induced' the 
existence of the second element".401  Thus, Paragraph 16.4 seems to suggest that rapidly increasing 
imports must be an "important" or "notable" f actor in "bringing about, producing or inducing" 
material injury to the domestic industry. 
177. In this respect, we note that Paragraph 16. 4 stipulates that rapidly increasing imports from 
China must be "a" significant cause of material inju ry to the domestic industry.  This, in our view, 
suggests that rapidly increasing imports may be one of several causes that contribute to producing or 
bringing about material injury to the domestic industr y.  To that extent, we agree with the Panel that 
Paragraph 16.4 must be interpreted "in a way that allows for the possibility that [rapidly increasing 
imports] is one of several causal factors that together produce or bring market disruption".402  
However, we consider that the inclusion of the te rm "significant" to qualify "a cause" indicates that 
rapidly increasing imports must be more than a mere contributing cause to the material injury of the 
domestic industry.  Rather, the contribution made by rapidly increasing imports to the material injury 
of the domestic industry must be important or notable.   
                                                      
397United States' appellee's submission, paras. 109-111.   
398See supra , para. 133 of this Report. 
399Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 2, p. 2835.  
400We do not consider that a "significant" cause can properly be described as a "consequential" cause.  
401Appellate Body Report, US – Wheat Gluten , para. 67 (quoting The New Shorter Oxford English 
Dictionary , 4th edn, L. Brown (ed.) (Clarendon Press, 1993), Vol. 1, p. 1958).   
402Panel Report, para. 7.140.  WT/DS399/AB/R 
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178. Paragraph 16.4 further establishes that market di sruption exists when imports are "increasing 
rapidly … so as to be  a significant cause of material injury".  As implied by the meaning of the term 
"so as to be", that is, "in a manner that"
403, imports can only be "a significant cause" of material injury 
when they are "increasing rapidly".  In other words,  the phrase "so as to be" links the ability of subject 
imports to be "a significant cause" of material inju ry to the threshold of imports that are "increasing 
rapidly, absolutely or relatively".  Reference to "are being imported … in such increased quantities as 
to cause  … market disruption" in Paragraph 16.1 also  links subject imports' ability to cause "market 
disruption" to subject imports being imported "in such increased quantities".404 
179. The second sentence of Paragraph 16.4 further requi res investigating authorities to consider 
"objective factors" in determining whether mark et disruption exists, including the "volume of 
imports", the "effect of imports on [domestic] prices", and the "effect  of such imports on the domestic 
industry".  The volume of imports from China and their effects on prices and on the domestic industry 
are therefore the factors that an investigating au thority is required to consider in assessing whether 
rapidly increasing imports are "a significant cause" of material injury to the domestic industry.  The 
word "including" in the second sentence of Paragra ph 16.4 suggests that other elements may also be 
relevant in determining whether rapidly incr easing imports are a significant cause of market 
disruption. 
180. In our view, these textual and contextual elem ents suggest that the term "significant" 
describes the causal relationship or nexus that mu st be found to exist between rapidly increasing 
imports and material injury to the domestic indus try, which must be such that rapidly increasing 
imports make an "important" or "notable" contribution in bringing about material injury to the 
domestic industry.  Such assessment must be carried out on the basis of the objective factors listed in 
the second sentence of Paragraph 16.4, such as the volu me of imports, the effect of imports on prices, 
and the effect of imports on the domestic industry. 
181. In the light of the above, we do not agree w ith China that the inclusion of the term 
"significant" to qualify the term "a cause" indicat es that Paragraph 16.4 of the Protocol imposes a 
more rigorous causation standard than other WTO agreements, which require that imports "cause" 
injury.405  We do not find China's comparison particularly  useful, given the distinct causation standard 
set forth in the Protocol.  In any event, we not e that China's argument is premised on other WTO 
                                                      
403Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 1, p. 125.  
404In US – Steel Safeguards , the Appellate Body noted that similar language contained in Article 2.1 of 
the Agreement on Safeguards  "clearly links the relevant increased imports to their ability to cause serious 
injury". (Appellate Body Report, US – Steel Safeguards , para. 346) 
405See, for example, Articles 2.1 and 4.2(a) and (b) of the Agreement on Safeguards ;  Article 3.5 of the 
Anti-Dumping Agreement ;  and Articles 5 and 15.5 of the SCM Agreement .    WT/DS399/AB/R 
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agreements requiring that subject imports be no mo re than "a cause" of injury to the domestic 
industry.  However, the Appellate Body has interpre ted the causation standard reflected in the use of 
the term "cause" in other WTO agreements as requi ring a "genuine and substantial relationship of 
cause and effect"406 between import increases and the requisite level of injury.  Such a "genuine and 
substantial" causal link, in our view, implies a hi gher degree of causality than subject imports being 
merely "a cause" of the requisite leve l of injury to the domestic industry. 
182. Furthermore, the context of Paragraph 16.4 does not seem to support China's interpretation of 
the requisite causation standard.  We note that Paragr aph 16.1 of the Protocol refers to products from 
China being imported in such increased quantities as to "cause or threaten to cause" market disruption.  
In our view, the fact that the causal link reflected in Paragraph 16.1 is not similarly qualified by the 
term "significant" provides contextual support for the interpretation that Paragraph 16.4 does not 
establish a more rigorous causation standard, becau se the terms "cause" in Paragraph 16.1 and a 
"significant cause" in Paragraph 16.4  must be interpreted harmoniously. 
183. In this regard, we also note th at the injury threshold provided for in Paragraph 16.4 of the 
Protocol is "material injury", rather than the "seri ous injury" threshold contained in Article 2.1 of the 
Agreement on Safeguards .  In US – Lamb , the Appellate Body explained that "the word 'serious' 
connotes a much higher standard of injury than the word 'material'".407  Such lower injury threshold 
thus seems to imply a lower degree of injurious e ffects caused by rapidly increasing imports to the 
domestic industry.  This reading also appears to  be consistent with the meaning of the term 
"disruption" in Paragraph 16.4, that is, "lack of order or regular arrangement;  disarray, confused 
state"408, which similarly suggests a lower injury  threshold than "serious injury". 
184. The above observations militate against China's argument that the object and purpose of the 
Protocol supports an interpretation of "a significant cause" that implies a "particularly strong, substantial, and important causal connection"
409 between rapidly increasing imports and material 
injury to the domestic industry.  China is correct that the Protocol provides for restrictive measures on 
"fair" trade, and permits, for a transitional peri od, the application of such measures on Chinese 
imports alone.  However, as noted above, we consider that the object and purpose of the Protocol, as 
reflected in Section 16 thereof, is to afford tempor ary relief to domestic industries that are exposed to 
                                                      
406Appellate Body Report, US – Wheat Gluten , para. 69.  See also Appellate Body Report, US – 
Softwood Lumber VI  (Article 21.5 – Canada) , para. 132;  Appellate Body Report, US – Upland Cotton , 
para. 438;  Appellate Body Report, US – Steel Safeguards , para. 488;  and Appellate Body Report, US – Lamb , 
para. 179. 
407Appellate Body Report, US – Lamb , para. 124.  
408Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 1, p. 704.   
409China's appellant's submission, para. 193.  WT/DS399/AB/R 
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market disruption as a result of a rapid increase in  Chinese imports of like or directly competitive 
products, subject to the conditions and requirements provided therein.  Therefore, the object and 
purpose of the Protocol, as reflected in Section 16 thereof, seems to weigh in favour of an 
interpretation pursuant to which temporary relief is  available whenever rapidly increasing imports are 
making an "important", rather than a "particularly strong [and] substantial"
410, contribution to the 
material injury of the domestic industry. 
185. In sum, Paragraph 16.4 of the Protocol sets forth a distinct causation standard whereby 
rapidly increasing imports must be "a significant cause" of material injury to the domestic industry.  This causation standard requires that rapidly increasing imports from China make an important 
contribution in bringing about material injury to  the domestic industry.  Pursuant to the second 
sentence of Paragraph 16.4, such determination is  to be made on the basis of objective criteria, 
including the volume of imports, the effects of rapidly increasing imports on prices, and the effects of 
rapidly increasing imports on the domestic industry.   
2. Nature of the Analysis 
(a) Conditions of Competition and Correlation 
186. China claims that, because Paragraph 16.4 of th e Protocol requires a "particularly strong, 
substantial, and important"411 causal link between rapidly increasing imports and material injury to the 
domestic industry, investigating authorities are requir ed to conduct a differentiated, more searching 
analysis of both the conditions of competition and of the correlation between increasing imports and 
declining injury indicators in determining whether such imports are "a significant cause" of material 
injury to the domestic industry.  According to Ch ina, the analysis of the conditions of competition 
must examine the degree of competitive overlap  between imported and dom estic products, and the 
analysis of correlation must identify a coin cidence both in the "year-by-year changes"412 and in the 
"degree of magnitude"  between subject imports and injury factors.413 
187. For its part, the United States argues that Paragraph 16.4 of the Protocol does not require 
investigating authorities to "refine" their causation analysis by applying a higher degree of scrutiny in 
their analysis of conditions of competition or of correlation.414  The United States underscores that the 
Protocol does not set forth any specific methodology for determining whether s ubject imports rise to 
the level of "a significant cause" of material injury  to the domestic industry.  More specifically, with 
                                                      
410China's appellant's submission, para. 193.  
411China's appellant's submission, para. 193.  
412China's appellant's submission, para. 232. (original underlining) 
413China's appellant's submission, para. 236. (original underlining) 
414United States' appellee's submission, para. 118.  WT/DS399/AB/R 
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respect to correlation, the Un ited States stresses that Paragr aph 16.4 requires no correspondence 
between the magnitude of changes in subject imports and the magnitude of changes in the 
performance indicators of the domestic industry.415 
188. The Panel found that investigating authorities have the discretion to apply any methodology 
to establish causation under Paragraph 16.4, prov ided that it sufficiently addresses the objective 
factors listed in the second sentence of Paragraph 16.4, and sufficiently establishes that rapidly 
increasing imports are "a significant cause" of material  injury.  For the Panel, an analysis of the 
conditions of competition and of co rrelation "will often be relevant" and may indeed "prove essential" 
to a consideration of "significant cause".416  To the extent that the USIT C did rely on the conditions of 
competition and on correlation, the Panel said it w ould objectively assess those analyses in reviewing 
the USITC's determination of "significant cause".417 
189. In relation to the analysis of correlation, th e Panel disagreed with China that a finding of 
"significant cause" depended on a finding of correlation between degrees  of increase in imports and 
degrees  of decreases in injury indicators.418  The Panel reasoned that such "more precise degree of 
correlation" was "unrealistic" to expect, especially where other causes of injury might be at work.419  
The Panel added: 
While a more precise degree of correlation between the upward 
movements in imports and the downward movements in injury 
factors might result in a more robust finding of causation, and might 
indeed suffice on its own to dem onstrate causation, a finding of 
"significant cause" is not excluded simply because an investigating 
authority relies on an overall coincidence between the upward movement in imports and the downward movement in injury factors, especially if that finding of overall coincidence is combined—as it 
was in the present case—with other analyses indicative of 
causation.
420 
190. On this basis, the Panel concluded that th e USITC "was entitled to support its determination 
of 'significant cause' with a finding of overall coin cidence between an upward trend in subject imports 
from China and downward trends in  the relevant injury factors".421 
191. On our part, we note that Paragraph 16.4 of the Protocol does not provide specific guidance 
with respect to the methodology investigating aut horities may apply in determining whether rapidly 
                                                      
415United States' appellee's submission, para. 125.  
416Panel Report, para. 7.170.  
417Panel Report, para. 7.170.  
418Panel Report, para. 7.229.  
419Panel Report, para. 7.229. 
420Panel Report, para. 7.229.  
421Panel Report, para. 7.234.  WT/DS399/AB/R 
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increasing imports are "a significant cause" of materi al injury.  Thus, we agree with the Panel that 
Paragraph 16.4 gives investigating authorities a certain degree of discretion in selecting the 
methodology to assess the existence of a causal link,  provided that such methodology establishes that 
rapidly increasing imports are "a significant cause" of  material injury to the domestic industry, and 
considers the objective factors listed in the second sentence of Paragraph 16.4.  The Appellate Body 
recently noted that "the appropriateness of a partic ular method [to establish causation] may have to be 
determined on a case-specific basis, depending on a number of factors and factual circumstances".
422  
192. We also agree with the Panel that an analysis of the conditions of competition and of 
correlation may prove "essential" in order prope rly to establish causation under Paragraph 16.4.423  
Indeed, rapidly increasing imports from China will be capable of being "a significant cause" of 
material injury to the domestic industry only  where they are engaged in actual or potential 
competition with the like or directly competitive pr oducts in the domestic industry.  Similarly, a 
temporal coincidence between upward trends in im ports and a decline in the performance indicators 
of the domestic industry may evidence the existen ce of a causal link between rapidly increasing 
imports and material injury to the domestic indus try.  However, as China itself acknowledges, the 
examination of the conditions of competition and th e analysis of correlation between movements in 
imports and injury factors are merely "analytical t ools" that may assist an i nvestigating authority in 
determining whether rapidly increasing imports are "a  significant cause" of material injury to the 
domestic industry.424  As such, neither of these analytical tools is dispositive of the question of 
whether rapidly increasing imports are "a significant cause" of material injury to the domestic industry 
under Paragraph 16.4. 
193. In respect of correlation in particular, the Appellate Body agreed with the panel in 
Argentina – Footwear (EC) that a correlation analysis focuses on "the relationship  between 
movements  in imports (volume and market share) and the movements in injury factors".425  T h e  
Appellate Body further clarified that:  
 … with respect to a "coincidence"  between an increase in imports 
and a decline in the relevant injury  factors, we note that the Panel 
simply said that this should "normally" occur if causation is present.  
The Panel qualified this statement, however, with the following sentence:   
                                                      
422Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 1376 (referring 
to Panel Report, US – Upland Cotton , para. 7.1194;  and Panel Report, Korea – Commercial Vessels , 
para. 7.560).   
423Panel Report, para. 7.170.  
424China's appellant's submission, para. 217.   
425Appellate Body Report, Argentina – Footwear (EC) , para. 144 (quoting Panel Report, Argentina – 
Footwear (EC) , para. 8.237). (emphasis added by the Appellate Body)   WT/DS399/AB/R 
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While such a coincidence by itself cannot prove causation … 
its absence would create serious doubts as to the existence of a causal link, and would require a very compelling analysis of 
why causation still is present.
426 (original emphasis;  footnotes 
omitted)   
194. Thus, the Appellate Body made clear that the ex istence of correlation, though indicative, is by 
no means dispositive of the existence of a causal link.  Indeed, the A ppellate Body considered that the 
lack of correlation does not preclude a finding th at a causal link exists, provided that a very 
compelling analysis is provided.   
195. In our view, China's argument that Paragraph 16.4 of the Protocol requires a more rigorous 
scrutiny of the conditions of competition and a stricter correlation between import increases and 
decreases in injury factors than other WTO agreements is predicat ed on Paragraph 16.4 requiring a 
"particularly strong, substantial, and important"427 causal link between rapidly increasing imports and 
material injury to the domestic industry.  For the reasons discussed earlier, we consider that the term 
"a significant cause" requires that rapidly increasi ng imports make an important contribution in 
bringing about material injury to the domestic i ndustry.  This legal standard must inform the 
investigating authority's analysis of causation under Pa ragraph 16.4 of the Protocol.  As we see it, an 
investigating authority may choose to rely—as the USITC did in this case—on both an analysis of the 
conditions of competition and an analysis of correla tion to show that rapidly increasing imports are "a 
significant cause" of material injury to the domestic industry.  A careful analysis of degrees of 
competitive overlap and a greater coincidence in  the magnitude of import increases vis-à-vis 
decreases in injury factors may provide a more robu st basis for a finding of causation.  However, 
investigating authorities may calibra te their analysis to the partic ular circumstances of the case at 
hand, as long as the analysis provides a sufficiently  reasoned and adequate explanation for a finding 
that rapidly increasing imports are "a significant cause"  of material injury.  The causation standard set 
forth in Paragraph 16.4 will be satisfied where the se analytical tools provide a reasoned and adequate 
explanation for the investigating authority's dete rmination that rapidly increasing imports make an 
important contribution in bringing about ma terial injury to the domestic industry. 
                                                      
426Appellate Body Report, Argentina – Footwear (EC) , para. 144 (quoting Panel Report, Argentina – 
Footwear (EC) , para. 8.238).  See also Appellate Body Report, Argentina – Footwear (EC) , para. 145.  In US – 
Upland Cotton , the Appellate Body also stated that "mere correlation between payment of subsidies and 
significantly suppressed prices would be insufficient, without more, to prove that the effect of the subsidies 
[was] significant price suppression." (Appellate Body Report, US – Upland Cotton , para. 451) 
427China's appellant's submission, para. 193.  WT/DS399/AB/R 
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(b) Analysis of Other Causes 
196. China further argues that "there is an inherent requirement to consider other possible causes 
of injury when finding a causal link between impor ts and the condition of the domestic industry."
428  
In China's view, the term "significant" in Paragrap h 16.4 of the Protocol "requires more than just 
considering other causal factors in some generalized way".429  In particular, China contends that an 
assessment of both the magnitude of "effects" attributable to subject imports and an assessment of the magnitude of "effects" attributable to "other factors" is required.
430  China asserts that this involves 
"separating not just the causes, but also the effects of those causes".431  Moreover, the investigating 
authority is required to determine whether the sep arate effects properly associated with imports from 
China rise to the level of "significant" cause.432 
197. China recognizes that the Protocol does not set forth any specific method for determining 
when the effects properly associated with subject imports rise to the level of being "a significant 
cause".433  For China, this situation is therefore like those under other WTO agreements, where the 
absence of any specific guidance has meant that WTO Members have discretion as to the "methods 
and approaches" they employ.434  In China's view, one approach would be to "weigh the different 
causes".435  China recognizes that Paragraph 16.4 "does not specifically require the effects of imports 
from China to be larger than the effects of other causes".436  Yet, in cases where "the effects of 
imports from China are less than the effects of othe r causes, an investigating authority must pause and 
consider the situation very carefully" and "must take  particular care in fulfilling its duty to provide a 
reasoned and adequate explanation" if it conclu des that imports from China are "a significant 
cause".437   
198. In response, the United States argues that Chin a "relies heavily" on the Appellate Body's 
findings in previous disputes, such as US – Lamb  and US – Hot-Rolled Steel .438  The United States 
points out, however, that the Appellate Body grounded those findings on "express language in 
Article 4.2(b) of the Agreement on Safeguards  and Article 3.5 of the Anti-Dumping Agreement  that 
                                                      
428China's appellant's submission, para. 240. 
429China's appellant's submission, para. 247. 
430China's appellant's submission, para. 251. 
431China's appellant's submission, para. 252. 
432China's appellant's submission, para. 253. 
433China's appellant's submission, para. 254.  
434China's appellant's submission, para. 254 (referring to Appellate Body Report, US – Hot-Rolled 
Steel , para. 224;  and Appellate Body Report, US – Lamb , para. 181).  
435China's appellant's submission, para. 255.  
436China's appellant's submission, para. 256. (original underlining)  
437China's appellant's submission, para. 256.   
438United States' appellee's submission, para. 128.  WT/DS399/AB/R 
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specifically requires an authority not to attribute to imports the injury cau sed by other factors".439  In 
the present case, the United States ag rees with the Panel that the USITC was required "to perform 
some analysis of the effects of other factor s that have caused injury to the industry".440  Referring to 
the report of the Appellate Body in US – Upland Cotton , the United States notes, however, that "when 
an agreement does not contain specific non-attribut ion language, an authority has the discretion to 
adopt an appropriate and reasonable analysis to assess the effects of other factors."441   
199. For its part, the Panel began by noting that  the parties agreed that some form of 
non-attribution analysis may be requi red under Section 16 of the Protocol.442  Based on its analysis, 
the Panel concluded that "the causal link between ra pidly increasing imports and material injury must 
be assessed 'within the context of other possible causal factors'."443   
200. As the Panel noted, an analogy can be drawn with the approach in US – Upland Cotton , 
where, notwithstanding the absence of explicit non-a ttribution language in Articles 5 and 6.3 of the 
SCM Agreement , both the panel and the Appellate Body found that, where other possible causes are 
present, some form of non-attribution analysis is inherent in establishing the causal link between the 
subsidy and price suppression and that, if a non-a ttribution analysis does not occur, one cannot 
establish with certainty that price suppression was the effect of the challenged subsidy (as opposed to 
some other injurious factor).444  The Appellate Body further found that the absence of expressly 
prescribed causation requirements under Articles 5(c) and 6.3(c) suggests that "a panel has a certain 
degree of discretion in selecting an appropriate me thodology for determining whether the 'effect' of a 
subsidy is significant price suppression".445 
201. Although the reasoning of the Appellate Body in that case was based on language found in 
other WTO agreements, we consider it apt and instructiv e in this dispute.  In particular, it supports the 
notion that some form of analysis of the injurious effects of other factors is required to demonstrate 
that subject imports are "a significant cause" of in jury within the meaning of Paragraph 16.4 of the 
Protocol, despite the absence of language explicitly requiring a consideration of other possible causes 
                                                      
439United States' appellee's submission, para. 12 8 (referring to Appellate Body Report, US – Lamb , 
paras. 162-181;  and Appellate Body Report, US – Hot-Rolled Steel , paras. 216-236). 
440United States' appellee's submission, para. 132 (referring to Panel Report, paras. 7.176 and 7.177). 
441United States' appellee's submission, para. 132 (referring to Appellate Body Report, US – Upland 
Cotton , para. 436). 
442Panel Report, para. 7.174. 
443Panel Report, para. 7.177 (quoting Panel Report, US – Upland Cotton , para. 7.1344). 
444Panel Report, para. 7.176;  Appellate Body Report, US – Upland Cotton , paras. 437 and 438;  Panel 
Report, US – Upland Cotton , para. 7.1344.  See also Appellate Body Report, US – Lamb , para. 179. 
445Appellate Body Report, US – Upland Cotton , para. 436. WT/DS399/AB/R 
Page 74  
 
of injury.
446  As we see it, an investigating authority can  make a determination as to whether subject 
imports are a significant cause of material injury on ly if it properly ensures that effects of other known 
causes are not improperly attributed to subject imports and do not suggest that subject imports are in 
fact only a "remote" or "minimal" cause, rather than  a "significant" cause, of material injury to the 
domestic industry.  For this reason, the significance of the effects of rapidly increasing imports needs to be assessed in the contex t of other known causal factors.
447  The extent of the analysis that is 
required will depend on the impact of other causes that  are alleged to be relevant and the facts and 
circumstances of the particular case. 
B. Conditions of Competition in the US Tyres Market 
202. Against this background, we turn to the speci fic issues raised by China on appeal.  In this 
section, we examine China's claim that the Panel er red in finding that the USITC properly examined 
the conditions of competition in the US tyres market in determining that rapidly increasing subject 
imports were "a significant cause" of material inju ry to the domestic industry under Paragraph 16.4 of 
China's Accession Protocol. 
203. China claims that this finding is in error fo r two principal reasons.  First, because the Panel 
(and the USITC) failed to assess adequately evidence  indicating that a majority of US production was 
sold in a particular segment (referred to as tier 1) of the replacement market448, where they faced 
"virtually no competition" from subject imports, which were primarily sold in tiers 2 and 3 of that 
market.449  Second, because the Panel (and the US ITC) failed to assess adequately evidence 
suggesting that domestic producers focused on th e original equipment manufacturer ("OEM") 
market450, where competition from subject imports was not significant.  According to China, taken 
                                                      
446For example, Article 4.2(a) of the Agreement  on Safeguards provides that, "when factors other than 
increased imports are causing injury at the same time, such injury shall not be attributed to increased imports".  
Article 3.5 of the Anti-Dumping Agreement  reads, in relevant part, as follows:  "The authorities shall also 
examine any known factors other than the dumped imports which at the same time are injuring the domestic 
industry, and the injuries caused by these other fact ors must not be attributed to the dumped imports."  
447See infra , para. 252 of this Report. 
448The replacement market (sometimes al so referred to as "aftermarket ") consists of customers buying 
tyres to use as replacement tyres for cars already on the ro ad.  It accounts for about 80 % of the total US market. 
(China's appellant's submission, para. 310 (referring to USITC Report, p. V-3))  Both the Panel and the USITC 
accepted that the replacement market gene rally could be divided into three se gments or "tiers", differentiated on 
the basis of brand and prices. (See Panel Report, para. 7.197;  and USITC Report, p. 27)  Tier 1 consists of 
major, flagship premium brands;  tier 2 consists of secondary, associate, or foreign producer brands;  and tier 3 includes private label, mass market, lesser-known brands, and non-branded tyres. (USITC Report, footnote 41 at 
p. 9, and p. V-4) 
449China's appellant's submission, para. 318.  
450The OEM market consists of tyres produced for sale to manufacturers of new passenger vehicle and 
light trucks.  It represents about 20% of the total US market. (See China's appellant's submission, para. 310 
(referring to USITC Report, p. V-3))  WT/DS399/AB/R 
 Page 75 
 
 
together, this evidence suggested a "highly attenuated"451 degree of competition between Chinese 
imports and domestic tyres in the US market, and therefore neither the Panel nor the USITC 
"provided a reasoned and ad equate explanation … [as] to how th ese data could be reconciled with the 
ultimate conclusion" that imports from China were "a significant cause" of material injury to the 
domestic industry within the meaning of Paragraph 16.4 of the Protocol.452 
1. Conditions of Competition in the US Replacement Market 
204. China claims that both the Panel and the US ITC failed to assess adequately the existence of 
"attenuated competition" between subject imports  and domestic tyres in the US replacement 
market.453  According to China, the Panel's conclusion that there were no "bright-line distinctions" 
between tiers 1, 2, and 3 of the US replacement  market did not sufficiently address the attenuated 
degree of competition that existed in the US replacement market.454  China underscores that subject 
imports represented less than 1% of total shipme nts in tier 1 of the replacement market, where 
US producers concentrated 51% of their shipments.455  Such "limited presence" of Chinese imports in 
tier 1 suggested that a "majority" of US producti on faced "virtually no competition" from subject 
imports in the replacement market.456  Moreover, the Panel's finding that competition in tiers 2 and 3 
was more than "vestigial" did not, in China's vi ew, provide a sufficient basis for concluding that 
subject imports were "a significant cause" of ma terial injury, because those segments represented 
"less than half" of the US replacement market.457  China further argues that the Panel "went beyond 
the proper bounds of review" by providing its own analysis as to why competition between domestic 
tyres and subject imports was "significant" in tiers 2 and 3.458 
205. The United States responds that the Panel pr operly upheld the USITC's conclusion that 
competition between subject imports and domestically produced tyres in the replacement market was 
significant.  The United States emphasizes that "sig nificant quantities" of both US and Chinese tyres 
were shipped into tiers 2 and 3 in 2008, thus s upporting the USITC's conclusion that competition was 
significant within those tiers.459  The United States adds that the Panel correctly upheld the USITC's 
conclusion that the unclear demarcations between the tiers of the US replacement market did not 
                                                      
451China's appellant's submission, para. 336.  
452China's appellant's submission, para. 348.  
453China's appellant's submission, para. 311.  
454China's appellant's submission, para. 313 (referring to Panel Report, para. 7.197). 
455China's appellant's submission, para. 316.  
456China's appellant's submission, paras. 318 and 325.  
457China's appellant's submission, para. 320 (referring to Panel Report, para. 7.195).  
458China's appellant's submission, paras. 322 and 323.  
459United States' appellee's submission, para. 150.  WT/DS399/AB/R 
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support China's argument that imports in one tier could not impact volumes and prices in another tier 
of the market.
460 
206. For its part, the Panel noted that the evidence before the USITC suggested that there was no 
consensus as to the dividing lines between the tiers of the replacement market, particularly in respect 
of the differentiation between tiers 2 and 3.461  Moreover, the Panel emphasized that, even if tiers 2 
and 3 could be "clinically isolated" from tier 1,  there remained "significant competition" between 
domestic tyres and subject imports in tiers 2 and 3.462  Therefore, the Panel found no fault with the 
USITC's conclusions that "there was no distinct  dividing line between … tiers [1, 2, and 3]"463 and 
that "subject imports and domestic products  were not focused in different tiers".464 
207. We begin our analysis with China's argument that the Panel erred in upholding the USITC's 
conclusion that there were no distinct dividing lines between tiers 1, 2, and 3 of the US replacement 
market.465  China contends that this finding is in e rror because the Panel did not sufficiently address 
the "attenuated" degree of competition that existed in  the replacement market.  According to China, 
the Panel erroneously focused on the question of whet her the distinct tiers of the replacement market 
were clearly demarcated, when it should have inst ead focused on how the existence of those segments 
affected the USITC's conclusion that competition between imports from China and domestic tyres in 
the US replacement market was not attenuated.466 
208. At the outset, we note that the Panel (and the USITC) addressed the question of whether 
tiers 1, 2, and 3 of the US replacement market we re clearly divided in response to China's argument 
that imports from China and domestically produced tyres were focused on different market segments 
of the US replacement market.  According to China, US tyre production was primarily directed towards tier 1, whereas Chinese tyres were prim arily sold into the low-end tiers 2 and 3.
467  Viewed in 
this light, we cannot agree with China to the extent  that it suggests that the question of whether the 
distinct segments of the replacement market were clearly delineated was not relevant for the Panel's 
review of the USITC's assessment of the degree of competition between Chinese and domestic tyres 
in the US replacement market.  In our view, the f act that the distinct tiers of the US replacement 
market were not clearly divided is significant, in sofar as it suggests a greater degree of competitive 
overlap across these tiers than otherwise would have existed had such tiers been clearly delineated. 
                                                      
460United States' appellee's submission, paras. 151 and 152. 
461Panel Report, para. 7.188 (referring to USITC Report, p. 51). 
462Panel Report, para. 7.195. 
463Panel Report, para. 7.197.  
464Panel Report, para. 7.197.  
465Panel Report, para. 7.157. 
466China's appellant's submission, para. 313.  
467Panel Report, para. 7.185.   WT/DS399/AB/R 
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209. However, a careful review of the Panel's anal ysis indicates that the reasoning articulated by 
the Panel in support of the USITC's conclusion that "there was less agreement [among firms 
submitting questionnaire responses] as to which tires were included in the two lower-priced 
categories"468 refers to the views expressed by the dissenting USITC commissioners .  Indeed, in 
rejecting China's argument concerning segmentation in the US replacement market, the Panel noted 
the dissenting USITC commissioners' observation that  questionnaire responses were "mixed as to 
where to place associate brands, with some respon ses placing them in tier 2 and others placing them 
in tier 3"469, and that there were "wide variations in the est imates for the share of the total U.S. market 
accounted for by each tier".470  For the Panel, these findings suggested that "there was no established 
market perception of where the boundari es between tiers 1, 2 and 3 should lie."471  In response to 
China's argument that domestic tyres were princi pally confined to tier 1, whereas subject imports 
were concentrated on tiers 2 and 3, the Panel re ferred to the following statement by the dissenting 
USITC commissioners: 
While not arguing that there is a clear dividing line among each of 
the tiers, respondents , in general, contend that competition is 
attenuated between domestically produced tires which are primarily 
in tier 1 and 2  tires for the OEM and replacement markets, and 
subject imports which are primarily in tier 3  tires for the replacement 
market.472 (emphasis added by the Panel) 
210. The Panel also referred to the testimony of a Ch inese producer who stated that it was "often 
useful to group Tier 1 and Tier 2 tires together  in the category of 'higher end' tires, since both of these 
segments are ones in which brand equity is an important element."473 
211. As the above reasoning suggests, the Panel upheld  the USITC's conclusion that there were no 
distinct dividing lines between tiers 1, 2, and 3 of the US replacement market on the basis of findings 
made by the dissenting USITC commissioners , and on the basis of a statement by one Chinese 
producer before the USITC.  However, as noted  earlier, the proper standard of review under 
Article 11 of the DSU required the Panel to est ablish whether the USITC provided a reasoned and 
adequate explanation for its affirmative  finding of market disruption.  The separate views of any 
dissenting commissioners are not part of the USITC' s determination that market disruption exists.  
Accordingly, insofar as the Panel relied on the views of the dissenting USITC commissioners to 
                                                      
468Panel Report, para. 7.186 (quoting USITC Report, p. 27).  
469Panel Report, para. 7.188 (quoting USITC Report, p. 51). (emphasis omitted)  
470Panel Report, para. 7.189 (quoting USITC Report, p. 52). 
471Panel Report, para. 7.190.  
472Panel Report, para. 7.191 (quoting statement by the dissenting commissioners, USITC Report, 
p. 51). 
473Panel Report, para. 7.192 (quoting GITI Post-Hearing Brief (Panel Exhibit China-40), p. 6). 
(emphasis added by the Panel)  WT/DS399/AB/R 
Page 78  
 
support its finding that the USITC provided a reasone d and adequate explanation for its determination 
that subject imports were a significant cause of ma terial injury under Paragraph 16.4, including the 
USITC's assessment of the conditions of competiti on in the US market, the Panel was in error. 
212. Having said that, we note that the Panel's endor sement of the USITC's conclusion that there 
were no distinct dividing lines between tiers 1, 2, and 3 of the US replacement market was but one of 
the reasons articulated by the Panel in support of its finding that the USITC did not err in finding that 
competition between Chinese and domestic tyres in that market was not attenuated.
474  In addition to 
finding that the USITC correctly concluded that such tiers were not clearly divided, the Panel further 
reasoned that the market share data before th e USITC did not suggest that competition between 
domestic and Chinese tyres in the replacement mark et was attenuated, for the following reasons: 
[E]ven if tiers 2 and 3 could be clinically isolated from tier 1, record 
evidence demonstrates that ther e remained significant competition 
between domestic tyres and subject imports in tiers 2 and 3.  In 2008, U.S. producers and subject imports accounted for 16 and 27.3 per 
cent respectively of tier 2 shipments, and 18.6 and 42.4 per cent respectively of tier 3 shipments.  In our view, such U.S. industry 
presence in tiers 2 and 3 suggests significantly more than the merely 
"vestigial" competition alleged by China.  The fact that this data relates to 2008, after the U.S. industry closed plant producing lower-value (i.e., tier 2 and 3) tyres, suggests that the competition between the U.S. industry and subject imports would have been even 
greater earlier in the period of investigation.
475 (footnotes omitted) 
213. On this basis, although the Panel acknowledge d that imports from China had only a "limited 
presence" in tier 1, which accounted for 51.2% of US shipments in the replacement market, the Panel 
found that subject imports had "a far greater presen ce in the remainder of the replacement market", 
where domestic tyres were also "prevalent".476 
214. In our view, the above reasoning reasonably su pports the Panel's conclusion that the USITC 
did not err in finding that the presence of both domes tic and Chinese tyres in tiers 2 and 3 suggested 
that, overall, there was significant competition in the US replacement market, despite the limited 
presence of Chinese imports in the larger tier 1 of that market.  As the Panel noted, although there was 
some variation in the levels of competition in the distinct tiers of the replacement market, there was 
                                                      
474Panel Report, para. 7.197;  USITC Report, p. 27. 
475Panel Report, para. 7.195 (referring to United States ' response to Panel Question 46, para. 24).  The 
USITC similarly found that "U.S.-produced tires and subject imports from China both have a significant 
presence in the Tier 2 and Tier 3 (category 2 and categor y 3) segments of the replacement market, both are also 
present in the Tier 1 segment (category 1) and the OE M market, and there is significant competition between the 
subject imports and domestic tires in the U.S. market." (USITC Report, p. 27) 
476Panel Report, para. 7.196.  WT/DS399/AB/R 
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significant competition between domestic and Chinese tyres in tiers 2 and 3477, which in turn 
supported the USITC's ultimate finding that subject im ports were a significant cause of material injury 
to the domestic industry. 
215. Accordingly, we are not persuaded that the Pa nel erred in finding that the USITC correctly 
assessed the conditions of competition in the US re placement market.  Although we consider the 
Panel to have fallen into error in referring to views expressed by the dissenting USITC commissioners 
on the question of whether the different tiers of the US replacement market were clearly divided, we 
do not consider that this error invalidates the Pa nel's ultimate conclusion that the USITC properly 
established that there was significant competition between imports from China and domestically 
produced tyres in the US replacement market.  In our  view, this conclusion is supported by the Panel's 
reasoning that market share data before the US ITC suggested that both Chinese and domestic tyres 
had a significant presence in tiers 2 and 3 of the US replacement market.  Accordingly, we do not 
consider that the Panel erred in finding that the USITC did not fail to assess adequately the existence 
of "attenuated competition"478 between subject imports and domestic tyres in the US replacement 
market. 
2. US Producers' Focus on the OEM Market 
216. According to China, the Panel erroneously focu sed on increasing trends in Chinese imports to 
the OEM market when instead it should have assessed whether co mpetition in that market was 
significant.479  China underscores that its share of the OEM market remained below 5% during the 
entire period of investigation.480  For China, the Panel's end-point-to-end-point analysis obscures the 
fact that most of China's gain in market share occurred by 2006.481  China also stresses that non-
subject imports had a larger and increasing share of the OEM market than subject imports, even 
during a period of time when they lost market share in the overall US market.482 
217. The United States counters that it was reasonable for the USITC to rely on China's growing 
presence in the OEM market to support its finding that competition in the overall US market was 
                                                      
477Panel Report, para. 7.195.  In this regard, we do not agree with China that the Panel "went beyond 
the proper bounds of review" in concluding that there re mained significant competition in tiers 2 and 3 of the 
US replacement market. (China's appella nt's submission, para. 322)  The Pa nel was simply reciting market share 
data before the USITC for those tiers, and critically examining whether this data supported the USITC's 
conclusion that competition between domestic tyres and subject imports was significant in the US market. 
478China's appellant's submission, para. 311.  
479China's appellant's submission, para. 334.  
480China's appellant's submission, para. 330.  
481China's appellant's submission, para. 331.  
482China's appellant's submission, paras. 332 and 333.  WT/DS399/AB/R 
Page 80  
 
significant.  The United States emphasizes that Ch inese imports increased their share of the OEM 
market consistently over the period of investiga tion, while the domestic industry consistently lost 
market share.
483  Because these trends were in accordance with the changes in the overall market, the 
United States argues, the conditions of competiti on in the OEM market supported the USITC's overall 
finding.484  In addition, the United States points out that a volume of 2.3 million tyres from China, 
representing a 5% market share in 2008, could not be considered "negligible".485 
218. Although the Panel acknowledged that the OE M sector was more important to domestic 
producers than for subject imports, it noted that the proportion of domestic shipments in that segment was decreasing (from 23.3% in 2004 to 17.7% in 2008), whereas the proportion of subject imports 
was increasing (from 0.8% in 2004 to 5% in 2008).
486  In absolute terms, the volume of domestic tyre 
shipments to the OEM market over the pe riod of investigation decreased by 46% (from 
45,351,000 units in 2004 to 24, 211,000 units in 2008), whereas the volume of subject imports 
increased by 1,785% (from 121,000 units in  2004 to 2,281,000 units in 2008).487  On the basis of this 
data, the Panel stated: 
Thus, during the period of inves tigation both subject imports and 
domestically-produced tyres were present in the OEM sector.  Over the period as a whole, the degree of the resultant competition between subject imports and domestically-produced tyres in the OEM sector was increasing, as the relative importance of 
domestically-produced tyres decreased, and that of subject imports 
increased.  Consistent with the trend for OEM and replacement market shipments overall, the competitive importance of subject imports in the OEM market became particularly pronounced at the 
end of the period of investigation,  when despite a fall in apparent 
consumption of 16.4 per cent, subject  imports were able to increase 
by 12.6 per cent, while non-subject imports and U.S. producer 
shipments fell by 11.3 and 22 per cent respectively.
488 (footnote 
omitted) 
Based on this analysis, the Panel rejected China's assertion that "the USITC was required to dismiss 
the level of competition from subject imports in the OEM sector as 'negligible'."489 
219. We agree with China that the Panel could have  provided a more thorough analysis of the data 
concerning the level of competition in the OEM ma rket.  After noting that both Chinese and domestic 
tyres were "present" in the OEM sector, the Panel a ppears to have relied primarily on an end-point-to-
                                                      
483United States' appellee's submission, para. 154. 
484United States' appellee's submission, para. 154. 
485United States' appellee's submission, para. 155. 
486Panel Report, para. 7.201.  
487Panel Report, para. 7.202. 
488Panel Report, para. 7.204. 
489Panel Report, para. 7.205 (quoting China's firs t written submission to the Panel, para. 226).  WT/DS399/AB/R 
 Page 81 
 
 
end-point comparison of relative volumes and market  share in coming to the conclusion that the 
degree of competition between domestically produced  tyres and subject imports was "increasing" in 
the OEM market.490  The Panel then sought to buttress this  conclusion by juxtaposing the upward 
trend in subject imports' market share with downw ard trends in apparent consumption and market 
share of both domestic tyres and non-subject imports.491 
220. We note that the Appellate Body has expressed  reservations about end-point-to-end-point 
analyses of the type developed by the Panel in relation to the OEM market.492  Leaving that aside, the 
Panel could have provided a more thorough analysis  of the conditions of competition in the OEM 
market.  In particular, the Panel did not discuss in detail why an "increasing degree of competition"493 
in the OEM market supported its ultimate conclusi on that the USITC was not required to dismiss 
competition in that market as "negligible".494  Having said that, the Panel in this case was called upon 
to assess whether the USITC properly concluded that there was significant competition between 
subject imports and domestic tyres in the overall  US market, rather than in the OEM market alone.  
Thus, the relevant question before the Panel w as whether the degree of competition in the OEM 
market supported the USITC's conclusion that comp etition between subject im ports and domestically 
produced tyres in the overall US market was significant .  This is the question to which we turn next. 
3. Conditions of Competition in the Overall US Market 
221. As a final matter, China claims that the Panel failed to grasp the significance of the combined 
effect of attenuated competition in the OEM and re placement markets for its review of the USITC's 
assessment of the conditions of competition in the overall US market.  According to China, both the 
Panel and the USITC failed to explain adequately how subject imports could be a significant cause of 
material injury under Paragraph 16.4 of the Protoc ol when approximately 60% of US production went 
into tier 1 of the replacement market and the OE M market, where Chinese imports held only a 2-3% 
combined market share.495 
222. The United States responds that the Panel corr ectly concluded that the USITC reasonably 
determined that there was "significant competiti on" between Chinese and domestic tyres in tiers 2 
                                                      
490Panel Report, para. 7.204.  
491Panel Report, para. 7.204.  
492See, for example, Appellate Body Report, US – Steel Safeguards , para. 354;  Appellate Body Report, 
Argentina – Footwear (EC) , para. 129;  and Appellate Body Report, EC and certain member States – Large 
Civil Aircraft , para. 1188.  
493Panel Report, para. 7.204.  
494Panel Report, para. 7.205.  
495China's appellant's submission, paras. 309 and 336. WT/DS399/AB/R 
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and 3 of the US replacement market
496;  that Chinese imports in different segments could impact 
prices and volumes of domestic tyres in other segments because there were "no clear dividing lines" 
between the tiers of the replacement market497;  and that subject imports were taking a "growing, 
though smaller" share of the OEM market.498 
223. We recall our earlier conclusion that the Pa nel did not err in reviewing the USITC's 
assessment of the conditions of compet ition in the US replacement market.499  We have agreed with 
the Panel that the USITC properly concluded that  the significant presence of both Chinese imports 
and domestic tyres in tiers 2 and 3 indicated a su fficient degree of competition in the replacement 
market, despite the limited presence of subject imports  in tier 1 of that market.  However, we have 
also found that the Panel could have provided a more thorough analysis of the conditions of 
competition in the OEM market. 
224. Nonetheless, we observe that the OEM market was generally less important for both US 
producers and subject imports than the replacem ent market.  As China acknowledges, whereas the 
replacement market accounted for more than 80% of the overall US market, the OEM market 
represented less than 20% of that market.500  During the period of investigation, the OEM market 
represented from 23.3% to 17.7% of  total US producers shipments, and from 0.8% to 5% of subject 
imports.501  Therefore, even assuming that China is co rrect in arguing that competition in the OEM 
market was not significant502, the resulting degree of competition between subject imports and 
domestic tyres in the larger replacement market w ould have sufficed to establish that competition in 
the overall  US market was significant.  Moreover, the significant presence of Chinese imports in 
tiers 2 and 3 of the replacement market, combined with their limited—but growing—presence in tier 1 
of the replacement market and in the OEM market , supports the Panel's endorsement of the USITC's 
conclusion that there was "significant competition between the subject imports and domestic tires in 
the U.S. market".503 
225. In our view, China's arguments in respect of "attenuated" competition in the US market are 
predicated on its interpretation of the causation standa rd in Paragraph 16.4 of the Protocol.  For China, 
                                                      
496United States' appellee's submission, para. 156 (referring to Panel Report, para. 7.195;  and USITC 
Report, pp. 21 and 27).  
497United States' appellee's submission, para. 156 (referring to Panel Report, paras. 7.185-7.194;  and 
USITC Report, pp. 21 and 27).  
498United States' appellee's submission, para. 156 (referring to Panel Report, paras. 7.201-7.205;  and 
USITC Report, pp. 21 and 27). 
499See supra , para. 215 of this Report. 
500China's appellant's submission, para. 310.  
501Panel Report, para. 7.201 (referring to USITC Report, Table V-3).  
502China's appellant's submission, para. 327.  
503USITC Report, p. 27.   WT/DS399/AB/R 
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the degree of competition in the US market does not support a finding that subject imports are "a 
significant cause" of material injury to the domest ic industry because China reads Paragraph 16.4 as 
requiring a "particularly strong, substantial, and important" causal link between subject imports and 
any material injury to the domestic industry.504  However, as we explained above505, the causation 
standard of Paragraph 16.4, properly read, requi res that subject imports make an important 
contribution in bringing about material injury to the domestic industry.  In our view, the degree of 
competition between subject imports and domestic tyr es in the US market that was established by the 
USITC, and confirmed by the Panel, was sufficient to support a finding that imports from China were "a significant cause" of material injury to the domestic industry. 
4. Conclusion 
226. On the basis of the foregoing, we consider that  the Panel did not err in finding that the USITC 
properly assessed the conditions of competition in the overall US market.  Accordingly, we uphold  the 
Panel's finding, in paragraph 7.216 of  the Panel Report, that the USITC did not err in its assessment of 
the conditions of competition in the overall US market. 
C. Correlation between Rapidly Increasing Imports and Material Injury 
227. We turn next to China's claim that the Panel erred in finding that the USITC was entitled to 
rely on "overall coincidence" between upwar d movements in subject imports and downward 
movements in injury factors in reaching its finding that subject imports were a significant cause of material injury under Paragraph 16.4 of China's Accession Protocol. 
228. First, China argues that the Panel erred in not requiring a more specific degree of correlation 
between increases in subject imports and declines in injury factors.  According to China, the Panel 
was under an obligation under Paragraph 16.4 to analyze carefully "year-to-year relative changes"
506 
between subject imports and injury factors.  In pa rticular, China contends that the Panel failed to 
assess adequately a "disconnect" in the trends betw een 2007 and 2008, when the rate of increase in 
subject imports declined, but injury factors su ch as production, shipments, and sales nonetheless 
deteriorated.507  China adds that a similar "disconnect" exis ted between declines in the rate of increase 
in subject imports and a decline in other injury f actors such as operating profits, productivity, capacity 
utilization, and research and development.508  According to China, the Panel failed to address in its 
explanation whether these inconsiste ncies in trends suggested that in jury was caused by other factors, 
                                                      
504China's appellant's submission, para. 193.  
505Supra , paras. 176 and 177 of this Report. 
506China's appellant's submission, para. 350.  
507China's appellant's submission, paras. 354-358.  
508China's appellant's submission, para. 359.  WT/DS399/AB/R 
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such as the 2008 recession and the domestic industry's strategic decision to cede the low-end segment 
of the US replacement market.
509 
229. Second, China argues that the Panel incorrectly upheld the USITC's finding that subject 
imports had adverse effects on domestic  prices and profitability.  In particular, China stresses that the 
cost of goods sold ("COGS")/sales ratio increased between 2007 and 2008, when the rate of increase 
in subject imports declined.510  In China's view, the Panel uncritically accepted the USITC's 
conclusion that there was "a sharp increase in this ratio in 2008", and ignored the sharp decrease in the 
COGS/sales ratio in 2007.511  Similarly, the Panel failed to a ddress yearly changes in finding that 
"underselling by subject imports generally had a highly detrimental impact on the domestic 
industry".512  China emphasizes that, when the margin of underselling was greatest, in 2007, the 
profitability of the domestic indus try improved.  In contrast, when the margin of underselling 
decreased in 2008, the profitability of the domestic industry also declined.513  China adds that the 
margin of underselling remained relatively high in 2008 because domestic higher-value branded tyres 
have higher prices than unbranded Chinese tyres.514  Thus, the Panel did not take into account the 
effects of "attenuated competition" on underselling515, and failed to address adequately the fact that 
non-subject imports also undersold domestic tyres.516 
230. The United States responds that the USITC's analysis of correlation was both reasoned and 
adequate, and sufficiently supported the USITC's conc lusion that subject imports were "a significant 
cause" of material injury to the domestic industry.  In the United States' view, the Panel correctly held 
that Paragraph 16.4 of the Protocol did not require a strict correlation in the degrees of changes in 
subject imports and injury factors.517  The United States emphasizes that injury indicators such as 
market share, production, capacity, shipments, ne t sales, number of production-related workers, hours 
worked, and wages declined in every year of the period of investigation.518  Other factors such as 
productivity, capacity utilization, operating margins,  and operating income fell in three out of 
                                                      
509China's appellant's submission, paras. 364-366.   
510China's appellant's submission, para. 368.  The COGS /sales ratio expresses the portion of total sales 
value that is accounted for by costs di rectly associated with making a partic ular good.  A higher COGS/sale ratio 
therefore indicates that such costs make up a higher por tion of sales value, leaving a smaller margin for selling, 
general and administrative expenses, and profits.  The COGS/sales ratio therefore provides an indication of 
whether the sales value is sufficient to cover the pr oduction costs to produce the goods that are sold. 
511China's appellant's submission, para. 369 (quoting USITC Report, p. 24).  
512China's appellant's submission, para. 371 (quoting Panel Report, para. 7.258). (emphasis added by 
China) 
513China's appellant's submission, para. 372.  
514China's appellant's submission, para. 375.  
515China's appellant's submission, para. 377.  
516China's appellant's submission, para. 379.  
517United States' appellee's submission, para. 160.  
518United States' appellee's submission, para. 161.   WT/DS399/AB/R 
 Page 85 
 
 
four years of the period of investigation.519  The United States argues that improvements in the 
profitability, productivity, and capacity utilization of  the domestic industry in  2007 do not undermine 
the Panel's overall correlation finding because othe r factors such as market share, capacity and 
production levels, shipments, sales quantities, num ber of production-related workers, hours worked, 
and wages continued to fall in that same year.520 
231. The United States further submits that the Panel did not err in finding that subject imports 
adversely impacted the domestic industry's prices and profitability.  In the United States' view, the 
Panel sufficiently addressed and rejected China's ar gument that an improvement in the COGS/sales 
ratio in 2007 suggested an absence of correlation.521  In addition, the Panel correctly held that 
improvements in the profitability of the US industry in 2007 did not suggest an absence of correlation, 
because the industry's operating margins declined in three out of four years of the period of 
investigation.522  Moreover, the United States explains that the USITC reasonably found that "levels 
of pervasive underselling" by subject imports suppressed prices in the US market, thereby indicating that there was "significant price competition" in the replacement market.
523  In addition, the 
United States stresses that subject imports also consistently undersold thir d-country imports over the 
period of investigation.524 
232. The Panel, for its part, noted that Paragra ph 16.4 did not expressly require a showing of 
correlation between material injury and rapidly incr easing imports, and described it as a "tool" that the 
investigating authority might use to establish causation.525  The Panel disagreed with China that a 
finding of "significant cause" depended on a finding of correlation between varying degrees  of 
increase in imports and varying degrees  of decline in injury indicators.526  The Panel reasoned that "a 
more precise degree of correlation" was "unrealis tic" to expect, especially where other causes of 
injury might be at work.527  The Panel added that a finding of "significant cause" is not excluded 
simply because an investigating authority relies on "an overall coincidence" between import increases 
and declining injury factors, particularly where that analysis is combined with other analyses 
indicative of causation.528 
                                                      
519United States' appellee's submission, para. 162.  
520United States' appellee's submission, para. 163. 
521United States' appellee's submission, paras. 170 and 171.  
522United States' appellee's submission, para. 173.  
523United States' appellee's submission, para. 175.  
524United States' appellee's submission, para. 176.  
525Panel Report, para. 7.228.  
526Panel Report, para. 7.229.  
527Panel Report, para. 7.229.  
528Panel Report, para. 7.229.  WT/DS399/AB/R 
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233. Turning to the correlation analysis conducted by the USITC, the Panel noted that, while 
subject imports were "increasing rapidly", the domes tic industry's market share, production, capacity, 
shipments, sales quantities, and employment-related f actors declined in every year of the period of 
investigation.
529  The Panel added that the domestic indus try suffered declines in operating income, 
operating margins, capacity utilization,  and productivity in three out of four years of the period of 
investigation, and that all, except for capacity utili zation, were at their lowest levels in 2008, when 
imports from China were at their highest.530  For the Panel, these data were sufficient for the USITC 
properly to find that there was an overall coinci dence between the upward movement in subject 
imports and the downward movement in injury factors.531 
234. The Panel further disagreed with China that a decline by 5.3 percentage points in the 
COGS/sales ratio in 2007 undermined the USITC's finding that the domestic industry experienced a 
"cost-price squeeze" over the period of investigation.   The Panel recalled that the USITC had made a 
finding of price suppression , and that price increases over the pe riod of investigation were not 
sufficient to offset increases in production costs.532  For the Panel, the USITC's conclusion regarding a 
"cost-price squeeze" was further confirmed by the "per vasive underselling" by subject imports in the 
US market over the period of investigation.533  The Panel reasoned that the fact that discrete injury 
factors—profitability and COGS/sales ratio—impr oved in 2007 did not undermine the USITC's 
conclusion concerning overall coincidence between incr eases in subject imports and declines in injury 
factors.534 
1. Trend "Disconnect" between 2007 and 2008  
235. We begin our analysis with China's claim that the Panel—and the USITC—failed to assess 
adequately year-by-year relative changes between s ubject imports and injury factors.  According to 
China, the following indicators suggest that the performance of the domestic industry improved 
in 2007 when the rate of increases in subject imports was hi ghest, at a 53.7% increase over 2006 
levels, but deteriorated significantly in 2008 when the rate of increases in subject imports declined to 
10.8% over 2007 levels. 
                                                      
529Panel Report, para. 7.234 (referring to USITC Report, pp. 15-18 and 23-26).  
530Panel Report, para. 7.235 (referring to USITC Report, Table C-1 at pp. C-3-C-4). 
531Panel Report, para. 7.236. 
532Panel Report, para. 7.245. 
533Panel Report, para. 7.246. 
534Panel Report, paras. 7.244 and 7.258.  WT/DS399/AB/R 
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Volume Disconnects In Correlation (2006/2007 vs. 2007/2008 Period) 
Injury Factor Change from '06 to '07 Change from '07 to '08 
Production Capacity 18.8 M tire drop-off 
(-8.8%) 9.9 M tire drop-off 
(-5%) 
Production 4.5 M tire drop-off 
(-2.4%) 20 M tire drop-off 
(-11.1%) 
U.S. Shipments 8.1 M tire drop-off 
(-5%) 18.9 M tire drop-off 
(-12.1%) 
Net Sales 10.4 M tire drop-off 
(-5.5%) 21 M tire drop-off 
(-11.7%) 
Source:  China's appellant's submission, para. 355 (referring to USITC Report, Table C-1 at pp. C-3-C-4). 
 
Value Disconnects In Correlation (2006/2007 vs. 2007/2008 Period) 
Injury Factor Change from '06 to '07 Change from '07 to '08 
U.S. Shipments $484 M increase 
(+5.1%) $430 M decrease 
(-4.3%) 
Net Sales $523 M increase 
(+4.8%) $451 M decrease 
(-4%) 
Source:  China's appellant's submission, para. 358 (referring to USITC Report, Table C-1 at pp. C-3-C-4). 
 
Omitted Factor Disconnects In Corre lation (2006/2007 – 2007/2008 Period)535 
Injury Factor Change from '06 to '07 Change from '07 to '08 
Operating Profits 5.6% pt increase 6.9% pt decrease 
Productivity 0.1 tire per hour increase 0.2 tire per hour decrease 
Capacity Utilization 6.0% pt increase 5.9% pt decrease 
Research and Development 6.4% increase 0.1 percent decrease 
Capital Expenditures 3.6% increase 22.1% increase 
Source:  China's appellant's submission, para. 359 (referring to USITC Report, Table C-1 at pp. C-3-C-4). 
 
 
236. At the outset, we note that China's argumen t seems premised on its interpretation that 
Paragraph 16.4 required the USITC to establish a strict year-by-year correlation between the  
magnitude of upward import trends and the magnitude of downward movements in the relevant 
performance indicators of the domestic industry.  As noted above536, we see nothing in the text of 
Paragraph 16.4 that would require investigating au thorities to establish a stricter degree of correlation 
between movements in imports and movements in injury factors in assessing causation under the 
Protocol than under other WTO agreements. 
237. As the Appellate Body has explained, the analysis of correlation focuses on "the relationship  
between movements  in imports (volume and market share) and the movements in injury factors".537  
                                                      
535USITC Report, Table C-1 at pp. C-3-C-4. 
536Supra , para. 195 of this Report. 
537Appellate Body Report, Argentina – Footwear (EC) , para. 144. (original emphasis) WT/DS399/AB/R 
Page 88  
 
Furthermore, although the Appellate Body has acknowledged that correlation would "normally" 
suggest the existence of a causal link, it has made clear that it "cannot by itself prove causation", and 
that its absence does not preclude an affirmative cau sation finding provided a "compelling analysis is 
present".
538  Hence, a correlation analysis is merely indicative—but not dispositive—of the existence 
of a causal link, and may assist an investigating au thority in establishing that subject imports are "a 
significant cause" of material injury to the domest ic industry under Paragraph 16.4 of the Protocol. 
238. Moreover, we agree with the Panel that correla tion between increases in subject imports and 
decreases in injury factors "is not an exact science", and that it would be "unrealistic" to require a strict correlation in the degree of change in subj ect imports and the degree of change in injury 
indicators, particularly where other causes of injury are at work.
539  This is particularly so because, in 
economic terms, different injury indicators will re spond differently to increases in subject imports, 
thereby making it difficult—if not impossible—to estab lish such a precise correlation in the degree of 
changes in subject imports and the degree of changes in injury indicators.  We agree with the Panel 
that, while a more precise degree of correlation between the upward moveme nts in subject imports 
and the downward movements in injury factors might result in a more robust finding of causation, a 
finding of "significant cause" is not excluded si mply because an investigating authority relies on 
overall coincidence between the upward movement in subject imports and the downward movement 
in injury factors.540  
239. In any event, we are not persuaded that the st atistics put forward by China demonstrate that 
the Panel and the USITC failed to assess adequately th e relationship between trends in subject imports 
and relevant injury indicators in their analyses.  We note that China presents data on the relative 
change in discrete injury factors as compared to th e immediately preceding year, and compares this 
with the relevant change  in the rate of increases in subject imports.  We do not consider that the 
USITC was required to conduct such an analysis.  For the reasons articulated above, a correlation 
analysis is not one seeking to establish a preci se coincidence between trends in the yearly rates  of 
increase in subject imports and the yearly rates of change in injury factors.  In other words, in its 
                                                      
538Appellate Body Report, Argentina – Footwear (EC) , para. 144 (quoting Panel Report, Argentina – 
Footwear (EC) , para. 8.238).  
539Panel Report, para. 7.229.  We understand the Panel' s reference to a "decrease" in injury factors as 
referring to a deterioration in the performance of the domestic industry, irrespective of whether the particular 
injury factor expresses such deterior ation in positive or negative terms. 
540Panel Report, para. 7.229.   WT/DS399/AB/R 
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analysis of correlation, the USITC did not need to establish whether subject imports accelerated  over 
the period of investigation at the same pace  at which the injury factors deteriorated.  Moreover, a 
proper correlation analysis seeks to establish a temporal  coincidence between an upward trend in 
subject imports  and a downward trend in the performance indicators of the domestic industry, and 
does not necessarily require strict simultaneity in th e movements of these indicators.  Viewed in this 
light, the data compiled by the USITC for the year s 2007 and 2008, and reviewed by the Panel, do not 
detract from the USITC's overall finding of coincidence between the upward movement in subject 
imports and the downward movement in injury factors, because in that period subject imports continued to increase
541 and injury indicators continued to deteriorate. 
240. Indeed, whereas subject imports increased in both absolute and relative terms in each year of 
the period of investigation, including 2008, performance indicators of the domestic industry 
consistently deteriorated over the same period.  As the Panel correctly observed, factors such as 
market share542, production543, capacity544, shipments545, sales quantities546, and employment-related 
factors547 declined in every year of the period of investigation.548  Other factors such as operating 
income549, operating margins550, capacity utilization551, and productivity552 declined in three out of 
four years of the period of investigation, and all, except for capacity utilization, were at their lowest 
levels in 2008, when the volume of subject imports was greatest.553 
                                                      
541We recall that the volume of subject imports incr eased by 53.7% in 2007, and by 10.8% in 2008. 
542The domestic industry's market shar e fell in every year of the period of investigation, declining by 
13.7% over the entire period. (Panel Report, para. 7.234 (referring to USITC Report, pp. 25-26)) 
543The domestic industry's production declined in every year of the period of investigation, resulting in 
an overall decline of 26.6%. (Panel Report, para. 7.234 (referring to USITC Report, pp. 15-18 and 24))  
544The domestic industry's capacity d eclined in every year of the period of investigation, with an 
overall decline of 17.8%. (Panel Report, para. 7.234 (referring to USITC Report, pp. 15-18 and 24))  
545The domestic industry's US shipments declined in every year of the period of investigation, with an 
overall decline of 29.7%. (Panel Report, para. 7.234 (referring to USITC Report, pp. 15-18 and 24))  
546The domestic industry's net sales quantities declined in every year of the period of investigation, 
with an overall decline of 28.3%. (Panel Report, para. 7.234 (referring to USITC Report, pp. 23-24))  
547The domestic industry's employment-related factors fell significantly over the period of 
investigation, with the number of production-related workers falling by 14.2%, th e number of hours worked 
falling by 17.0%, and wages paid falling by 12.5% over th e entire period. (Panel Report, para. 7.234 (referring 
to USITC Report, pp. 17 and 24))  
548Panel Report, para. 7.234. 
549Operating income fell from US$256.2 million in 2004 to a loss of US$262.8 million in 2008. (Panel 
Report, para. 7.235 (referring to USITC Report, Table C-1 at pp. C-3-C-4)) 
550Operating margins fell by 4.8% over the period of investigation, with declines in three out of four 
years of that period. (Panel Report, para. 7.235 (referring to USITC Report, Table C-1 at pp. C-3-C-4))  
551Capacity utilization fell by 10.3% over the period of investigation. (Panel Report, para. 7.235 
(referring to USITC Report, Table C-1 at pp. C-3-C-4)) 
552Productivity fell by 11.5% over the period of inves tigation. (Panel Report, para. 7.235 (referring to 
USITC Report, Table C-1 at pp. C-3-C-4)) 
553Panel Report, para. 7.235.  WT/DS399/AB/R 
Page 90  
 
241. Accordingly, we do not consid er that the Panel erred in finding that these data were 
"sufficient for the USITC to properly find that th ere was an overall coincidence between the upward 
movement in subject imports and the downward movement in domestic industry injury factors."
554 
2. Correlation between Import Increases, Domestic Prices, and Profitability 
242. We turn to China's claim that the Panel e rred in finding correlation between increases in 
subject imports and prices and profitability in the domestic industr y.  In particular, China argues that 
improvements in the COGS/sales ratio and in the do mestic industry's profitability in 2007 (when the 
margin of underselling by subject imports was at its highest) undermined the USITC's conclusion that 
domestic producers had suffered a "cost-price squeeze" over the period of investigation.  Both of these 
indicators, China emphasizes, further deteriorated in 2008, when the margin of underselling by 
subject imports declined in comparison to 2007. 
243. At the outset, we note that the COGS/sales ratio expresses the portion of total sales value that 
is accounted for by costs directly associated with making a particular good.  A higher COGS/sale ratio 
therefore indicates that such costs make up a highe r portion of sales value, leaving a smaller margin 
for selling, general and administrative expenses, a nd profits.  The COGS/sales ratio therefore provides 
an indication of whether the sales value is sufficien t to cover the production costs of the goods that are 
sold.  Over the period of investigation, the year ly COGS/sales ratios of US producers were:  84.7% 
in 2004;  87.0% in 2005;  89.6% in 2006;  84.3% in 2007 ;  and 90.1% in 2008.555  China argues that 
a 5.3% improvement in the COGS/sales ratio in 2007, when subject imports rose by their highest 
margin, suggests a lack of correlation between subj ect imports and prices of the domestic industry. 
244. Addressing the same arguments that China now raises on appeal, the Panel found that "[t]he 
fact that annual movements in every single injury factor did not precisely track annual movements in 
subject imports does not invalidate the USITC's finding of overall coincidence."556  Highlighting that 
the USITC had found the existence of price suppression  over the period of investigation, the Panel 
further noted that domestic price increases for that  period should be assessed in the light of even 
larger increases in industry costs.557 
245. We agree with the Panel that an improvement in the COGS/sales ratio in 2007 does not per se  
undermine the USITC's finding that subject imports negatively affected domestic prices.  As noted earlier, we do not interpret Paragraph 16.4 of the Protocol as requiring a strict correlation between 
                                                      
554Panel Report, para. 7.236.  
555USITC Report, Table III-5 at p. III-13. 
556Panel Report, para. 7.244.  
557Panel Report, para. 7.245.   WT/DS399/AB/R 
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yearly upward movements in subject imports and downward movements in all injury factors.  
Moreover, the fact that the COGS/sales ratio in creased in all but one year of the period of 
investigation reasonably supports, in our view, the Panel's conclusion that the USITC provided a 
reasoned and adequate explanation with respect to  the occurrence of a "cost-price squeeze" over the 
period of investigation. 
246. Similarly, the fact that the profitability of the domestic industry improved when margins of 
underselling were at their highest in 2007 cannot be  determinative as to whether overall there was a 
correlation between increases in subject imports and d eclines in injury factors.  As the Panel correctly 
pointed out, even if the profitability of the domestic  industry recovered in 2007, other injury factors 
such as domestic capacity, production, shipments, sales,  and employment continuously deteriorated in 
each year of the period of investigation, including 2007.558  For the reasons discussed above, we do 
not consider that a single injury factor should be  determinative, provided that the investigating 
authorities' correlation analysis provides a reasoned a nd adequate explanation for a determination that 
subject imports are a significant cause of material injury to the domestic industry.  
247. In this respect, an analogy can be drawn with the Appellate Body's finding in Argentina – 
Footwear (EC) that a decline in each injury factor is  not necessary to support a finding that the 
domestic industry is seriously injured with in the meaning of Article 4.1(a) of the Agreement on 
Safeguards .  The Appellate Body explained: 
Obviously, any such evaluation will be different for different 
industries in different cases, depending on the facts of the particular case and the situation of the industry concerned.  An evaluation of each listed factor will not necessarily have to show that each such factor is "declining".  In one case, for example, there may be 
significant declines in sales, employment and productivity that will 
show "significant overall impairment " in the position of the industry, 
and therefore will justify a finding of serious injury.  In another case, a certain factor may not be declining, but the overall picture may nevertheless demonstrate "significant overall impairment" of the 
industry.
559 
248. Similarly, in this case, we consider that the improvement in discrete injury factors during the 
period of investigation does not per se undermine the overall coincidence found by the USITC—and 
upheld by the Panel—between increases in subject imports and general downwar d trends in prices.  
Moreover, we note that such injury factors dete riorated in all other years of the period of 
investigation. 
                                                      
558Panel Report, paras. 7.258 and 7.234.  
559Appellate Body Report, Argentina – Footwear (EC) , para. 139.  WT/DS399/AB/R 
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3. Conclusion 
249. For these reasons, we uphold the Panel's finding, in paragraph 7.261 of the Panel Report, that 
the USITC's reliance on an overall coincidence betw een an upward movement in subject imports and 
a downward movement in injury factors reasonably supports the USITC's finding that rapidly 
increasing imports from China are a significant cause of material injury to the domestic industry within the meaning of Paragraph 16.4 of China's Accession Protocol. 
D. Other Causes of Injury 
1. The Panel's Approach to the USITC's Analysis of Other Causes of Injury 
250. The Panel began by noting that, while at the outset of the proceeding, it appeared that the 
parties disagreed fundamentally on whether an i nvestigating authority was required under Section 16 
of China's Accession Protocol to perform a non-attri bution analysis, by the end it was clear that the 
parties agreed that some form of non-attribution analysis may be required in certain circumstances.560  
251. China's Accession Protocol does not contain express non-attribution language.  The Panel 
observed, however, that "this does not mean that the obligation to demonstrate that rapidly increasing 
imports are a significant cause of material injury should not entail some form of analysis of the injurious effects of other factors."
561  As noted above, the Panel drew an analogy with the approach in 
US – Upland Cotton , where, notwithstanding the absence of explicit non-attribution language in 
Articles 5 and 6.3 of the SCM Agreement , both the panel and Appellate Body found that some form of 
non-attribution analysis is inherent in establis hing a causal link between the subsidy and price 
suppression and that, "if non-attribution does not occu r, one cannot establish with certainty that price 
suppression [is] the effect of the subsidy (as opposed to some other injurious factor)".562  The Panel 
thus concluded that: 
… the causal link between rapidly increasing imports and material 
injury must be assessed "within th e context of other possible causal 
factors".  In particular, a finding of causation for the purpose of 
Paragraph 16.4 should only be made  if it is properly established that 
rapidly increasing imports have injurious effects that cannot be explained by the existence of other causal factors.  We shall evaluate the USITC's assessment of alternative causes in this light.
563 
(footnote omitted) 
                                                      
560Panel Report, para. 7.174. 
561Panel Report, para. 7.176. 
562Panel Report, para. 7.176.  
563Panel Report, para. 7.177 (quoting Panel Report, US – Upland Cotton , para. 7.1344).  WT/DS399/AB/R 
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252. We agree with the Panel that some form of non-attribution analysis is inherent  in the 
establishment of a causal link between rapidly incr easing imports from China and material injury to 
the domestic industry.  As noted above564, Paragraph 16.4 of the Protocol requires that rapidly 
increasing imports from China make an important contri bution to bringing about material injury to the 
domestic industry.  This de termination can only be made if an i nvestigating authority properly ensures 
that effects of other known causes are not such as to suggest that subject imports are in fact only a 
"remote" or "minimal" cause, rather than a "signi ficant" cause of material injury to the domestic 
industry.  For this reason, the significance of the effects of rapidly increasing imports from China must be assessed in the context of other known causal factors.  The extent of the analysis of other 
causal factors that is required will depend on the imp act of the other factors that are alleged to be 
relevant and the facts and circumstances of the part icular case.  As noted above, the participants do 
not contest that "some form of non-attribution anal ysis" may be required in order to establish properly 
that subject imports are a "significant cause" of mate rial injury within the meaning of Paragraph 16.4 
of the Protocol.
565  In some cases, the investigating authorit y may need to perform a detailed analysis 
of other causes of injury to support adequately a conclusion that subject imports are nonetheless "a 
significant cause" of injury.566  In other cases, a less extensive analysis of other causal factors may 
suffice to support adequately a conclusion that s ubject imports are "a significant cause" of injury.567 
253. China takes issue with th e Panel's statement that: 
… a finding of causation for purpose of Paragraph 16.4 should only 
be made if it is properly establis hed that rapidly increasing imports 
have injurious effects that cannot be explained by the existence of 
other causal factors.568 
254. China asserts that the Panel's fo cus in this case was on identifying some "residual effect" from 
subject imports, rather than on assessing how differe nt factors may be affec ting the condition of the 
domestic industry and whether any remaining eff ects attributable to imports from China could 
properly be deemed to be "a significant cause" of material injury.569  China argues that, under the 
Panel's standard, any injurious effects—including "residual effects"—could constitute "a significant 
                                                      
564Supra , paras. 176 and 177 of this Report. 
565Panel Report, para. 7.174. We further note that the United States agrees with the Panel that "the 
USITC was required to perform some analysis of the eff ects of other factors that have caused injury to the 
industry" in the present case. (United St ates' appellee's submission, para. 132) 
566Such analysis may be necessary, for example, where the volume of subject imports and the margins 
of underselling are small and the record evidence suggests that the effects of the other possible causes of injury 
are particularly important. 
567This may be the case, for example, where the volu me of subject imports and margin of underselling 
are very important. 
568Panel Report, para. 7.177. 
569China's appellant's submission, para. 285. WT/DS399/AB/R 
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cause".
570  In other words, if the other causal factor s "do not explain everything", and instead leave 
some residual injurious effects attributable to imports from China, "then those residual effects 
somehow constitute a 'significant cause' of material injury".571  China rejects this as an "all or nothing" 
approach to the assessment of other causes.572 
255. The United States disagrees with China's assertion that the Panel applied an "all or nothing" 
approach to the consideration of other causes, or that the Panel permitted "residual effects" to 
constitute a "significant cause".  Instead, accordi ng to the United States, the Panel properly assessed 
whether subject imports were a "significant" or "im portant" cause of material injury independent of 
other possible causes.573 
256. Read in isolation, the Panel's reference to "inj urious effects that cannot be explained by the 
existence of other causal factors" could give the impression that the Panel viewed Paragraph 16.4 as 
requiring only that subject imports have "any" injuri ous effects, rather than examining whether such 
imports make an important contribution and theref ore constitute "a significant cause" of material 
injury.  Certain other statements made by the Pane l might also suggest that the Panel was in fact 
examining whether subject imports had "any" injurious effects, rather than "significant" effects.  For 
example, in relation to the impact of the 2008 recession, the Panel found that the USITC properly 
established that the injury to the domestic industry c ould not be attributed "in whole" to the fall in 
demand resulting from the 2008 recession.574 
257. This finding and other similar statements by the Panel may be unfortunately worded.  We 
note, however, that the Panel clearly indicated that it viewed the applicable standard under 
Paragraph 16.4 to consist of two elements:  the "causal" element and the "significant" element.575  
Moreover, the Panel rejected the proposition that ev en "a minimal cause" of injury might be "a 
significant cause" of injury.576  The Panel also stated that the fact that subject imports continued to 
increase significantly during that recession indicated that subject imports were having an adverse 
impact independent  of the effect of the fall in demand during the 2008 recession.577  Importantly, in 
dismissing China's claims regarding the USITC's as sessment of the individual injurious effects of 
other factors, the Panel also stated that it had "reviewed record evidence indicating that subject 
imports from China had significant  injurious effects, independent  of any injurious effects of other 
                                                      
570China's appellant's submission, para. 286.  
571China's appellant's submission, para. 284.  
572See China's appellant's submission, paras. 284, 289, 433, and 436. 
573United States' response to questi oning at the oral hearing. 
574Panel Report, para. 7.354.  
575See, for example, Panel Report, para. 6.28.  
576Panel Report, para. 7.159.  
577Panel Report, para. 7.354.  WT/DS399/AB/R 
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causal factors".578  In the light of these statements, we consid er that the Panel correctly articulated the 
standard of review appropriate for assessing the USIT C's analysis of other possible causes of injury. 
258. For all these reasons, we disagree with China's as sertion that the Panel set out an approach 
that focused only on identifying any "residual eff ects" of imports, rather than on assessing whether the 
effects of subject imports could properly be deemed a significant cause of material injury.  As 
explained above579, we consider that an investigating au thority can make a determination as to 
whether subject imports are a significant cause of ma terial injury only if it properly ensures that 
effects of other known causes are not improperly attributed to subject imports and do not suggest that subject imports are in fact only a "remote" or "min imal" cause, rather than a "significant" cause of 
material injury to the domestic industry.  In our view, the Panel properly understood that it was 
required in this case to assess whether the USITC ha d adequately explained that subject imports were 
a "significant" or "important" cause of material inju ry "independent" of the injurious effects of other 
possible causes. 
2. The Panel's Findings relating to the US ITC's Consideration of Other Causes 
of Injury  
259. China attributes the injury suffered by the US dom estic industry, at least in part, to three 
causal factors other than subject imports from China,  namely:  (i) the US domestic industry's business 
strategy of shifting focus to higher-value products for its US production;  (ii) demand declines in the 
US market;  and (iii) non-subject imports.  China contends that the Panel erred in finding that the 
USITC properly considered and addressed the effect s of these other factors that were allegedly 
causing injury to the domestic industry.   
260. First, China argues that the Panel failed to examine properly the USITC's analysis of the 
domestic industry's business strategy, including the f actual basis for the USITC's conclusion that the 
US producers' capacity reductions in 2006 were la rgely a reaction to increases in subject imports from 
China and not part of a strategy by domestic producers to abandon voluntarily the low-price segment of the US tyres market.  Next, China contends that  the Panel failed to review properly the USITC's 
analysis of the impact of declines in demand a nd the effect of non-subject imports, even though the 
latter had a larger presence in the US market th an the Chinese imports.  As we understand it, China 
does not claim that these other causal factors explain a ll of the material injury found to exist in this 
                                                      
578Panel Report, footnote 511 to para. 7.377. (emphasis added)  The Panel introduced its analysis of 
changes in demand by articulating the proper inquiry, that is, whether subject imports had injurious effects 
independent of the injury caused by changes in demand.  The Panel also concluded that the USITC did not "improperly attribute injury caused by non-subject imports to subject imports". (See Panel Report, paras. 7.333 
and 7.367) 
579See supra , para. 201 of this Report. WT/DS399/AB/R 
Page 96  
 
case.  However, China asserts that "individually a nd collectively they call into serious doubt the 
causal link between imports from China and the condition of the U.S. industry".
580 
261. In response, the United States does not contest that the USITC was "required to perform an 
assessment of other injury factors under the Protocol".581  Instead, it agrees with the Panel that the 
USITC was under an obligation "to perform some analysis of the effects of other factors that have caused injury to the industry".
582  The United States considers, however, that the USITC properly 
addressed all of the factors that could reasonably be  considered significant enough to break the causal 
link between subject imports and material injury in  the present case.  Moreover, in the United States' 
view, the Panel properly examined China's arguments concerning the effects of other causal factors to 
determine whether they seriously undermined the USITC's conclusion that rapidly increasing imports 
from China were a significant cause of material injury to the industry. 
(a) The US Domestic Industry's Business Strategy 
262. Before the Panel, China claimed that the domes tic industry's business strategy was an "other 
cause" of material injury to the domestic industr y, in the sense that decl ines in certain injury 
indicators (including production, shipments, and ne t sales quantities) should be attributed to what 
China asserted was the domestic industry's voluntary  withdrawal from the low-value segments of the 
replacement market rather than to subject imports.583  According to China, this business strategy 
involved closing those plants in the United States that made lower-value tyres and shifting that 
production to lower-cost fo reign production facilities, while c oncentrating US production on higher-
value tyres.  In China's view, this strategy resulte d in a "supply gap" in the US market that was filled 
by imports from both China and other sources.   
263. As the Panel noted, the USITC rejected  the argument that domestic producers voluntarily  
abandoned the lower-priced part of the US tyres mark et and that imports from China simply filled the 
supply gap left by the re treating domestic industry.584  Instead, the USITC found that the reduction in 
domestic capacity and the closures of US plants were largely "a reaction to increases in subject imports from China that were already occurring and, given the size and degree of the increases, likely 
would continue in the future".
585  In reaching this conclusion, the USITC relied upon:  (i) data 
indicating that imports from China were already increasing before Bridgestone, Continental, and 
Goodyear announced the plant closures in 2006 and 2008;  (ii) evidence indicating that competition 
                                                      
580China's appellant's submission, para. 386. 
581United States' appellee's submission, para. 132. 
582United States' appellee's submission, para. 132. 
583See Panel Report, para. 7.285. 
584See Panel Report, para. 7.287 (quoting USITC Report, pp. 26-27). 
585Panel Report, para. 7.287 (quoting USITC Report, pp. 24-27).  WT/DS399/AB/R 
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from low-priced imports from Asia, including China,  was an "important part" of the companies' 
decisions to close these plants;  (iii) articles in trade publications referring to a surge in purchases of 
tyre-manufacturing equipment by Chinese producers that  occurred over the past 10 years;  and (iv) a 
2006 news article noting that imports from China were expected to increase.586 
264. China's arguments on appeal focus on the Panel's analysis of the USITC's conclusion that the 
plant closures by US producers were largely a reacti on to increases in subject imports from China.  In 
particular, China takes issue with the Panel's an alysis of the evidence relied upon by the USITC to 
support its conclusions in this regard. 
265. As an initial matter, we note that several of Ch ina's arguments appear to be directed at the 
objectivity of the Panel's assessment of the facts, while other arguments are directed mainly at the 
way in which the Panel assessed the ev idence that was before the USIT C.  Regarding several aspects 
of its challenge, China has made parallel claims unde r Section 16 of the Protocol, alleging an error of 
application, and under Article 11 of the DSU, a lleging that the Panel failed to make an objective 
assessment of the facts.  While the Appellate Body has noted that "an appellant is free to determine 
how to characterize its claims on appeal"587 and that "it is often difficult to distinguish clearly between 
issues that are purely legal or purely factual, or are mixed issues of law and fact", the Appellate Body 
has also emphasized that "a failure to make a cl aim under Article 11 of the DSU on an issue that the 
Appellate Body determines to concern a factual a ssessment may have serious consequences for the 
appellant."588 
266. With these principles in mind, we proceed to review China's arguments  on appeal both below 
and in section VI.E of this Report, where we deal wi th claims that China brings referring explicitly to 
Article 11 of the DSU. 
(i) Continental's plant in Charlotte 
267. With respect to the reasons for the closure of Continental's plant in Charlotte, North Carolina, 
the Panel noted that a contemporaneous press release by Continental attributed the closure to "global 
competition putting pressure on us as our manufacturing costs are cheaper overseas".589  The USITC 
interpreted this statement as including a referenc e to import competition from China.  The Panel 
disagreed, and found instead that Continental's reference to "global competition" should "be 
                                                      
586Panel Report, para. 7.287 (quoting USITC Report, pp. 26-27).  
587Appellate Body Report, Canada – Wheat Exports and Grain Imports , para. 177 (referring to 
Appellate Body Report, Japan – Apples , para. 136). 
588Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 872;  Appellate 
Body Report, Mexico – Anti-Dumping Measures on Rice , para. 274.  
589Panel Report, para. 7.299.  WT/DS399/AB/R 
Page 98  
 
understood as competition from other Continental plants in the world".
590  The Panel reasoned that 
this "is because the press release clearly refers to 'our' manufacturing costs being 'cheaper 
overseas'".591  As to whether import competition from othe r Continental plants in the world might 
include subject imports from China, the Panel found that since Continental did not have any 
production facilities in China, there was therefore " no proper basis for the USITC to conclude that 
imports from Continental plants around the world might include subject imports from China".592  The 
Panel concluded that the USITC therefore "could not properly have attributed the closure of 
Continental's plant to subject imports from China".593   
268. China submits that the Panel erred in rejecting the USITC's conclusion that Chinese imports 
played a role in the closure of Continental's plant in Charlotte, without  assessing whether that 
conclusion undermined the USITC's finding that impor ts from China played an important part in the 
decisions to close Bridgestone's plant in Ok lahoma City and Goodyear's plant in Tyler.594  In addition, 
according to China, both the Panel and the USITC faile d to ensure that the in jurious effects resulting 
from the closure of Continental's plant in Charlo tte were not attributed to imports from China. 
269. We are not persuaded that Continental's refere nce to "global competition" must necessarily be 
understood as referring exclusively to competition from "other Continental" factories located 
overseas.  However, we note that eviden ce regarding the Charlotte facility was not the only evidence 
that the USITC relied upon to support its conc lusion that "low-priced competition from Asia, 
including China" was an "important part" of the d ecision by certain US producers to close factories in 
the United States, including both Bridgestone's plant in Oklahoma City and Goodyear's plant in Tyler.  
We consider it was appropriate for the Panel to proceed to assess the evid ence relied upon by the 
USITC regarding those two plant closures given that the USITC also relied on this evidence.595 
270. China argues that the Panel's finding regarding the Charlotte plant calls into question the 
USITC's conclusions with respect to the closures of Bridgestone's plant in Oklahoma City and 
Goodyear's plant in Tyler.  China suggests that all three companies were "reacting to the same market 
                                                      
590Panel Report, para. 7.299.  
591Panel Report, para. 7.299.  
592Panel Report, para. 7.299.  
593Panel Report, para. 7.299.  
594See China's appellant's submission, paras. 406 and 407.  
595In any event, even if we were to accept that the ki nd of non-attribution analys is that is suggested by 
China was required, we note that the closure of Contin ental's plant in Charlotte represented a reduction in 
industry capacity of 9.3 million units, whereas the closure of Bridgestone's plant in Oklahoma City and 
Goodyear's plant in Tyler represented a total reduction in  US producers' capacity of 30.1 million units.  In the 
light of these figures, we do not see why the Panel coul d not have proceeded to examine in this case whether the 
closures of the Bridgestone and Goodyear plants could reasonably support the USITC's overall finding 
regarding US producers' capacity reductions in 2006. (USITC Report, pp. 26-27).  WT/DS399/AB/R 
 Page 99 
 
 
situation".596  We do not view the Panel to have found th at the closure of the Charlotte plant was not 
caused by subject imports from China.  Rather, th e Panel's finding was that the evidence before the 
USITC did not support the USITC's conclusion that imports from Asia, including China, played an 
important part in the closure of Continental's plan t in Charlotte.  In any event, we see no basis to 
assume that the reasons for the plant closings were necessarily the same for all three companies.  Even 
assuming that Continental may not have closed its plant as a resu lt of low-priced competition from 
subject imports, this does not mean, without more, that "low-priced competition" from subject imports 
may not have played a role in the closing of other plants by other companies. 
(ii) Bridgestone's plant in Oklahoma City 
271. Bridgestone announced the closure of its plant in Oklahoma City, Oklahoma, in 2006.597  
With respect to the reasons for the plant's clos ure, the Panel noted that the USITC relied on a 
contemporaneous press release that stated that "t his plant produces tires in the low-end segment of the 
market where demand is shrinking and fierce co mpetition from low-cost producing countries is 
increasing."598  The Panel reasoned that, "to some extent", "shifts in demand played a part in the 
closure of the Bridgestone, Oklahoma, plant".599  However, the reference to "fierce competition from 
low-cost producing countries" in the same press re lease suggested to the Panel that such "shifts in 
demand were not entirely responsible for the closure of that plant".600  The Panel further found that the 
reference to "fierce" competition also suggested that import competition was not as benign as China 
suggested, and that imports were not merely f illing a "supply gap" caused by the industry's retreat 
from the low-end of the market.601  For these reasons, the Panel found that "the USITC could properly 
have attributed the closure of the Bridgest one, Oklahoma City, plant to subject imports."602 
272. China argues, on several grounds, that the Panel erred in finding that the USITC could 
properly have understood Bridgest one's reference to "fierce co mpetition from low-cost producing 
countries" to include competition from subject import s from China.  First, China observes that the 
official press release by Bridgestone refers only to  "low-cost producing count ries", and does not refer 
explicitly to imports from China as a reason for shutting down Bridgestone's plant in 
Oklahoma City.603  Second, China asserts that the "low -cost imports" causing these closures were 
more likely non-subject imports, since they occupied  a larger share of the US market than Chinese 
                                                      
596China's appellant's submission, para. 407. 
597Panel Report, para. 7.302 (referring to USITC Report, footnote 62 at p. III-16). (emphasis added)  
598Panel Report, para. 7.300.  
599Panel Report, para. 7.300.  
600Panel Report, para. 7.300.  
601Panel Report, para. 7.300.  
602Panel Report, para. 7.304.  
603China's appellant's submission, para. 409. WT/DS399/AB/R 
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imports in 2006.
604  China contends that the Panel " downplayed the significant and increasing 
presence" of such non-subject imports.605 
273. The issues raised by China on appeal appear to be  directed mainly at the Panel's assessment of 
the factual basis for the USITC's conclusions.  We c onsider these issues to be more in the nature of 
claims made under Article 11 of the DSU.  Howeve r, China has not brought a claim of error under 
Article 11 of the DSU to challenge this aspect of  the Panel's findings.  Consequently, we do not 
consider it necessary to further address China's arguments in this regard. 
274. China further claims that the Panel "mischarac terized the evidentiary basis" of the USITC's 
finding, when relying on a statement made in the USITC staff report (which the USITC did not explicitly refer to in its determination) in asse ssing whether the USITC could properly attribute the 
closing of the Bridgestone plant to imports from China.
606  We note that China also raises a claim 
under Article 11 of the DSU regarding this aspect of the Panel's analysis.  Consequently, we address 
that claim in section VI.E of this Report. 
(iii) Goodyear's plant in Tyler 
275. China makes similar claims regarding the Panel's analysis of the reasons for closure of 
Goodyear's plant in Tyler, Texas.  First, China a lleges that there was no factual basis for the Panel's 
assertion that "competition from subject imports was clearly greater than the competition from 
non-subject imports".607  For China, with non-subject imports representing more than 80% of the total 
import volume, priced on average 17% below US pr ice levels, and largely imported by US domestic 
producers themselves, it made "no sense" for the USIT C and the Panel to read a generic reference to 
"low-cost imports" as a reference to imports from China.608  China also criticizes the Panel for its 
"selective" approach in dealing with certain evid ence, not only by equating "low-cost imports" to 
"subject imports" from China, but also by ignori ng the non-import factors behind the Goodyear plant 
closure identified by the USITC.609 
276. In our view, China's allegations on appeal are more properly characterized as claims made 
under Article 11 of the DSU, because they are directed  at the objectivity of the Panel's assessment of 
the factual components of the USITC determination.   We will examine them under Article 11 of the 
                                                      
604China's appellant's submission, para. 414. 
605China's appellant's submission, para. 415. 
606China's appellant's submission, para. 411. 
607China's appellant's submission, para. 419 (quoting Panel Report, para. 7.305). 
608China's appellant's submission, para. 426. 
609China's appellant's submission, paras. 420 and 421 (referring to USITC Report, footnote 62 at 
p. III-16).   WT/DS399/AB/R 
 Page 101 
 
 
DSU in section VI.E of this Report to the extent that these allegations have been brought as claims 
under Article 11 of the DSU.  
(iv) Plant closures, change in business strategy, and other causes 
of injury 
277. In addressing China's claim that the US industry's change in business strategy was voluntary 
and created a supply gap in the US market, the Pane l observed that "the majority of the USITC and 
the dissenting commissioners drew precisely the opposite conclusions on the issue of business 
strategy."610  As the Panel noted, the "majority took the view that the strategy to reduce U.S. 
production and locate production in China was itself a response to increased imports and thus it was 
not an alternative cause that prevented the incr easing imports from China to be a significant cause."611  
By contrast, the "dissenting commissioners took th e view that the business strategy of relocating 
production to China was an independent business strategy that began before imports were 
increasing."612  The Panel considered that it would be inappropriate in these circumstances "for the 
Panel simply to make a choice between th e views of the majority and the dissenting 
commissioners".613  The Panel expressed the view that "the decision to [re]locate production in China 
might have been the result of an independent busin ess strategy, but the decision to close plants might 
well have been a response to imports."614  In the light of these considerations, the Panel found "no 
basis for determining that the USITC's analysis of  the alternative business strategy was in error".615  
Rather, the Panel considered that  it was for China to establish a prima facie  case of such error "and it 
failed to do so".616 
278. China faults the Panel for failing to assess fully  whether the majority or the dissent was 
correct, arguing that the Panel failed to "consider cr itically whether the USITC majority sufficiently 
explained its conclusion to ignore the eff ect of the change in business strategy".617 
279. China's arguments are based on its own readi ng of the underlying facts.  In particular, 
according to China: 
[T]he domestic industry's business strategy significantly affected the 
U.S. industry and many of the injury  factors assessed by the USITC.  
Given their high costs and comparative advantages in the non-
commodity tire segments, U.S. producers chose to withdraw their 
                                                      
610Panel Report, para. 7.320.  
611Panel Report, para. 7.320.  
612Panel Report, para. 7.320.  
613Panel Report, para. 7.321.  
614Panel Report, para. 7.321.  
615Panel Report, para. 7.322.  
616Panel Report, para. 7.322.  
617China's appellant's submission, para. 430.  WT/DS399/AB/R 
Page 102  
 
domestic production from the low-value segments of the replacement market and focus instead on the high -value segments.  This decision 
to refocus and close certain plan ts created an increased need for 
imports—both subject and non-subject, both imported by 
U.S. producers and not.  Given this strategic decision, which bore 
fruit in 2007 prior to the recession, increasing subject imports were 
not a "significant cause" of injury to the domestic industry.
618 
280. We see no error in the Panel's analysis in this regard.  In particular, we note that it is well 
established that a panel must neither conduct a de novo review nor simply defer to the conclusions of 
the investigating authority.  Instead, it must test whether the explanations for the conclusions reached 
by the investigating authority are reasoned and ade quate in the light of other plausible alternative 
explanations.  In doing so, a panel should examin e whether the investigating authority provided a 
reasoned and adequate explanation as to how the ev idence on the record supported its factual findings 
and how those factual findings suppo rted the overall determinations.619  C o n t r a r y  t o  w h a t  C h i n a  
asserts, it was not for the Panel to decide whet her the majority or the dissent was "correct"620, and in 
this way "substitute its judgement for that of th e competent authorities" by deciding the issue for 
itself.621  Instead, it was for the Panel to assess whether the USITC's explanation of its conclusion was 
reasoned and adequate in the light of plausible alternative explanations proffered by China.  
281. China considers that US producers closed certain  plants for a "broader set of economic and 
business reasons", and that subject imports were just one of many factors being considered by these 
firms.622  China argues that, "even if one assumes th e USITC could properly find that imports from 
China played some role in the d ecision to close the plants, that do es not justify attributing the entire 
consequences of the plant closures to the imports from China."623   
282. China appears to suggest that the USITC attri buted the "entire consequences" of the plant 
closures to imports from China.  This is not correct .  In fact, the USITC simply found that low-cost 
imports from Asia, including China, played an "i mportant part" in the decisions to close the 
Goodyear, Continental, and Bridgestone plants  and acknowledged that there may well be other 
                                                      
618China's appellant's submission, para. 383. 
619See Appellate Body Report, Argentina – Footwear (EC) , paras. 119-121;  Appellate Body Report, 
US – Cotton Yarn , paras. 74-78;  Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , 
paras. 183 and 186-188;  Appellate Body Report, US – Hot-Rolled Steel , para. 55;  Appellate Body Report, US – 
Lamb , paras. 101 and 105-108;  Appellate Body Report, US – Steel Safeguards , para. 299;  Appellate Body 
Report, US – Wheat Gluten , paras. 160 and 161;  and Appellate Body Report, US – Softwood Lumber VI 
(Article 21.5 – Canada) , para. 93. 
620China's appellant's submission, para. 430.  
621Appellate Body Report, US – Steel Safeguards , para. 299 (referring to Appellate Body Report, 
Argentina – Footwear (EC) , para. 121). 
622China's appellant's submission, para. 485.  
623China's appellant's submission, para. 433. (original underlining)  WT/DS399/AB/R 
 Page 103 
 
 
reasons for the plant closures.  Moreover, the US ITC's analysis focused on the rationale for the 
closures rather than the consequences thereof. 
283. As a separate matter, we note that China also  takes issue with certain general observations 
made by the Panel regarding China's argument that  imports from other countries, including China, 
were merely filling a "supply gap" left by  US producers in certain market segments.624  On this point, 
the Panel noted, inter alia , that China presented subject imports as non-injurious because they were 
drawn into the US market by the business strategy of US tyres producers.625  According to China, 
nothing in the Panel's observations "calls into doub t … the extent to which imports from China could 
properly be considered a 'significant cause'" of material injury.626  We do not view the Panel's 
preliminary remarks to have been  a necessary component of the Panel' s analysis of China's arguments 
concerning the specific factors relied upon by the US ITC to support its findings regarding the impact 
of changes in business strategy during the period of i nvestigation.  For this re ason, we do not consider 
it necessary to address further these rema rks by the Panel in our analysis. 
284. For all these reasons, we do not agree with China that the Panel erred in its review of the 
USITC's analysis of the US domestic industry's business strategy and the reasons for the three 
US plant closures.627 
(b) Changes in Demand 
285. China takes issue with the Panel's analysis of  declines in demand arguing that the Panel and 
the USITC both failed to "evaluate seriously" de mand declines as a possible alternative cause of 
injury to the domestic industry.628  China claims that a contraction in demand over the full period of 
investigation, combined with a sharp decline in demand in 2008 due to the recession, accounted for "a 
sizeable portion"—albeit not all—of the injury su ffered by the industry over the relevant period.629 
286. China recalls that the consumption data collected  by the USITC showed a decline in three out 
of four years of the period of investigation, and an overall decline of more than 10% over the entire 
period of investigation.630  China faults the USITC for not addressing this "longer term trend in 
demand" and claims that the Panel failed to disti nguish between "average tr ends" over time and "the 
fluctuations that inevitably occur year-by-year".631  In China's view, the overall decline in demand 
                                                      
624See Panel Report, para. 7.291 (quoting China's response to Panel Question 41, para. 58). 
625Panel Report, para. 7.291. 
626China's appellant's submission, para. 402. 
627Panel Report, para. 7.322.  
628China's appellant's submission, para. 437. 
629China's appellant's submission, para. 436. 
630China's appellant's submission, para. 437. 
631China's appellant's submission, paras. 438 and 443.  WT/DS399/AB/R 
Page 104  
 
represents a significant competitive factor that th e Panel and the USITC should have considered 
"more carefully".
632   
287. The United States disagrees with what it descr ibes as China's notion of a "consistent demand 
decline" in the US tyres market over the period of  investigation, arguing instead that the record 
indicated "fluctuations" in demand, with the "bul k" of the overall decline in consumption occurring 
during the recession in 2008.633  The United States further conte nds that the demand changes during 
the period did not explain "to any significant degree " the declines in the industry's condition, as the 
industry's production, shipments, sales, and market sh are levels fell consistent ly while the volume and 
market share of Chinese imports increased, irresp ective of whether demand declined, increased, or 
remained relatively stable.634   
288. In its analysis of this issue, the Panel obser ved that "apparent consumption of all passenger 
vehicle and light truck tyres declined (by volume) by 10.3 per cent from 2004 to 2008".635  The Panel 
added, however, that "the bulk of this fall in appa rent consumption occurred at the end of the period 
of investigation, from 2007 to 2008"636 and "[p]rior to 2007, apparent U.S. consumption declined 
slightly by 0.8 per cent from 2004 to 2005, by 4.4 per cent from 2005 to 2006, but actually increased 
by 1.6 per cent from 2006 to 2007."637  The Panel concluded, therefore, that, "while there was a 
pronounced decline in apparent consumption from 2007 to 2008", the record evidence did not indicate 
a "prolonged contraction" in demand over the peri od of investigation as a whole, as China had argued 
before the Panel.638  On this basis, the Panel found no error in the USITC's finding that demand 
"fluctuated"639 during the period of investigation.   
289. On appeal, China appears to accept that demand may have "fluctuated" on a yearly basis as 
the USITC concluded.  China argues, however, that the drop in consumption over the period of investigation represented a significant competitive f actor that must have had some effect on the 
domestic industry and should have been analyzed "more carefully" by the Panel and the USITC.
640   
                                                      
632China's appellant's submission, para. 443.  
633United States' appellee's submission, para. 203. 
634United States' appellee's submission, para. 204.  
635Panel Report, para. 7.339. 
636Panel Report, para. 7.339.  According to Table V-1 of the USITC Report, apparent consumption fell 
from 307,484,000 units to 296,091,000 units, that is, 3.7%, over four years from 2004 to 2007.  Apparent consumption fell by 6.9% in the single year from 2007 to 2008 (from 296,091,000 units to 275,702,000 units). 
(Panel Report, footnote 470 to para. 7.339) 
637Panel Report, para. 7.329. 
638Panel Report, para. 7.339. 
639USITC Report, p. 15. 
640China's appellant's submission, para. 443.   WT/DS399/AB/R 
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290. Our review of the Panel's reasoning does not indicate that the Panel failed to assess 
adequately China's arguments regarding the declin e in demand over the full period of investigation as 
distinct from yearly fluctuations in demand.  Rath er, as we see it, the Panel carefully examined the 
correlation between trends in subject imports and changes in  demand over the full period of 
investigation.  The Panel noted the USITC's finding that: 
[t]he large increase in the volume of subject imports is also reflected 
in those imports' large and growing share of the U.S. market. Subject imports increased their share of the U.S. market by 12 percentage points (more than threefold) between 2004 and 2008, from 4.7 percent in 2004 to 16.7 percent in 2008. More than half of this 
increase, 7.4 percentage points, has occurred since 2006.
641 
291. The Panel further noted the USITC's finding that "t he ratio of subject impor ts to U.S. apparent 
consumption increased by 12.0 percentage points dur ing the period examined , with the two largest 
year-to-year increases also occurring at the end of the period in 2007 and 2008."642 The Panel added 
that, in a related footnote, the USITC stated that the "ratio of subject imports to U.S. apparent consumption increased from 4.7 percent in 2004 to 6.8 percent in 2005, 9.3 percent in 2006, 
14.0 percent in 2007, and 16.7 percent in 2008."
643 
292. The Panel went on to note that: 
… the ratio of subject imports to U.S. apparent consumption 
increased throughout the period of investigation.  Even when demand 
increased by 1.6 per cent in 2007, the volume of subject imports 
increased by the significantly greater figure of 53.7 per cent.  As a result, subject import market share increased by 4.8 percentage points, while the domestic industry's market share declined by 3.4 points (and the market share of non-subject imports declined by 1.1 per cent).  In 2005, demand fell by a very modest 0.8 per cent.  
Subject imports in that year increased by 42.7 per cent, resulting in a 
2.1 percentage point increase in market share, while the domestic industry's market share fell by 3.7 percentage points.  In 2006, as demand fell by 4.4 per cent, the volume of subject imports increased by a further 29.9 per cent, resulting in a 2.4 percentage point increase 
in subject import market share.  This contrasted with a 3.4 percentage 
point decline in the domestic industry's market share.
644 (footnote 
omitted) 
293. Regarding the decline of demand in 2008 due to the recession, the Panel added that, "as 
demand fell by 6.9 per cent in 2008, the volume of  subject imports continued to increase by an 
                                                      
641Panel Report, para. 7.333 (quoting USITC Report, p. 22).  The Panel used the terms "demand" and 
"US apparent consumption" interchangeably. (See Panel Report, footnote 469 to para. 7.339) 
642Panel Report, para. 7.334 (quoting USITC Report, p. 12). 
643Panel Report, para. 7.335 (quoting USITC Report, footnote 52). 
644Panel Report, para. 7.336.  WT/DS399/AB/R 
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additional 10.8 per cent, resulting in a 2.7 percentage  point increase in market share, compared with a 
fall in the domestic industry's market share of 2.9 percentage points."
645 
294. The Panel and the USITC therefore discussed changes in the level of demand over the full 
period of investigation.  We also attach importan ce to the fact that the "bulk" of the decline in 
demand, as the Panel noted, "occurred at the end of  the period of investigation, from 2007 to 2008"646; 
that this recession-driven decline in demand was se parately addressed by the Panel and the USITC;  
and that "[p]rior to 2007, apparent U.S. consum ption declined slightly by 0.8 per cent from 2004 
to 2005, by 4.4 per cent from 2005 to 2006, but actually increased by 1.6 per cent from 2006 to 2007".
647  In these circumstances, since the Panel did not find error in the USITC's conclusion that 
demand "fluctuated" over the period of investigation,  we do not consider that the Panel was required 
to address as a separate matter the overall decline in  demand over the full period of investigation. 
295. China further argues that the Panel erred in findi ng no fault in the USITC's assessment of the 
impact of the 2008 recession.  We disagree with Ch ina.  The Panel noted the USITC's finding that 
subject imports "continued to increase rapidly ev en in 2008 when U.S. apparent consumption was 
falling".648  As the Panel found, this would suggest th at "subject imports were having an adverse 
impact on the domestic industry independent of th e effects of the fall in demand during the 2008 
recession."649  We therefore do not agree with China that the USITC failed to distinguish the 
"contribution of imports from China from those of the current recession on the overall condition of the industry".
650 
296. Finally, we note China's argument that, in its analysis of the 2008 recession, the Panel 
"suggested that if the sharp decline in demand coul d not explain all of the injury to the domestic 
industry, then it could explain none of the injury".651  In particular, China takes issue with the Panel's 
finding that: 
… the USITC properly established that the injury to the domestic 
industry could not be attributed in whole to the fall in demand resulting from the 2008 recession.  The fact that subject imports continued to increase significantly du ring that recession, forcing the 
domestic industry to absorb virtually all of the resultant fall in 
demand, indicates that subject imports were having an adverse 
                                                      
645Panel Report, para. 7.338.  
646Panel Report, para. 7.339.  
647Panel Report, para. 7.329.  
648USITC Report, p. 26. 
649Panel Report, para. 7.354.  
650China's appellant's submission, para. 449.  
651China's appellant's submission, para. 451. (original underlining)  WT/DS399/AB/R 
 Page 107 
 
 
impact on the domestic industry independent of the effects of the fall in demand during the 2008 recession.
652 
297. As discussed above653, we agree with China that, read in  isolation, the passage quoted above 
may suggest that the Panel was merely assessing whethe r "all of the injury" could be attributed to the 
fall in demand resulting from the 2008 recession, rath er than examining whether subject imports had 
"significant effects".  However, the Panel went on to explain that the fact that subject imports 
continued to increase significantly during that recessi on indicated that subject imports were having an 
adverse impact independent  of the effect of the fall in demand during the 2008 recession.654  T h e  
Panel also clarified elsewhere in its Report that, in rejecting China's claims regarding the USITC's 
assessment of the individual injurious effects of ot her causal factors, it had "reviewed record evidence 
indicating that subject imports from China had significant  injurious effects, independent of any 
injurious effects of other causal factors".655  Therefore, while the passage quoted above may give rise 
to some concern and is unfortunately worded, we do not agree with China that the Panel suggested 
that, if the sharp decline in demand in 2008 "coul d not explain all of the injury to the domestic 
industry, then it could explain none of the injury".656   
298. China further submits that the Panel "substitu ted its own analysis" instead of assessing the 
USITC's determination.657  For example, in China's view, the Panel compared the changing levels of 
apparent consumption with the ch anging levels of subject import penetration, although the USITC did 
not conduct such an analysis in its determination.658  We note that China also raises a claim under 
Article 11 of the DSU regarding this aspect of the Panel's analysis and we address that claim in 
section VI.E of this Report.  Based on the foregoing,  we find no error in the Panel's conclusion that 
the USITC properly addressed the issue of demand  and properly f ound "that subject imports had 
injurious effects independent of any injury caused by changes in demand".659 
(c) Non-Subject Imports 
299. China faults the Panel for upholding the USITC' s finding, contending that the USITC "never 
seriously addressed the competitive significance of non-subject imports".660  According to China, 
despite the fact that non-subject imports held a larg er share of the US mark et than Chinese imports 
                                                      
652Panel Report, para. 7.354. 
653Supra , paras. 256 and 257 of this Report. 
654Panel Report, para. 7.354. 
655Panel Report, footnote 511 to para. 7.377. (emphasis added) 
656China's appellant's submission, para. 451. (original underlining) 
657China's appellant's submission, para. 440. 
658China's appellant's submission, para. 440. 
659Panel Report, para. 7.333. 
660China's appellant's submission, para. 470. WT/DS399/AB/R 
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and were lower priced than the tyres produced in  the United States, the USITC failed to address their 
competitive effects in the market.
661   
300. We note, as an initial matter, that the United States contends that China did not identify 
before the Panel non-subject imports as a possible "oth er" factor causing injury that the USITC should 
have addressed in its analysis.  The United States s ubmits that it is therefore "inappropriate for China 
to raise this issue on appeal".662  Contrary to what the United States suggests, however, it appears, that 
China did raise this issue before the Panel.663 
301. Turning to China's arguments on appeal, we are not persuaded that the USITC failed to 
address adequately the competitive effect of non-subj ect imports in the market.  As the Panel noted, 
the USITC found that, "since 2006, imports from China ga ined a greater share of the U.S. market than 
was lost by domestic producers, indicating that they also took market share away from third-country 
sources."664  Moreover, with respect to changes occurring in 2008, the USITC explained: 
Subject imports increased by 4.5 million tires in 2008, while U.S. 
apparent consumption declined by 20.4 million tires.  Imports from third countries declined by 6.0 million tires in 2008, or by 
6.1 percent, roughly consistent with the 6.9 percent decline in U.S. 
apparent consumption in 2008.  Meanwhile, domestic production of subject tires declined by 20.0 million tires in 2008, or by 11.1 percent, and absorbed virtually all the decline in U.S. apparent consumption that year.
665 (footnote omitted) 
302. Having said that, China is correct in noting that non-subject imports consistently held a larger 
share of the US market than subject imports from China, and that prices for non-subject imports 
remained lower than prices for domestically produ ced tyres throughout the period of investigation.666  
Nonetheless, as the Panel noted, the record also in dicates that the average unit value of non-subject 
                                                      
661China's appellant's submission, para. 470. 
662United States' appellee's submission, para. 216. 
663Panel Report, para. 7.360. The Panel noted China's contention that "the USITC also failed to 
properly analyse the injury caused to the domestic industry by imports from countries other than China."  The Panel added that "China suggests that injury caused by non-subject imports was improperly attributed to subject 
imports."  The United States is correct, however, when it points out that China discussed "in detail only two 
factors that China believed were 'other factors' that had allegedly had a significant injurious effect on the industry during the period of investigation." (United States' appellee's submission, para. 216)  Yet, although 
China's arguments focused on changes in demand and the US industry's alleged business strategy, we note that 
China also referred in its arguments to "other contribu ting factors", including "massive numbers of non-subject 
imports", arguing that the USITC "failed to explain why imports from China were nonetheless a 'significant' 
cause amid these multiple factors." (China's first written submission to the Panel, para. 332)  We note that the 
United States suggests that the Panel itself "looked at th is issue primarily because Ch ina addressed the issue of 
non-subject imports in the context of its arguments on  demand changes in the OEM market." (United States' 
appellee's submission, para. 216) 
664Panel Report, para. 7.364 (quoting USITC Report, p. 26). 
665Panel Report, para. 7.353 (quoting USITC Report, p. 26). 
666China's appellant's submission, para. 470.  WT/DS399/AB/R 
 Page 109 
 
 
imports remained 22-25% higher  than the average unit value of s ubject imports, with the average unit 
value of subject imports increasing from US$31.10 to US$38.90 over the period, while the average 
unit value of non-subject imports increased from US$40.42 to US$55.29, and the average unit value 
of US producers' shipments increased from US$48.40 to US$69.69.667 In assessing China's allegations 
as to the effects of non-subject imports, the Panel further noted that "by 2006 only imports from Indonesia were cheaper than subject imports from China, and Indonesian imports represented only 
3.4 per cent of total imports in 2006, compar ed to subject imports' 21.2 per cent share."
668  In addition, 
the Panel observed that "the share of non-subject imports in total U.S. imports declined from 87.1 to 66.9 per cent over the period, as the share of subject imports to total U.S. imports increased from 12.9 
to 33.1 per cent."
669  This suggests, as the Panel found, th at "non-subject imports would have had 
considerably less price effect on the domestic industry than subject imports."670   
303. China also contends that the Panel impermissibl y substituted its own analysis for that of the 
USITC when it stated that "the dominant feature of  the U.S. market was the rise of subject imports 
from China at the expense of both non-s ubject imports and the U.S. industry."671  China also raises a 
claim under Article 11 of the DSU regarding this aspect of the Panel's analysis.  We address that 
claim in section VI.E.3 of this Report.   
304. China argues that the Panel's analysis of pri ce effects disregarded the "relative volumes" of 
non-subject imports vis-à-vis subject imports.672  In relation to the replacement market, China submits 
that "imports from China in 2008 were less than 1 percent of the tier 1 market while imports from 
other countries made up 39 percent of the market."673  In China's view, "the Panel's analysis 
essentially assumed that one tire from China at $40 had more of an adverse impact than thirty nine 
tires from other countries at $55."674  China adds that "there we re approximately nine times  as many 
non-subject imports in the OEM market in 2008" as there were imports from China, and "non-subject 
imports grew from 30.2 percent to 43.5 percent of the U.S. OEM market between 2004 and 2008".675  
Noting that "[t]ogether the OEM and tier 1 segments represent about 60 percent of U.S. shipments", 
                                                      
667USITC Report, Table C-4. 
668Panel Report, para. 7.364 (referring to USITC Report, Table II-1). 
669Panel Report, para. 7.364 (referring to USITC Report, Table II-1). 
670Panel Report, para. 7.364.  
671China's appellant's submission, para. 473 (quoting Panel Report, para. 7.367).  See also China's 
appellant's submission, para. 577. 
672China's appellant's submission, paras. 476 and 477. 
673China's appellant's submission, para. 477. 
674China's appellant's submission, para. 477. (original underlining) 
675China's appellant's submission, para. 478 (referring to USITC Report, Table V-3 at p. V-4). (original 
underlining) WT/DS399/AB/R 
Page 110  
 
China asserts that the Panel ignor ed the fact that "non-subject imports remained the overwhelming 
competitive factor facing U.S. producers".
676   
305. This argument by China focuses exclusively on distinct segments of the overall US tyres 
market.  While it may be, as China suggests, that subject imports might not have had a significant 
effect in tier 1, the issue before the Panel, however, was whether the USITC reasonably established 
that subject imports were "a si gnificant cause" of injury in the overall US market , consisting of the 
OEM market and the three tiers of the replacement market.  In section VI.B of our Report, we have 
examined this matter in more detail when addressi ng China's arguments concerning the conditions of 
competition. 
(d) Comparative Analysis of Alternative Causal Factors 
306. China acknowledges that Section 16 of the Protoc ol does not require that an investigating 
authority compare or "weigh" the effects of  various causal factors against one another.677  However, 
China maintains that such analysis would provide an  "alternative way" for an investigating authority 
to determine appropriately that imports from China are "a significant cause" of material injury in the light of the existence of other causal factors.
678  Moreover, even if this a pproach is not required, China 
contends that, in this case, a consideration of the relative importance of other causes "reinforces" the conclusion that imports from China were not in fact "a significant cause" of injury.
679  In China's 
view, this is because other causes reduced any residu al contribution by imports from China to a level 
that no longer meets the sta ndard of "significant cause".680   
307. According to China, the Panel erred by affirmi ng the USITC's analysis of other causes.  China 
contends that the USITC relied exclusively on its  holistic explanation—based on conditions of 
competition, overall correlation, and other causes—w ithout any assessment of the relative importance 
of each of the various causes at work.681  China makes reference to the industry's alleged business 
strategy, declines in demand, and the role of non-s ubject imports, maintaining that the evidence before 
the USITC "strongly suggested" that these other possi ble causes of injury were more important than 
imports from China.682 
                                                      
676China's appellant's submission, para. 478.  
677China's appellant's submission, para. 480.  
678China's appellant's submission, para. 480.  
679China's appellant's submission, para. 481.  
680China's appellant's submission, para. 481.  
681China's appellant's submission, para. 482.  
682China's appellant's submission, para. 492.   WT/DS399/AB/R 
 Page 111 
 
 
308. As we understand it, China does not claim that an investigating authority is required to 
compare or "weigh" the effects of various causal factors against one another in order to determine 
whether imports from China are a significant cause of injury to the domestic industry.  China argues, 
however, that a consideration of subject imports in the context of other causes can inform  the issue of 
whether rapidly increasing imports from China rise to th e level of being a significant cause of injury.  
As we see it, China's arguments on this issue are cl osely linked to its argument concerning the need to 
consider the relationship between rapidly increasing im ports and other causal factors.  We consider it 
appropriate therefore to address these arguments t ogether in the following section of this Report. 
(e) Cumulative Assessment, Interplay, and Integrated Analysis  
309. Referring to the Appellate Body's findings in EC – Tube or Pipe Fittings , the Panel reasoned 
that, notwithstanding the lack of any requirement  for cumulative assessment under the Protocol, 
"there may be cases where the collec tive injurious effect of other causal factors might be so dominant 
that the injury caused by increasing imports could not properly be found to be 'significant'."683  The 
Panel stated, however, that China has not demonstr ated that this was the case in the underlying 
USITC investigation.  The Panel further noted that, in rejecting China's claims regarding the USITC's 
assessment of the individual injurious effects of these other causal factors, it had "reviewed record evidence indicating that subject imports from China had significant injurious effects, independent of 
any injurious effects of other causal factors."
684  The Panel found that China had "failed to establish 
that in the context of the presen t case the USITC should have provided a cumulative assessment of the 
effects of the other causes of injury".685 
310. China takes issue with this finding, claiming that the Panel improperly dismissed China's 
arguments on this point.  According to China, it provided the Panel with "the unique factual 
circumstances by which other causes worked in an  interrelated manner in th is case to sever or 
diminish the magnitude of any causal link" between Chinese imports and material injury.686  I n  
                                                      
683Panel Report, para. 7.377 (referring to Appellate Body Report, EC – Tube or Pipe Fittings , 
para. 192). 
684Panel Report, footnote 511 to para. 7.377.  
685Panel Report, para. 7.377.  
686China's appellant's submission, para. 494. (original underlining) WT/DS399/AB/R 
Page 112  
 
support of its argument, China refers to certain passages in its first and second written submission to 
the Panel.
687 
311. On appeal, China refers to the "interplay" be tween factors other than subject imports and 
points to the "subsequent reduction in the possibilit y for subject imports to be a 'significant cause'".688  
In doing so, China largely repeats the arguments it makes concerning distinct other causes of injury 
that it claims the Panel and the USITC failed to addr ess meaningfully.  China ar gues, for instance, that 
import levels in 2007 and 2008 reflected , "at least in part", the consequences of earlier decisions by 
US producers to globalize and create more demand for imports.689  According to China, the "void" left 
by US producers "became particularly important  during the recession in 2008 as demand shifted to 
lower-priced value tires and thus shipments of those imported tires at a lower price-point held up significantly better than domestic shipments of the more expensive U.S.-manufactured tires."
690  
China asserts that it was therefore "improper to assume imports from China displaced U.S. production 
at the end of the period when many of the U.S.  production lines of the most directly competitive 
products had already been shut down for broader re asons that only partially related to imports from 
China."691 
312. With regard to non-subject imports, China re iterates its argument that, during the 2004-2006 
period, non-subject imports had a much larger shar e of the market than imports from China and were 
lower priced than US-made tyres.  China asserts that  it was therefore "improper to attribute significant 
effects to the smaller volume of imports from China while ignoring the effects of the larger volume of 
imports from other countries that also undersold U.S. tire prices by a wide margin."692  China adds 
that "the domestic industry itself was responsible for imports of both subject and non-subject imports, 
and therefore U.S. producers themselves had some  control over the relative magnitude of those 
imports."693  Moreover, for China, "[g]iven the importance of non-subject imports in the overall 
U.S. market (comprising more than four times as large a presence in the market as imports from 
                                                      
687China's appellant's submission, para. 494 (referring to China's first written submission to the Panel, 
paras. 235-238, 357, and 358;  and China's second wr itten submission to the Panel, paras. 345-347).  China 
argued, inter alia , that declining demand, the US domestic industry's business strategy to globalize production, 
attenuated competition, and other factors, individually sever the requisite causal link that must be shown in 
order to justify the imposition of a product-specific safeguard under Section 16 of the Protocol.  China further 
argued that these factors "work togeth er to create the overall conditions of competition in the market place" and 
that they "interact and reinforce each other".  For China, in order to jus tify the imposition of a product-specific 
safeguard in this case, the USITC was required to show th at, "even in the face of thes e interrelated conditions of 
competition, imports from China were still themselv es a 'significant cause' of material injury". 
688China's appellant's submission, para. 494.  
689China's appellant's submission, para. 495.  
690China's appellant's submission, para. 495.  
691China's appellant's submission, para. 495.  
692China's appellant's submission, para. 496.  
693China's appellant's submission, para. 496.   WT/DS399/AB/R 
 Page 113 
 
 
China) and their ability to undersell the higher-c ost U.S.-based production of lower-end tires (with 
average unit values about 20 percent lower than U. S.-produced tires), U.S. producers themselves had 
to find lower cost places to produce."694  In China's view, "it makes little sense to blame this need on 
the smaller volume of imports from China", when "[a]ll imports—not just those from China—offered 
more price-competitive options a nd drove the new business strategy."695 
313. With regard to declines in demand, China fu rther argues that the longer-term decline in 
overall US demand created the need for US producer s to shift production to where the markets were 
strongest and "reinforced the need for a new business strategy to globalize production".696  China adds 
that the "decline in U.S.-based automobile prod uction drove down production for the OEM market" 
and further "reinforced the need to produce in other markets".697 
314. China's arguments on appeal regarding the "int erplay" of causes other than rapidly increasing 
subject imports are clearly more elaborate and deta iled than the arguments that China developed on 
this point before the Panel.  Having said this, we  recall that the Panel found that China failed to 
establish that the USITC's analysis of the dom estic industry's business strategy was in error.698  We 
further recall that the Panel found "no error in the USITC's consideration of changes in demand for 
tyres in the United States, or the conclusion that any injury suffered by the domestic industry was 
caused by subject imports, rather than demand changes".699  Moreover, the Panel found that "although 
the volume of non-subject imports was greater than  the volume of subject imports from China, and 
although non-subject imports remained cheaper th an domestically-produced tyres, the dominant 
feature of the U.S. market was the rise of subj ect imports from China at the expense of both non-
subject imports and the U.S. industry."700  On our part, in reviewing China's arguments on appeal, we 
have not found the Panel to have erred in reaching these conclusions.  In these circumstances, we are 
not persuaded that the Panel erred in  concluding that China failed to dem onstrate in this case that "the 
collective injurious effect of other causal factors mi ght be so dominant that the injury caused by 
increasing imports could not properly be found to be 'significant'".701  
315. Even accepting that non-subject imports, dec lines in demand, and the domestic industry's 
business strategy of shifting focus to higher-value  products for its US production may also have 
played a role, even an important role, in bringing about material injury to the domestic industry, we 
                                                      
694China's appellant's submission, para. 499.  
695China's appellant's submission, para. 499.  
696China's appellant's submission, para. 497. 
697China's appellant's submission, para. 497.  
698Panel Report, para. 7.322.  
699Panel Report, para. 7.359.  
700Panel Report, para. 7.367.  
701Panel Report, para. 7.377 (referring Appellate Body Report, EC – Tube or Pipe Fittings , para. 192). WT/DS399/AB/R 
Page 114  
 
are not persuaded that the Panel erred in conclu ding that the record ev idence before the USITC 
indicated "that subject imports from China had significant injurious effects, independent of any 
injurious effects of other causal factors."
702  To the contrary, we consider that the Panel properly 
concluded that the effects of rapidly increasing imports from China remained significant in the 
context of the effects of these other causes. 
316. China further argues that the Panel "erred by considering each causation argument raised by 
China in isolation", and never addressing them toge ther in what China descr ibes as an "integrated 
analysis".703  According to China, the lack of correla tion and the existence of attenuated competition 
in this case "reinforced each other" and "undermined " any conclusion that subject imports might be a 
significant cause of material injury.704  China maintains that the domestic industry's business strategy 
"helped explain why attenuated competition was an accelerating phenomenon in the market over the 
period of investigation".705  China also refers to the "contin uing large presence" of non-subject 
imports and improvements in the perform ance of the domestic industry in 2007.706  
317. We are not persuaded that the Panel failed to  consider sufficiently how different causal 
factors interacted in its analysis.  For example, th e Panel juxtaposed trends in subject imports with 
declines in demand, noting that, "[e]ven when de mand increased by 1.6 per cent in 2007, the volume 
of subject imports increased by the significantly greater figure of 53.7 per cent".707  Based on its 
analysis, the Panel concluded that the USITC pr operly found "that subject imports had injurious 
effects independent of any injury caused by changes in demand."708  The Panel also noted that the fact 
that the "domestic industry was required to absorb virtually 100 per cent of the decline in demand in 
2008, while subject imports continued to increase by 10.8 per cent, demonstrates that subject imports 
were having effects on the domestic industry that could not be explained by that decline in 
demand."709  In addition, the Panel examined the rela tionship between rapidly increasing imports from 
China and imports from third countries, noting, for example, that "the prices of non-subject imports 
were lower than those of U.S. producers throughout the period of investigation, and this may have 
impacted negatively on the domestic industry."710  The Panel also noted that "the average unit value of 
non-subject imports remained 22-25 per cent higher th an the average unit value of subject imports, 
suggesting that non-subject imports  would have had considerably less price effect on the domestic 
                                                      
702Panel Report, footnote 511 to para. 7.377.  
703China's appellant's submission, para. 502.  
704China's appellant's submission, para. 506. 
705China's appellant's submission, para. 507.  
706China's appellant's submission, paras. 508 and 509. 
707Panel Report, para. 7.336. 
708Panel Report, para. 7.333.  
709Panel Report, para. 7.343.  
710Panel Report, para. 7.364.  WT/DS399/AB/R 
 Page 115 
 
 
industry than subject imports."711  The Panel added that "the share of non-subject imports in total 
U.S. imports declined from 87.1 to 66.9 per cent ov er the period, as the share of subject imports to 
total U.S. imports increased from 12.9 to 33.1 per cent."712  The Panel's analysis reveals that the 
USITC also considered the interaction between sever al of the factors referred to by China.  For 
example, with respect to changes occurring in 20 08, the USITC referred to subject imports, non-
subject imports, and declines in demand, finding that: 
[s]ubject imports increased by 4.5 million tires in 2008, while U.S. 
apparent consumption declined by 20.4 million tires.  Imports from 
third countries declined by 6.0 million tires in 2008, or by 6.1 percent, roughly consistent with the 6.9 percent decline in 
U.S. apparent consumption in  2008.  Meanwhile, domestic 
production of subject tires declined by 20.0 million tires in 2008, or 
by 11.1 percent, and absorbed vi rtually all the decline in U.S. 
apparent consumption that year.
713 (footnotes omitted) 
318. China suggests that the Panel erred by "isolating elements of the causation analysis instead of 
considering their interrelated a nd mutually reinforcing nature".714  We do not agree.  Instead, as we 
see it, the Panel's analysis of the USITC's findings largely mirrored arguments that China made before 
the Panel.  The fact that the Panel assessed Ch ina's arguments concerning the USITC's causation 
analysis separately does not mean that the Panel fa iled to consider whether the reasoning provided by 
the USITC for its overall conclusion regarding cau sation was adequate in the light of China's 
arguments and the record evidence taken as a whol e.  Thus, for example, in addressing China's 
arguments regarding the US plant closures in 2006 and 2008, the Panel refe rred to various factors 
relied upon by the USITC, including the proportion of total subject imports made by US producers.  The Panel emphasized that, while it would consider "the USITC's handling of these factors, and the 
relevant evidence, individually", it would "als o assess the USITC's conclusion on the basis of the 
totality of the factors and evidence relied on by the USITC".
715  We consider the Panel's analysis to 
have been sufficient particularly given that, under Paragraph 16.4 of the Protocol, rapidly increasing 
imports from China may be one of several causes that contribute to producing or bringing about material injury to the domestic industry.  China's argument that this is not the case is predicated on 
China's interpretation of Paragraph 16.4,  which we have rejected above.   
                                                      
711Panel Report, para. 7.364.  
712Panel Report, para. 7.364.  
713Panel Report, paras. 7.337 and 7.353 (quoting USITC Report, p. 26).  In addition, we note that, in 
reaching its ultimate conclusion on the existence of mark et disruption, the USITC re lied in large part on the 
significant increase in the volume of subject imports, the significant underselling of domestic products, and the 
correlation of the increase in subject imports with the domestic indu stry's performance i ndicators. (See USITC 
Report, p. 29) 
714China's appellant's submission, para. 510.  
715Panel Report, para. 7.289. WT/DS399/AB/R 
Page 116  
 
3. Conclusion 
319. Based on the foregoing, we uphold  the Panel's finding, in paragraph 7.378 of the Panel 
Report, that China has failed to establish that the USITC improperly attributed injury caused by other 
factors to subject imports. 
E. Article 11 of the DSU 
320. China claims that the Panel failed to conduct an  objective assessment of the matter as required 
under Article 11 of the DSU in its review of the US ITC's determination that subject imports were "a 
significant cause" of material injury to the domestic industry.  China relies on several arguments to support its claim.  First, China alleges that the Pane l failed to consider the totality of the evidence on 
the question of causation.  Second, China conten ds that the Panel failed to conduct a balanced 
assessment of the evidence on the question of cau sation and disregarded evidence that was not 
consistent with the conclusion reached by the USIT C.  Third, China submits that the Panel went 
beyond the rationale contained in the USITC determ ination on the question of causation and relied on 
post hoc  clarifications provided by the United States or analysis developed by the Panel itself.  
Finally, China asserts that the Panel failed to c onsider all of China's arguments on the cumulative 
effects of other causal factors.
716 
321. The Appellate Body has consistently recognized that panels enjoy a margin of discretion in 
their assessment of the facts.717  This margin includes the discretion of a panel to decide which 
evidence it chooses to utilize in making its findings718, and to determine how much weight to attach to 
the various items of evidence placed before it by the parties to the case.719  A panel does not commit a 
reversible error simply because it declines to accord to  the evidence the weight that one of the parties 
believes should be accorded to it.720  In addition, as the Appellate Body has previously emphasized, a 
claim under Article 11 of the DSU must "stand by its elf and be substantiated with specific arguments, 
                                                      
716China's appellant's submission, paras. 566-583. 
717Appellate Body Report, EC – Asbestos , para. 161;  Appellate Body Report, EC – Hormones , 
para. 132;  Appellate Body Report, EC – Sardines , para. 299;  Appellate Body Report, Japan – Apples , 
para. 222;  Appellate Body Report, Korea – Dairy , para. 137;  and Appellate Body Report, US – Wheat Gluten , 
para. 151. 
718Appellate Body Report, EC – Hormones , para. 135. 
719Appellate Body Report, Korea – Dairy , para. 137. 
720Appellate Body Report, Australia – Salmon , para. 267;  Appellate Body Report, Japan – Apples , 
para. 221;  and Appellate Body Report, Korea – Alcoholic Beverages , para. 164.  WT/DS399/AB/R 
 Page 117 
 
 
rather than merely being put forth as a subsidiary ar gument or claim in support of a claim of a panel's 
failure to construe or apply correctly a pa rticular provision of a covered agreement."721  
322. With these considerations in mind, we turn to China's four specific allegations that the Panel 
failed to comply with Article 11 of the DSU. 
1. Totality of the Evidence 
323. China claims that the Panel failed to consider the "totality of the evidence" on the question of 
causation.722  China also faults the Panel for failing to see how the various cause s are interrelated, and 
for failing to consider the way in whic h other causes interacted with each other.723  Noting that the 
USITC itself "embraced a holistic approach to the causation issue", China submits that it was 
therefore error for the Panel to address "each causation issue in isolation".724  In support of its 
position, China refers to the dispute in US – Countervailing Duty Investigation on DRAMS , where the 
Appellate Body "explained that when the authorities considered evidence as a whole, a panel must use 
the same approach when evaluating the WTO consis tency of the decision reached by the authority".725 
324. As noted above, the Panel's discussion of possi ble other causes of injury largely mirrored 
arguments that China made before the Panel.726  The fact that the Panel structured its analysis by 
addressing China's arguments individually does not mean  that the Panel failed to consider whether the 
USITC's overall conclusion regarding causation was r easoned and adequate in the light of China's 
arguments and the record evidence taken as a whol e.  We see no error in the Panel's analytical 
approach.  We therefore disagree with  China's assertions in this respect. 
2. Balanced Assessment of the Evidence 
325. China claims that the Panel failed to conduct a balanced ass essment of the evidence on the 
question of causation, and disregarded evidence that  was not consistent with the conclusions reached 
                                                      
721Appellate Body Report, Australia – Apples , para. 406.  See also Appellate Body Report, Chile – 
Price Band System (Article 21.5 – Argentina) , para. 238 (referring to Appellate Body Report, US – Steel 
Safeguards , para. 498); and Appellate Body Report, China – Publications and Audiovisual Products , 
footnote 368 to para. 189.  More recently, the Appellate Body found th at "[i]t is also unacceptable for a 
participant effectively to r ecast its argument before the panel under the gui se of an Article 11 claim.  Instead, a 
participant must identify specific errors regarding the objectivity of the panel's assessment." (Appellate Body 
Report, EC – Fasteners (China) , para. 442) 
722China's appellant's submission, para. 566.  
723China's appellant's submission, para. 567.  
724China's appellant's submission, para. 568.  
725China's appellant's submission, para. 568 (referring to Appellate Body Report, US – Countervailing 
Duty Investigation on DRAMS , paras. 188-190). 
726See supra , para. 318 of this Report. WT/DS399/AB/R 
Page 118  
 
by the USITC.  In particular, China takes issue w ith the Panel's reliance on footnote 62 of the USITC 
staff report, which refers to, inter alia , reasons for the closure of Bridgestone's plant in Oklahoma 
City and Goodyear's plant in Tyler.
727  According to China, the Panel "went out of its way to find and 
cite evidence the USITC majority did not cite or  rely upon" and "extracted only those pieces of 
evidence that supported the USITC conclusion and i gnored those other pieces of evidence that were 
not consistent with the USITC conclusion".728  Referring to the Appellate Body Report in US – 
Upland Cotton (Article 21.5 – Brazil) , China submits that panels mu st be "even-handed" in their 
review and consider all of the arguments a nd evidence in a balanced and consistent way.729 
326. We do not agree with China's assertion that  the Panel erred by relying on information 
contained in footnote 62 of the USITC staff report that indicates that competition from low-cost imports from China and Korea was one of the reas ons for the closure of Bridgestone's plant in 
Oklahoma City.  Instead, the Panel simply engage d in a review of record evidence (including 
information found in the USITC staff report) to assess whether the USITC's statement regarding plant 
closings was supported by the evidence before the US ITC.  We see no reason why, in this context, the 
Panel would have been precluded from examining in formation set out in the USITC staff report.  
Furthermore, the fact that the information is prov ided in a passage of the USITC staff report that 
addresses a different issue (COGS/sales ratio) does not  mean that it cannot be relevant for purposes of 
determining whether the USITC could reasonably understand the reference to "low cost producing 
countries" as including China.  Rather, as we s ee it, the information on which the Panel relied 
provides relevant context for the purpose of assessi ng whether one of Bridgestone's reasons for the 
closing of its plant was low-cost imports from China. 
327. Moreover, although China is correct in saying that footnote 62 of the USITC staff report cites 
three non-import related factors as reasons for the cl osure of the Goodyear plant, the footnote also 
states that the plant was experiencing "c onsiderable pressure from low cost imports".
730  We do not 
agree with China that the Panel "ignored" these other reasons for the closure of Goodyear's plant in 
Tyler.  Contrary to what China seems to sugg est, the question before the Panel was not whether 
subject imports were the only reason for the closure of the plant.  Rather, the Panel was called upon to assess the USITC's conclusion that competition from low-priced imports from Asia, including China, 
played an "important part" in the plant closures that occurred in 2006 and 2008.
731  We therefore do 
                                                      
727China's appellant's submission, para. 569 (referring to USITC Report, footnote 62 at p. III-16).  
728China's appellant's submission, para. 569.   
729China's appellant's submission, paras. 49 and 562 (referring to Appellate Body Report, US – Upland 
Cotton (Article 21.5 – Brazil) , para. 293). 
730USITC Report, footnote 62 at p. III-16.  Non-import-related factors justifying Goodyear's plant 
closure were identified as rising costs, Goodyear's decision announced in June 2006 to exit the wholesale private 
label market, and reduced demand for the types of tyres produced at Goodyear's plant in Tyler. 
731See Panel Report, para. 7.287 (quoting USITC Report, p. 26).  WT/DS399/AB/R 
 Page 119 
 
 
not agree with China that the Panel acted inconsis tently with its obligations under Article 11 of the 
DSU by failing to conduct a balanced assessme nt of the evidence before the USITC. 
3. Rationale and Reasoning in the USITC Determination 
328. China claims that the Panel acted inconsistently  with its obligations under Article 11 of the 
DSU by going beyond the rationale contained in the USITC determination on the question of 
causation, and relying on post hoc  clarifications provided by the United States or analysis developed 
by the Panel itself to "bolster the USITC determination".732  China does not set out "specific" 
arguments and reasoning to support its claim.  Inst ead, China refers to certain arguments it made 
earlier in other sections of its appellant's submissi on dealing with conditions of competition, declining 
demand over the period of investigation, the recession  in 2008, and the role of non-subject imports.733 
329. The Appellate Body has previously clarified that  a panel's examination of the conclusions of 
an investigating authority "must be critical and se arching, and be based on the information contained 
in the record and the explanations given by the author ity in its published report ."734  The Appellate 
Body has also clarified that during panel pro ceedings a Member is precluded from providing an 
ex post  rationale to justify the inves tigating authority's determination.735 
330. Based on our examination of the Panel's analysis , we find that the Panel merely engaged in a 
review of whether the evidence on record supported the conclusion reached by the USITC, rather than 
constructing a rationale for the USITC.  The fact th at the Panel may have examined evidence or data 
on the record that the USITC did not refer to specifi cally in its determination does not establish that 
the Panel conducted an improper review of the US ITC determination.  To the contrary, as noted 
above, a panel should examine whether the explanation provided by the investigating authority to 
support its conclusion is reasoned a nd adequate, in the light of the evidence on the record and other 
plausible alternative explanations.  Moreover, althou gh the Panel may have attributed different weight 
to certain evidence on record than did China, this is insufficient to  demonstrate that the Panel acted 
inconsistently with its obligati ons under Article 11 of the DSU. 
331. In any event, the Appellate Body has held th at a challenge under Article 11 of the DSU must 
"stand by itself and be substantiated with specific arguments, rather than merely being put forth as a 
subsidiary argument or claim in support of a claim of  a panel's failure to construe or apply correctly a 
                                                      
732China's appellant's submission, para. 572.   
733China's appellant's submission, paras. 574-577.  
734Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93. (emphasis 
added) 
735Appellate Body Report, Japan – DRAMs (Korea) , para. 159. WT/DS399/AB/R 
Page 120  
 
particular provision of a covered agreement."
736  This, in our view, is not the case here.  Accordingly, 
we reject this aspect of China's claim that the Pane l acted inconsistently with Article 11 of the DSU. 
4. Consideration of Certain Arguments Made by China 
332. China claims that the Panel acted inconsistently  with its obligations under Article 11 of the 
DSU by failing to consider China' s arguments regarding:  (i) how "other causes interacted with each 
other" and had a broader "cumulative effect"737;  (ii) the existence of "attenuated competition" 
between subject imports and domestic tyres in the US replacement market, including evidence provided by the United States to the Panel indicating a limited presence of Chinese imports in tier 1 of 
that market
738;  and (iii) how it was necessary to disti nguish the standard in China's Accession 
Protocol of a "significant cause" from the mere "cause" standard of other WTO agreements.739 
333. Contrary to China's assertion, it appears that th e Panel did in fact consider China's arguments 
on these three issues.  First, in relation to China's argument concerning the cumulative effect of causes 
other than subject imports, the Panel reasoned that , notwithstanding the lack of any requirement for 
cumulative assessment under the Protocol, "there may be cases where the collective injurious effect of 
other causal factors might be so dominant that the injury caused by increasing imports could not 
properly be found to be 'significant'."740  The Panel explained, however, that, in rejecting China's 
claims regarding the USITC's assessment of the indi vidual injurious effects of these other factors, it 
had "reviewed record evidence indicating that subj ect imports from China had significant injurious 
effects, independent of any injurious effects of other causal factors."741  On this basis, the Panel 
concluded that China "failed to establish that in th e context of the present case the USITC should have 
provided a cumulative assessment of the effects of the other causes of injury".742   
334. Second, with respect to the issue of attenuated competition, the Panel noted that there was no 
consensus among market participants as to how to de fine what types of tyres should be classified in 
each tier, or what brands should be classified in eac h tier, of the US replacement market.  On this 
basis, and following further analysis, the Panel f ound no fault with the USITC's conclusion that there 
were no distinct dividing lines between tiers 1, 2, and 3.  Also, while the Panel recognized that "there 
was some variation in levels of competition be tween subject imports a nd domestic products as 
                                                      
736Appellate Body Report, US – Steel Safeguards , para. 498;  and, most  recently, Appellate Body 
Report, Australia – Apples , para. 406. 
737China's appellant's submission, para. 579. 
738China's appellant's submission, para. 580.  
739China's appellant's submission, para. 583. 
740Panel Report, para. 7.377 (referring Appellate Body Report, EC – Tube or Pipe Fittings , para. 192). 
741Panel Report, footnote 511 to para. 7.377.  
742Panel Report, para. 7.377.   WT/DS399/AB/R 
 Page 121 
 
 
between tier 1 and tiers 2 and 3", based on its anal ysis, the Panel found "no fault with the USITC's 
conclusion that subject imports a nd domestic products were not focused  in different tiers" and did not 
accept that "the USITC should have found that ther e was only 'vestigial' competition between them in 
tiers 2 and 3."743 
335. Third, with respect to the need to distinguish  "a cause" from "a significant cause", we note 
that the Panel agreed with Ch ina (and the United States) that  "a significant cause" is one that is 
"important" or "notable".  The Panel added, however , that it disagreed with China's argument that the 
meaning of "significant" must include the notion of significance relative to other causal factors.  The 
Panel further explained that China had "provided no evidence or explanation in support of this 
argument", and expressed the view that "rapidly  increasing imports might properly constitute a 
significant cause of market disruption even though th eir causal role is not as significant as other 
factors."744 
336. Based on our review of the Panel's reasoning, we  believe that the Panel reasonably considered 
China's arguments regarding the USITC's causation analysis.745  The fact that the Panel ultimately 
disagreed with China's position does not establish th at it committed an error of law under Article 11 
of the DSU.  While we agree with China that the Panel could have pr ovided more reasoning to 
support its findings, we do not think that any shortcomings in the Panel's analysis of the USITC's determination on causation are so serious as to amount to a failure to make an  objective assessment of 
the matter before it. 
337. Based on the foregoing, we do not consider that the Panel acted inconsistently with its duties 
under Article 11 of the DSU. 
F. Conclusion 
338. For all these reasons, and having considered all of China's arguments concerning the Panel's 
assessment of the USITC's causation analysis, we uphold the Panel's finding, in paragraph 7.379 of 
the Panel Report, that the USITC did not fail prope rly to establish that rapidly increasing imports from 
China were a significant cause of material injury to the domestic industry within the meaning of 
Paragraph 16.4 of China's Accession Protocol. 
                                                      
743Panel Report, para. 7.197.  
744Panel Report, para. 7.158.  The Panel also explaine d that it agreed with China that the term "a 
significant cause" requires more  than a mere contribution. ( Ibid., footnote 271 to para. 7.159)  
745See also Appellate Body Report, EC – Poultry , para. 135.  WT/DS399/AB/R 
Page 122  
 
VII. Findings and Conclusion 
339. For the reasons set out in this Report, the Appellate Body: 
(a) with respect to the USITC's analysis of  whether imports from China are increasing 
rapidly within the meaning of Paragraph 16.4 of the Protocol, upholds the Panel's 
finding, in paragraph 7.110 of the Panel Report, that the USITC did not fail to 
properly evaluate whether imports from China met the specific threshold under Paragraph 16.4 of China's Accession Protocol of "increasing rapidly"; 
(b) with respect to whether rapidly increasing imports from China are "a significant 
cause" of material injury to the US domestic industry within the meaning of 
Paragraph 16.4 of China's Accession Protocol: 
(i) upholds the Panel's finding, in paragraph 7.216 of the Panel Report, that the 
USITC did not err in its assessment of the conditions of competition in the 
US market; 
(ii) upholds the Panel's finding, in paragraph 7.261 of the Panel Report, that the 
USITC's reliance on overall coincidence between an upward movement in 
subject imports and a downward movement in injury factors supports the USITC's finding that rapidly increasing imports from China are a significant 
cause of material injury to the dome stic industry within the meaning of 
Paragraph 16.4 of China's Accession Protocol; 
(iii) upholds the Panel's finding, in paragra ph 7.378 of the Panel Report, that 
China has failed to establish that th e USITC improperly attributed injury 
caused by other factors to subject imports; 
(iv) finds that the Panel did not act incons istently with its duties under Article 11 
of the DSU in its analysis of the USITC's determination that rapidly 
increasing imports from China were a significant cause of material injury to the domestic industry;  and accordingly 
(v) upholds the Panel's finding, in paragraph 7.379 of the Panel Report, that the 
USITC did not fail properly to establish that rapidly increasing imports from 
China were a significant cause of materi al injury to the domestic industry 
within the meaning of Paragraph 16.4 of China's Accession Protocol.   WT/DS399/AB/R 
 Page 125 
 
 
ANNEX I 
  
WORLD TRADE  
ORGANIZATION   
WT/DS399/6 
27 May 2011 
 (11-2662) 
 Original:   English 
  
 
UNITED STATES – MEASURES AFFECTING IMPORTS OF CERTAIN PASSENGER 
VEHICLE AND LIGHT TRUCK TYRES FROM CHINA 
 
Notification of an Appeal by China 
under Article 16.4 and Article 17 of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
 
  The following notification, dated 24 May 201 1, from the Delegation of China, is being 
circulated to Members. 
_______________ 
 
 1. Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate 
Review, the People's Republic of China hereby notifies the Dispute Settlement Body of its decision to appeal to the Appellate Body certain issues of law and legal interpretation c overed in the Panel Report 
in United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres 
from China  (WT/DS399) ("Panel Report").  Pursuant to Rule 20(1) of the Working Procedures for 
Appellate Review , China is simultaneously filing this Noti ce of Appeal with the Appellate Body 
Secretariat. 
2. The measure at issue is a transitional product- specific safeguard measure under Paragraph 16 
of the Protocol of Accession  that has been applied by the United States on imports of certain 
passenger vehicle and light truck tyres from China pursuant to Section 421 of the Trade Act of 1974.  The U.S. International Trade Commission ("USITC") determined that there was market disruption as 
a result of rapidly increasing imports of subject tyres from China that were a significant cause of 
material injury to the domestic industry.  The USIT C made this determination in its investigation of 
Certain Passenger Vehicle and Light Truck Tires from China (Inv. No. TA-421-7). 
3. The issues that China raises in this appeal rela te to the Panel's findi ngs and conclusions in 
respect of the consistency of the challenged measures with the Protocol on the Accession of the 
People's Republic of China  ("the Protocol") and the Understanding on Ru les and Procedures 
Governing the Settlement of Disputes  ("DSU"). 
4. For the reasons stated below, and as will be de veloped in its submissions to the Appellate 
Body, China appeals the following errors of law and legal interpretation contained in the Panel Report 
and requests the Appellate Body to reverse or m odify the related findings and conclusions of the WT/DS399/AB/R 
Page 126  
 
Panel.  In doing so, China makes five specific cl aims, delineated below and to be detailed in its 
submissions to the Appellate Body.
1 
5. First, China seeks review by the Appellate  Body of the Panel's interpretation of 
Paragraph 16.4 of the Protocol as it relates to th e USITC's determination that imports from China 
were "increasing rapidly" within the meaning of th at provision.  The Panel's legal interpretation erred 
by not giving appropriate meani ng to the phrase "increasing rapidly."2  The Panel's errors of law and 
legal interpretation include:  
(a) The Panel erred in interpreting the term "increasing" from Paragraph 16.4 as meaning 
nothing more than the term "increased" from Paragraph 16.1 and failing to otherwise 
address the analytically appropriate period of time in a meaningful way.3 
 
(b) The Panel erred in interpreting the term "r apidly" from Paragraph 16.4 as meaning "with 
great speed" but not requiring an assessment of the rate of increase in imports or any 
other alternative metric to give meaning to the idea of great speed.4 
 
(c) The Panel erred in interpreting the phrase "i ncreasing rapidly" from Paragraph 16.4 as not 
requiring the most recent rate of increase in im ports to be put in context relative to prior 
rates of increase earlier in the period, or in  any other context, that would distinguish 
imports that are "increasing rapidly" from those that merely "increased" or are merely "increasing."
5 
 
6. Second, China seeks review by the Appellate  Body of the Panel's application of 
Paragraph 16.4 of the Protocol as it relates to th e USITC's determination that imports from China 
were "increasing rapidly" within the meaning of th at provision.  The Panel's application of the legal 
standard erred by upholding the USITC finding that imports from China were "increasing rapidly."6  
The Panel's errors of law and legal application include:  
(a) The Panel erred in upholding the USITC determination even though the USITC assessed 
the period as a whole, instead of the most recent period.7  Rather than requiring a focus on 
the most recent period, as is necessary to determine properly whether subject imports are "increasing rapidly," the Panel approved a temporal assessment that stressed the entire five-year period as a whole.   
(b) The Panel erred in upholding the USITC dete rmination even though the USITC failed to 
assess properly the rate of increase in imports, particularly that of the most recent year.
8  
Instead of determining whether this rate  constituted a "rapid" increase, the Panel 
dismissed the notion that the USITC was requi red to assess the rate of increase in subject 
imports when determining whether they were "increasing rapidly." 
 
(c) The Panel erred in upholding the USITC dete rmination even though the USITC failed to 
put the most recent rate of increase in proper context with prior rates of increases.9  To the 
                                                      
1 Pursuant to Rule 20(2)(d)(iii) of the Working Procedures for Appellate Review  this Notice of Appeal 
includes citations to the paragraphs of the Panel Report containing the alleged errors.  These citations, however, 
do not prejudice to the ability of China to refer to other paragraphs of the Panel Report in its appeal. 
2 Panel Report, para. 7.110. 
3 Panel Report, paras. 7.90-7.91. 
4 Panel Report, para. 7.92. 
5 Panel Report, paras. 7.90-7.93. 
6 Panel Report, para. 7.110. 
7 Panel Report, paras. 7.83-7.85, 7.96-7.100, 7.104. 
8 Panel Report, paras. 7.92-7.93. 
9 Panel Report, paras. 7.92-7.93.  WT/DS399/AB/R 
 Page 127 
 
 
extent the Panel did assess the most recent rate of increase in context, the Panel erred in going beyond the USITC determination as written  and in finding that a lower rate of 
increase constituted "increasing rapidly" b ecause it came "in addition" to prior 
increases.
10 
 
7. Third, China seeks review by the Appellate Body of the Panel's interpretation of 
Paragraph 16.4 of the Protocol as it relates to th e USITC's determination that imports from China 
were a "significant cause" within the meaning of that  provision.  The Panel's legal interpretation erred 
by not giving proper meaning to the term "signifi cant" from the phrase "significant cause" and failing 
to distinguish a "significant cause" from a "cause."11  The Panel's errors of law and legal interpretation 
include:  
(a) The Panel erred in offering a definition of the term "significant" but not otherwise 
providing an interpretation of what "significan t" meant in application, or explaining how 
a "significant cause" differed from a "cause."12 
 
(b) The Panel erred in interpreting the phrase "significant cause" as not requiring a conditions 
of competition analysis that meaningfully assesses whether subject imports are capable of being a "significant cause" of injury and not simply whether they are capable of being a 
"cause."
13 
 (c) The Panel erred in interpreting the phrase "significant cause" as not requiring a 
coincidence analysis that  assesses whether correlation goes beyond mere overall 
correlation, and instead corresponds in the degrees of relative magnitude as well as in a 
year-by-year assessment.
14 
 (d) The Panel erred in interpreting the phrase "si gnificant cause" as not requiring analysis that 
ensures injury caused by other factors is not  being attributed to the significance, or 
degree, of the injury allegedly caused by subject imports.
15 
 8. Fourth, China seeks review by the Appellate Body of the Panel's application of 
Paragraph 16.4 of the Protocol as it relates to th e USITC's determination that imports from China 
were a "significant cause" within the meaning of th at provision.  The Panel's application of the legal 
standard erred by upholding the USITC finding that imports from China were a "significant cause" of 
injury even though the USITC's and Panel never distinguished a "cause" from a "significant cause" 
nor modified their causal analyses to conform to this distinct standard.
16  The Panel's errors of law and 
legal application include:  
(a) The Panel erred in upholding the USITC determination even though the USITC failed to 
conduct the conditions of competition analys is with care sufficient to assess whether 
subject imports were in fact capable of be ing a "significant cause" of injury and not 
merely a "cause."17 
 (b) The Panel erred in upholding the USITC dete rmination even though the USITC failed to 
conduct a coincidence analysis that asse ssed whether correlation went beyond mere 
                                                      
10 Panel Report, para. 7.93. 
11 Panel Report, para. 7.379. 
12 Panel Report, paras. 7.158, 7.139-7.146, 7.170-7.178. 
13 Panel Report, paras. 7.169-170. 
14 Panel Report, paras. 7.228-7.234. 
15 Panel Report, paras. 7.175-7.177. 
16 Panel Report, para. 7.379. 
17 Panel Report, paras. 7.209-7.216. WT/DS399/AB/R 
Page 128  
 
general overall correlation and instead corres ponded in the degrees of relative magnitude 
and in a year-by-year assessment that would be necessary to establish a "significant cause."
18 
 (c) The Panel erred in upholding the USITC dete rmination even though the USITC failed to 
analyze other causes properly to ensure that injury caused by these other factors was not 
being improperly attributed to the significan ce, or degree, of the injury allegedly caused 
by subject imports.
19 
 (d) The Panel erred in upholding the USITC dete rmination even though the USITC failed to 
undertake an integrated analysis of all the causation factors to consider their collective 
implication for the existence of a sufficie nt link of "significant cause" between those 
imports that are "increasing rapidly" at th e end of the period and the condition of the 
domestic industry.
20 
 
9. Fifth, China seeks review by the Appellate Body under Article 11 of the DSU of how the 
Panel applied the "significant cause" standard of Paragraph 16.4 of the Protocol.  The Panel acted 
inconsistently with Article 11 of the DSU in con ducting its analysis of whether imports from China 
were a "significant cause" of injury by failing to conduct an objective assessment of the matter.  The 
Panel's errors of law and legal a pplication under Article 11 include: 
(a) The Panel erred in failing to consider the to tality of the evidence.  Regarding causation, 
the Panel approached individual arguments and pieces of evidence in isolation instead of 
addressing the ways in which the arguments  and supporting evidence interrelated. 
 
(b) The Panel erred in failing to conduct a balan ced assessment of the evidence.  Regarding 
causation, the Panel went out of its way to c ite evidence the USITC majority did not rely 
on from page III-16, footnote 62 of the USITC determination, yet ignored the evidence in 
the very same footnote that was not consistent with the USITC conclusion.21   
 (c) The Panel erred in failing to focus on the US ITC's decision as written.  In upholding the 
USITC determination on causation, the Pane l repeatedly went beyond the rationale 
contained in the determin ation itself and relied upon post hoc  clarifications by the United 
States and the Panel's own new analysis of the issues.
22 
 (d) The Panel erred in failing to consider all the ar guments of the parties.  The Panel failed to 
consider China's arguments about how other causes interacted with each other and had a 
broader cumulative effect,
23 how the more detailed data on the different suppliers to the 
aftermarket affected attenuated competition,24 and how it was necessary to distinguish the 
Protocol's "significant cause" requirement fro m the mere "cause" requirement of other 
WTO agreements.25 
 
                                                      
18 Panel Report, paras. 7.234-7.238; 7.244-7.245; 7.254-7.260. 
19 Panel Report, paras. 7.285-7.322; 7.333-7.345; 7.348-7.350; 7.353-7.354; and 7.364-7.367. 
20 Panel Report, paras. 7.376-7.378. 
21 Panel Report, paras. 7.301, 7.305, 7.307. 
22 Panel Report, paras. 7.195, 7.301, 7.305, 7.336, 7.354, and 7.366-7.367. 
23 Panel Report, paras. 7.376-7.377. 
24 Panel Report, para. 7.197. 
25 Panel Report, paras. 6.26-6.30.  WT/DS399/AB/R 
 Page 129 
 
 
10. China respectfully requests that the Appellate Body reverse the findings  and conclusions of 
the Panel that are based on the errors of law and le gal interpretation identified above.  With respect to 
the claims of error iden tified in paragraphs 6 and 8 above, China respectfully requests that the 
Appellate Body complete the analysis to conclude  that the challenged measures were inconsistent 
with the obligations of the United States under the covered agreements. 
__________