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Production processes
7.394  The European Communities and China point out that the USITC's decisive argument for
aggregating the five different products into one single category was the vertical integration of the
industry and the common production processes.1112  The USITC, in this safeguard determination, was,
again, required by its own stated methodology to use as criterion for determining a like product "its
manufacturing process (i.e., where and how it is made)".1113  The USITC paid "particular attention" to
the  "sharing of productive processes and facilities" which "is a fundamental concern in defining the
scope of the domestic industry under Section 201".1114  Moreover, the USITC considered itself
required "to define like or directly competitive in a manner that reflects the realities of the market andat the same time accomplishes the fundamental purpose of Section 201, protection of the productive
resources of domestic producers".
1115  Thus, the USITC's general methodology calls for the artificial
aggregation of downstream products by directing the USITC to "pay particular attention" to a
common integrated production base.1116
7.395  According to the European Communities, Japan, China, and Brazil, this criterion, however,
has already been found to be at odds with the Agreement on Safeguards in US – Lamb  well before the
USITC started the steel safeguard investigation.  Japan and Brazil also argue that the USITC found
the "vast majority" of CCFRS to be produced by "fir ms that are involved in a number of the stages of
processing".1117  Consequently, these complainants contend that the USITC's like product analysis of
CCFRS products is no more consistent with the Agreement on Safeguards  than its faulty analysis in
US – Lamb .  As the Appellate Body held in that dispute:  "[i]f an input product and an end product are
not 'like or directly competitive', then it is irrelevant, under the Agreement on Safeguards, that there is
a continuous line of production between an input product and an end-product … or that there is a
substantial coincidence of economic interests between the producers of these products".1118  Rather,
the focus must be on "the identification of the products, and their 'like or directly competitive'relationship, and not on the processes by which those products are produced".
1119  The cascading
nature of the production processes for various CCFRS products is irrelevant to the question of "like"
products under the Agreement, as interpreted by the Appellate Body.  The complainants argue that the
nature of the factors to be considered in determining the scope of the "like" products – i.e ., physical
properties, end-use, consumer tastes and habits, and customs treatment – also indicate that the overlap
in the production, the element that drove the USITC analysis1120, is irrelevant.  What matters is the
competitive relationship between the products, which helps to discern whether the products are "like"one another and whether, in turn, it makes sense to collapse them together.
1121  Japan considers that
                                                     
1112 USITC Report, Vol. I, pp. 30, 31, 37.
1113 USITC Report, Vol. I, p. 30.
1114 USITC Report, Vol. I, pp. 30 and 151.
1115 USITC Report, Vol. I, p. 31.
1116 European Communities' first written submission, paras. 249-251; China's first written submission,
paras. 201-203.
1117 USITC Report, Vol. I, pp. 37-39.
1118 Appellate Body Report, US – Lamb,  para. 90.  See also para. 94.
1119 Ibid.  at paras. 92-93.
1120 USITC Report, Vol. I , pp. 36-45 (Exhibit CC-6).  These complainants argue that this is apparent
from the USITC's reliance on the statement that the like product determination should be driven by the"fundamental purpose of Section 201, protection of the productive resources of domestic producers."  USITCReport, Vol. I, p.  31 (Exhibit CC-6) (citing to Carbon and Certain Alloy Steel Products , Inv. No. TA-201-51,
USITC Publication 1553, Washington, D.C. (July 1984), pp. 12-13).
1121 European Communities' first written submission, para. 252; Japan's first written submission, paras.
121-122; China's first written submission, para. 204; Brazil's first written submission, paras. 100, 102, 105, 109,111.WT/DS248/R, WT/DS249/R,
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the USITC finding that a large percentage of domestic CCFRS producers are vertically integrated,
producing four of the five flat-rolled steel products, is akin to its earlier finding of a "continuous lineof production" from live lambs to lamb meat.
1122
7.396  Japan and Brazil also insist that the products undergo different production processes.  The
USITC found, for example, that the production processes for hot-rolled steel and cold-rolled steel
differ in that cold-rolled steel is further reduced by 25% to 90%, and is often annealed and temper
rolled.  Coated steel differs from cold-rolled steel in that it has been processed on an electro-
galvanizing or hot-dip galvanizing line.1123
7.397  Japan submits that even the USITC admits that the processes that make the various CCFRS
products are distinct and that distinct products come out of them.1124  A slab caster is a process unto
itself, entirely separate from the hot rolling and St eckel plate mills.  These mills are in turn separate
from cold rolling mills, as are the co ating lines that make corrosion resistant steel.  Each process, in
turn, makes a product that can either be used as feedstock for the next stage, or be sold as finished
products for end-use purposes (except for slab, which is only used to make finished flat-rolled steel).The processes which make these products may be located on the same general premises and be owned
by the same company, but this doesn't make the processes' output "like" one another.  The separate
facilities in which slab is made as compared with hot-rolled, cold rolled and corrosion resistant create
separate products used for distinctly different purposes.
1125
7.398  The European Communities and China finally argu e that in essence, the USITC defined "like
product" by reference to the "domestic industry".  This turns on its head the requirement of
Articles 2.1 and 4.1(c) of the Agreement on Safeguards which mandates the "domestic industry" to be
defined by reference to producers of the "like product": the "identification of the products which are
"like or directly competitive with the imported product" is the first step required by US  – Lamb  in
defining the domestic industry, not the other way round.  This is not a product-focused approach asrequired by the Appellate Body.  Rather, it is an approach driven by the aim to give the widest
possible blanket of protection to the domestic industry.  The United States cannot arbitrarily replace
the criteria upheld by the Appellate Body.  The United States had to apply such criteria so as to ensure
that prejudice caused by one imported product is not unjustifiably attributed to another imported
product.
1126
7.399  The United States insists that CCFRS includes steel at any of the following five stages of
processing:  slab, hot-rolled steel (sheet/strip/plate in coils), cut-to-length ("CTL") plate, cold-rolled
steel, and coated steel.1127  An important factor in the USITC's analysis, which the complainants'
arguments ignore, was the fact that CCFRS at one stage of processing generally is feedstock for the
next stage of processing.  For example, slab is fe edstock for hot-rolled steel (sheet, strip, and plate);
hot-rolled steel is feedstock for cold-rolled steel and cut-to-length plate; and cold-rolled steel is
feedstock for coated steel.  The USITC acknowledged that the interrelationship between the productsis most prominent at the earlier stages.
1128  Since earlier processed CCFRS is the feedstock for further
                                                     
1122 Japan's second written submission, para. 40.
1123 Japan's first written submission, para. 117, footnote 183; Brazil's first written submission,
para. 106.
1124 USITC Report, pp. 40-41.
1125 Japan's second written submission, para. 41.
1126 European Communities' first written submission, para. 253; China's first written submission,
para. 205.
1127 USITC Report, p. 38.
1128 For example, slab is dedicated for use in produ cing the next stage steel, hot-rolled steel, whether
produced as sheet, strip, or plate.  The majority of hot-ro lled steel is further processed into cold-rolled steel.  TheWT/DS248/R, WT/DS249/R,
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processed steel, such steel is produced using essentially the same production processes at least at the
initial stages, with downstream steel merely employing later stages of processing.  The USITC'sanalysis provided a detailed discussion of the fi ve stages of processing CCFRS.  The manufacturing
processes for carbon steel involve three distinct stages that include: (1) melting or refining raw steel;
(2) casting molten steel into semifinished form, su ch as slab; and (3) performing various stages of
finishing operations, including hot-rolling, cold-rolling, and/or coating.
1129  All CCFRS is produced
from slab, with the majority of such steel further processed into hot-rolled steel on hot strip or Steckel
mills.1130  Substantial quantities of earlier processed steel are internally transferred for production of
further processed steel.1131  This tends to blur product distinctions until the processing reaches its final
stages since earlier stages simply are feedstock for the next stage.  As part of its consideration of the
manufacturing process ( i.e., where and how it is made), the USITC also recognized that there is
commonality of facilities and substantial vertical integration in the industry.1132
7.400  The United States notes that the complainants challenge the USITC's consideration of
production processes in determining the "like produc t" on the basis that "the Appellate Body in US –
Lamb  had ruled out this criterion for the like product determination".1133  However, the United States
maintains that contrary to the complainants' contentions, the Appellate Body in US – Lamb
recognized that when confronted with the question of whether two articles are separate products, "it
may be relevant to inquire into the production processes for those products".1134
7.401  The European Communities contends that the United States acknowledged the limited
similarity and interchangeability and tried to defend it on the basis of a the "important factor"
"feedstock" relationship,  stating that a lack of similarity "would be expected for feedstock
products".1135  However, this only admits the commonsensical reason why the Appellate Body clearly
                                                                                                                                                                    
remaining hot-rolled steel is about equally divided between being further processed into CTL plate or pipe and
tube, and used in the manufacture of structural parts of automobiles and appliances.  The majority of cold-rolled
steel also is used as the feedstock for further processing into coated steel, with smaller amounts furtherprocessed into tin mill products or GOES.
1129 USITC Report, p. OVERVIEW-7.
1130 Moreover, the evidence shows that advances in technology have blurred the former differences in
hot-rolled production processes for sheet/strip and plate.  The Steckel mills permit rolling to thinner gauges than
a traditional reversing mill thus permitting a producer to switch production between sheet and plate.  Steckel
mills also allow steelmakers to coil the finished plate, as on a hot-strip mill.  Moreover, the addition of tempermills to CTL lines has made heavy gauge hot-rolled interchangeable with discretely produced plate.  Withoutthe temper mill process, coils cut into lengths tend to retain memory and "snap back" or bend after the initialflattening.  While plate in coils can only be produced in thicknesses up to 3/4 inch and thus can only be
substituted for CTL plate up to 3/4 inch thick, this portion of the CTL plate market is large.  There is evidence
that some mills can produce plate in coils in gauges up to one inch.  Thus, the share of the CTL plate marketwhich can be, and is being, supplied with plates cut from coil is substantial.  USITC Report, p. 40-41.
1131 Virtually all US-produced slab is internally co nsumed by the domestic slab producers in their
production of hot-rolled steel (sheet, strip, or plate), w ith large shares of hot-rolled and cold-rolled steel also
internally transferred.  During the year 2000, 99.4% of the quantity of domestic producers' total US shipments of
slab were internally transferred, as were 66% of the quantity of domestic producers' total US shipments of hot-
rolled steel, and 58.7% of the quantity of total US shipments of domestically-produced cold-rolled steel.  USITCReport, pp. FLAT-1 and 3, nn. 4 and 5.
1132 United States' first written submission, paras. 121-122.
1133 European Communities' first written submission, para 233; see also  Korea's first written
submission, paras. 32 and 35; Japan's first written submission, para. 103; China's first written submission,
para. 141; Brazil's first written submission, para. 96; Switzerland's first written submission, para. 179; Norway's
first written submission, para. 197.
1134 Appellate Body Report, US – Lamb , para. 94, footnote 55.
1135 United States' first written submission, paras. 136 and 140.WT/DS248/R, WT/DS249/R,
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ruled out a feedstock relationship between products as criterion for establishing likeness, if the
products are not otherwise found to be like.  Had the USITC looked at the production process, i.e.,
how a product is made, as opposed to an irrelevant feedstock relationship, this would have only
confirmed the finding that all five products are different.  The European Communities alleges that the
United States itself described the production processes of all these four products and thereby admits
that they are different.1136  As is readily apparent, the production processes differ considerably and
accordingly, the texture and thickness of hot-rolled and cold-rolled steel is not similar.  Similarly, the
specific characteristics of coated sheet are due to the specific production processes of hot-dip
galvanising or otherwise coating the cold-rolled shee ts to make it corrosion resistant or give it other
specific qualities.1137
7.402  The United States stresses that cont rary to the complainants' allegations1138, the USITC's
definition of CCFRS as a single like product was not based solely on the vertical integration of the
domestic CCFRS producers.  It is clear from the USIT C's determination, that it considered the factors
it has traditionally used to evaluate like products in safeguard cases, and based its decision on all ofthe evidence before it.  The complainants fail to acknowledge, although they do not dispute, the fact
that CCFRS at one stage of processing generally is feedstock for the next stage of processing, which
tends to blur product distinctions until the processing reaches its final stages since steel at the earlier
stages simply are feedstock for the next stage.  This interrelationship between types of CCFRS at
different stages of processing clearly was an importa nt factor in the USITC's analysis and finding, and
is "product-oriented".  The fact that the USITC recognized that substantial quantities of earlier
processed steel are internally transferred for their production of further processed steel and that these
substantial internal transfers of feedstock underscore the fact that domestic producers are highly
integrated does not negate the USITC's entire like product analysis.
1139  These are facts about the
interrelationship of CCFRS and its manufacturing proc ess.  Contrary to the complainants' statements,
the USITC appropriately considered relevant other factors1140 including the vertical integration of the
domestic producers of CCFRS in its analysis.1141 1142
                                                     
1136 United States' first written submission, para. 121.
1137 European Communities' second written submission, paras. 277-279.
1138 Japan's first written submission, paras. 121-122; Brazil's first written submission, paras. 103-105;
Korea's first written submission, paras. 45-47 and 60; European Communities' first writtensubmission,paras. 249-254; New Zealand's first written submission, paras. 4.54-4.55;  China's first written submission,paras. 201-206; Brazil's first written submission, paras. 103-105 and 109.
1139 The evidence shows that domestic producers of hot-rolled steel shipped 94.7% of US shipments of
cold-rolled steel and 84.8% of coated steel in 2000.  INV-Y-207 at Table X-1 (US-27).  Conversely, domestic
producers of cold-rolled/coated steel shipped 89.1% of US shipments of hot-rolled steel in 2000.  INV-Y-207 atTable X-2 (US-27).
1140 Appellate Body Report, Japan – Alcoholic Beverages II , p. 20 ("In applying the criteria cited in
Border Tax Adjustments  to the facts of any particular case, and in  considering other criteria that may also be
relevant in certain cases, panels can only apply their best judgement in determining whether in fact products are
"like".).
1141  As discussed above, contrary to complainants' misstatements, US – Lamb does not prohibit
consideration of production processes and vertical inte gration as part of the like product analysis.  The
complainants ignore the Appellate Body's explicit rec ognition that consideration of production processes may be
a relevant factor in defining like products.  Specifically, the Appellate Body in US – Lamb added the following
statement in a footnote:
We can, however, envisage that in certain cases a question may arise as to whether two articles are
separate products .  In that event, it may be relevant to inquire into the production processes for those products.
Appellate Body Report, US – Lamb , para. 94, footnote 55; Panel Report, Japan – Alcoholic
Beverages I , para. 5.7 (Panel thought it was important to assess "likeness", as much as possible, on the basis ofWT/DS248/R, WT/DS249/R,
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7.403  The European Communities notes that even if the USITC had consistently drawn the dividing
lines between products on the basis of a feedstock relationship, such approach would be inconsistentwith Article 2.1 of the Agreement on Safeguards , as clarified by the Appellate Body in US – Lamb .
The European Communities submits that a mistake is not healed by repeating it.
1143
Marketing channels
7.404  Brazil argues that the USITC found that there was overlap among the products in terms of
channels of distribution in that the products were generally internally consumed or sold to end-users,
although neither plate nor corrosion resistant steel is internally consumed in most cases.1144 1145
7.405  The United States agrees that the USITC also considered the marketing channels and uses for
CCFRS.  The majority of CCFRS overall, and specifically for feedstocks products – slab, hot-rolled,
and cold-rolled – is internally transferred.  Thus, when CCFRS enters the commercial market, the
primary marketing channel generally is directly to end-users.1146
7.406  China considers that marketing channels are not relevant criteria.1147
Competition
7.407  According to Japan, the USITC completely ignored  the most basic principle that competition
needs to exist between products found to be like.  The choice of an overly broad CCFRS category – in
respect of both imports and the domestic industry – made the USITC's analysis meaningless because
it masked the true competitive dynamics in the mark et.  Assume, for instance, that imports of semi-
finished slab sharply increase, and sales of domestically produced corrosion-resistant steelsimultaneously decline.  This import increase cannot "cause … injury to domestic producers … of"
corrosion-resistant steel because there would be no competitive relationship between these products in
light of their wide differences in product properties and end-uses.
1148
7.408  Similarly, Korea argues that Articles 2.1 and 4.1(c) of the Agreement on Safeguards, read as a
whole, support the conclusion that an essential elem ent of the like product analysis should relate to
whether the products compete in the marketplace because this will determine the essential nature of
the impact of imports on the domestic industry and whether they are causing serious injury.  This
essential element of "competitive effect" should have guided the USITC's analysis of like product.
After all, the more attenuated the competitive effect, the less likely a causal relationship exists
between increased imports of that product and serious injury.  In this case, imports of hot-rolled coil
do not have a comparable competitive effect on cold-rolled production and profitability, etc., as do
imports of cold-rolled.  This is because the two products have different physical characteristics anddifferent end-uses and thus do not compete against each other in end-use market.  The effect is even
                                                                                                                                                                    
objective criteria, including, in particular, compositio n and manufacturing processes of the product, in addition
to consumption habits.).
1142 United States' first written submission, paras. 138, 140.
1143 European Communities' written reply to Panel question No. 11 at the second substantive meeting,
quoting the Appellate Body Report, US – Lamb, para. 90.
1144 USITC Report, p. 44.
1145 Brazil's first written submission, para. 102.
1146 In 2000, the marketing channels for certain carbon flat-rolled steel, except for CTL plate, ranged
from 60% to 99.6% to end-users.  USITC Report, Tables FLAT 12-15 and FLAT-17.  The marketing channels
for CTL plate were more evenly split with 45.2% to end-users and 54.8% to distributors.  Ibid., Table FLAT-13.
1147 China's second written submission, para. 78.
1148 Japan's first written submission, para. 80.WT/DS248/R, WT/DS249/R,
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more attenuated between slab imports and galvanized products – i.e., one cannot make a car or any
other finished product using slabs.  Indeed, the actual competitive overlap of CCFRS products ismarginal.
1149  New Zealand points out that the USITC acknowledged that slab "is dedicated for use in
producing the next stage steel, hot-rolled steel".1150  Slab may not, therefore, be applied to any of
the uses for which other steel products may be used – it is exclusively an input good.1151  The USITC
analysis thus falls well short of establishing th e "highest degree of competition" threshold for
"likeness" that was spoken of in US – Cotton Yarn .1152
7.409  The United States responded that substitutability is not one of the traditional factors
considered by the USITC in conducting its analysis of whether there are clear dividing lines betweendomestic products in order to define like product(s).  The United States further added that there
clearly is a competitive relationship between the imported and domestic products.  The complainants
have not disputed, and neither did the parties in the underlying investigation, that the imported and
domestic products generally consist of the same types of steel, are interchangeable, and thus compete
with each other.  Moreover, within any defined like product and the corresponding specific importedproduct there exists a range or continuum of goods of  different sizes, grades, or stages of processing.
While goods along the continuum share identical or similar factors, individual items at the extremes
of the continuum may not be as similar or substitutable.  For example, a size 36 skirt is like a size 44
skirt, but are they substitutable?  Or is size number 3 rebar substitutable for size number 18 rebar?  Or
are calves substitutable cattle at other stages of development (i.e., yearling or stocker cattle, feedercattle, or fed cattle ready for slaughter)?
1153
(iii) Relevance of other like product definitions in this case
7.410  Brazil argues that every one of the criteria used by the USITC to distinguish billets from
downstream long products can also be used to distinguish slab from downstream flat products.1154
The sole distinction put forward by the USITC was that each of the long products (i.e. hot-rolled bar,
rebar and heavy structural shapes) produced from billets is made at one stage removed from the billet
(i.e. there is a single rolling stage for each of the products) while for slab there are multiple additional
stages of production (i.e. hot rolling, cold rollin g, galvanizing) with each subsequent product also
being an input into a downstream product until galvan izing.  Thus, according to the United States,
while hot-rolled flat products (plate and sheet) result from a single rolling stage with slab as an input,
hot-rolled flat products are like slab because some  hot-rolled products may also be an input into a
subsequent rolling stage, cold rolling.  However, again according to the United States, hot-rolled bar
which, like hot-rolled flat products, results from a single rolling stage with billet as an input is not like
billets because hot-rolled bar is not an input into a s ubsequent rolling stage.  This logically leads to the
anomalous result that CCFRS products one, two a nd three stages of processing removed from the
semifinished product are determined to be "like" the semifinished product whereas long products only
one stage removed from the semifinished product are not "like" the semifinished product.  It alsoleaves unexplained why hot rolling of a billet creates a different like product when hot rolling of a
slab does not.  One might also ask why billets are not part of a like product category which includes
wire rod (resulting from hot rolling of the billet), wire (which results from cold drawing of the wire
rod) and galvanized wire (which involves application of a metallic coating to prevent corrosion).  The
                                                     
1149 USITC Report, Vol. II , p. FLAT-53 (Exhibit CC-6); Respondents' Joint Framework Brief ,
pp. 22-24 (Exhibit CC-50).
1150 USITC Report, Vol. I, p 38.
1151 New Zealand's first written submission, para. 4.62.
1152 New Zealand's second written submission, para. 3.47.
1153 United States' second written submission, paras. 71-72.
1154 Brazil's  second written submission, paras. 15-20.WT/DS248/R, WT/DS249/R,
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relationships here are virtually identical in terms of one product being the feedstock for the next and
the similarity of the subsequent processing as the relationships among CCFRS products.  In the end,the only distinction that the United States can find to justify different treatment of CCFRS and carbon
long products is the only distinction which the Appell ate Body has specifically stated is irrelevant to
the determination of whether products are like each other, namely whether each product is made as
part of a continuous line of production.  Furthermore, even if this approach were acceptable, it does
not justify any distinction between the treatment of CCFRS and stainless flat-rolled steel products,
where the input/output relationship between the dow nstream products is identical.  Finally, this
approach is also of limited validity in distinguishing billets from finished long products in that it isinapplicable to the billets-wire rod-wire-galvani zed wire grouping of products which have the same
input to end product relationship from billets through galvanized wire as does CCFRS from slab
through galvanized sheet.
1155
7.411  Brazil further notes that the level of integration in both the production of stainless steel flat
products (slab, plate, hot and cold rolled)  and carbon long products (billets, hot-rolled bar, rebar,heavy structurals, and wire rod) is comparable to the level of integration in the production of CCFRS.
The only difference is that virtually all stainless and the overwhelming majority of carbon long
products are produced from steel made in electric furnaces, while a majority of CCFRS products are
made from steel produced in blast furnaces and basic oxygen furnaces.  This distinction on how the
raw steel is made is not, however, relevant to the degree of vertical integration.  Most producers ofboth stainless flat products and carbon long products, like most producers of CCFRS, are vertically
integrated from the production of raw steel to the rolling of finished product.
1156  The CCFRS industry
as a whole is less vertically integrated than either the stainless or long products industries.  At least
two producers of a full range of CCFRS finished products do not produce any slab, but purchase all of
their slab requirements, almost exclusively from foreign sources.1157  Brazil is not aware of any
producers of stainless plate and sheet or of hot-rolle d bars, rebars or heavy structurals that do not also
produce the semifinished input product.  Furthermore, with imports of carbon slab ranging as high as
7.4 million tons during the period investigated (compared to small quantities relative to domestic
production of imported billets and stainless slab)1158, it is evident that there is a substantial portion of
total CCFRS production which is not vertically integrated.  Nevertheless, there is no meaningful
distinction between the level of vertical integration of the producers of CCFRS, billets and finished
carbon long products, and stainless flat products, including stainless slab.1159
7.412  The United States insists that the definitions are based on the application of the like product
criteria to the particular facts involved.  Where the facts differ the definitions will differ.  Thus, what
Brazil contends are inconsistencies in where dividing lines were drawn, are differences in the
underlying facts.1160  There is a key difference between the relationship of carbon slabs with CCFRS
and the relationship of carbon billets with carbon long products.  CCFRS at different stages of
processing has a sequential, or feedstock, relationship rather than the horizontal relationship between
carbon long products.  For example, 100% of carbon slab  is further processed into either plate or hot-
rolled steel.  The sequential relationship continues with other types of CCFRS; the majority of hot-
                                                     
1155 Brazil's written reply to Panel question No. 11 at the second substantive meeting.
1156 Brazil notes that in making like product distinctions between wire and various wire products
(rope/cable/cordage and nails/staples/cloth categories), the USITC did note the limited degree of verticalintegration between the producers of the upstream (wire) and downstream (various wire products) products.Views of the Commission – USITC Report, Vol.I, at 86-87.
1157 Common Exhibit CC-52 from Brazil's first written submission, pp. 61-62.
1158 Common Annex A and B from Brazil's first written submission.
1159 Brazil's written reply to Panel question No. 12 at the second substantive meeting.
1160 United States' written reply to Panel question No. 11 at the second substantive meeting.WT/DS248/R, WT/DS249/R,
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rolled steel is further processed into cold-rolled st eel and the majority of cold-rolled steel is further
processed into coated steel.  Thus, carbon slab is dedicated for processing into hot-rolled steelwhereas carbon billets are not dedicated for use into a single type of long product.  Instead, carbon
billets are used to produce five very different products – hot-rolled bar, rebar, heavy structural shapes,
rails, and wire rod.  Moreover, none of these five carbon long products produced from carbon billets
is further processed into one of the other five carbon long products.
1161  Therefore, carbon billets are
not dedicated for use for a single type of carbon long  product as occurs for carbon slab; the horizontal
relationship also continues between the very different long products.  There are other distinctions as
well in physical characteristics and manufacturing processes.  For example, carbon slabs are typicallymade from pig iron and not scrap metal whereas almost 100% of carbon billets are made from scrap
and scrap substitutes.  Thus, there is less variance in purity between slabs with greater variance
between billets.  All carbon slabs are refined and subject to extensive metallurgical testing.  Carbon
billets, on the other hand, have a wide degree of variation in quality/purity depending on the type of
carbon long product that they will be used to produce.  Carbon billets have less sophisticatedrefinement generally, but may have more extensive testing for certain end-uses.  For instance, billet
used for rebar has limited metallurgical testing, whereas billet used for certain kinds of specialty bar
may have extensive metallurgical testing.  This re sults in differences in the sophistication necessary
for the manufacturing processes.  Many United States producers of carbon billets produce other
carbon long products.  However, because of the ho rizontal relationship between carbon long products,
billets may be used to make hot-rolled bar, rebar, heavy structural shapes, rails, and wire rod, but none
of these five products is used to make one of the other five.  Thus, the integration of the production
process is not in the same fashion as the production of CCFRS.
1162
(iv) Like product definitions used in the anti-dumping and countervailing duty contexts
7.413  Korea recalls that the USITC has never determ ined that two or more CCFRS products should
be treated as a single like product in an anti-dumpi ng or countervailing duty investigation, nor has the
USITC found that different CCFRS products are commercially interchangeable with other CCFRS.
The USITC, at least, should have explained why the extensive analyses which justified its like product
determinations of flat products in past trade remedy cases did not apply to the instant case.1163  It is
instructive that the USITC came to the opposite conclusion regarding the like product in the 1992
CCFRS Products anti-dumping/countervailing duty case1164 based specifically on the fact that they
(hot-rolled, cold-rolled, corrosion-resistant, and plat e) "differ in physical characteristics and uses" and
"the different physical properties of each like product dictate particular end-uses".1165 1166
7.414  New Zealand and Brazil also argue that the aggregation of slab, plate, hot-rolled steel, cold-
rolled steel and coated steel into one "like product" group also represents a departure from the
USITC's own treatment of these products for the purposes of anti-dumping and countervailing duty
investigations.  In a number of instances since 1992, the USITC consistently dealt with the discretesteel products comprising the CCFRS category as separate like products.  Japan concurs in this
argument.  In each case the USITC has acknowledged  fundamental differences amongst the products
                                                     
1161 Hot-rolled bar may be further processed into cold-finished bar, and wire rod may be further
processed into wire and nails.  However, these downstream products are distinct from each other and from theother products produced from billets (i.e., rebar is not used in the production of hot-rolled bar).
1162 United States' written reply to Panel question No. 12 at the second substantive meeting.
1163 Korea's first written submission, paras. 38-40.
1164 1992 Certain Flat-Rolled Products , USITC Publication 2549, pp. 9-17 (Exhibit CC-32).  (The
USITC established four categories of flat-rolled products for its purposes and included investigation numbers
573-579, 581-592, 594-597, 599-609, 612-619.  See id. , p. 3.)
1165 1992 Certain Flat-Rolled Products , USITC Publication 2549, pp. 12-15 (Exhibit CC-32).
1166 Korea's first written submission, para. 50.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
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in terms of physical properties, uses and interchangeability.  In the present case the USITC seems to
aggregate or disaggregate products at will.  For example, while the USITC considered both semi-finished carbon steel (slab) and finished flat carbon steel products together in the same like product
category, it decided to treat semi-finished long products (billets) and semi-finished stainless products
as separate from finished products.
1167
7.415  According to the United States, the complain ants' arguments that the USITC should have
defined the like product the same as it has in certain prior anti-dumping and countervailing duty
investigations fails to recognize that the definiti ons arrived at in those cases, as in safeguard
investigations, are dependent on the imports subject to the particular investigation; thus the definitionshave varied.
1168  The starting point for the USITC's like product analysis is the subject imports
identified as within the investigation.  In the pr esent case, the USITC began with the subject imports
which included a range of certain carbon and alloy flat steel and looked for clear dividing lines
between the domestic steel that corresponded to these subject imports using well-established factors.
Moreover, contrary to the complainants' allegations, the USITC was not required to begin with likeproduct definitions found by the USITC in prior anti-dumping or countervailing duty cases, that may
have been appropriate definitions in different contexts based on particular statutes and record, and
make an array of comparisons.  The anti-dumping and countervailing duty investigations generally
begin with a more narrow starting point for the scope of subject imports so the analysis frequently
involves whether the domestic like product should be defined more broadly than the subject imports,i.e., it starts small and looks at whether to broaden rather than starts large and looks where to divide.
The complainants also fail to acknowledge that the anti-dumping and countervailing duty
investigations have a purpose that is different from that in a safeguards investigation.
1169
7.416  Japan responds that one might argue that safeguards investigations permit a broader definition
of the industry than anti-dumping and countervailing duty investigations, given that the Agreement onSafeguards contains both "like" and "directly competitive" whereas the Anti-Dumping and Subsidies
Agreements contain only the word "like".  However, in this case, the USITC relied only on "like" and
the concept of "like" is understood to be even more narrowly construed when it is juxtaposed against
directly competitive.  If anything, the USITC's d ecision should have been narrower.  Furthermore,
given the discussion above demonstrating that safeguards may be applied in only the most
extraordinary of circumstances, Japan takes issue with the notion that the definition of like product
may be broader in the safeguards context than in the anti-dumping and countervailing duty context.
1170
7.417  According to Korea, the stated premise of th e USITC's discussion of the legal relevance of
anti-dumping and countervailing duty like product de terminations is that the fundamental purpose of
Section 201 is to protect domestic industries.  Therefore, according to the USITC, it has more
discretion in defining the like product more broadly than under countervailing and anti-dumping duty
provisions.  The USITC's statement of the object a nd purpose of Section 201 is not consistent with the
object and purpose of the Agreement on Safeguards.  The purpose of the Agreement on Safeguards,
which is to be contrasted to the purpose of a corresponding domestic law (Section 201 in this case), is
not to protect the domestic industry, but to provide a framework within which a safeguard measure
                                                     
1167 New Zealand's first written submission, paras. 4.68-4.70; Brazil's second written submission,
para. 12;  Japan's first written submission, paras. 131-136.
1168 United States' first written submission, para. 128, citing Japan's first written submission, para. 125-
148; Korea's first written submission, paras. 34-44.
1169 United States' first written submission, paras. 128-130.
1170 Japan's second written submission, para. 38.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
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may be applied.  Hence, the USITC's like product decisions are seriously compromised.1171 1172  Korea
also argues that the USITC actually relied extensively and explicitly on its factual findings in prioranti-dumping and countervailing duty decisions re garding the products and production processes but
the USITC came to directly contrary conclusions based on the same factual findings.
1173  The method
of the like product analysis is actually substantially similar as well.  In both cases the USITC is
seeking "clear dividing lines among possible like products" and applying similar factors to the facts of
each case.  However, the result of like product determinations for the current Section 201 steel
investigation was obviously different from those in other investigations:  in the anti-dumping cases
beginning in 1992 and continuing through determinations made as recently as 2002 in the case ofcold-rolled steel from Argentina, Belgium, Brazil,  China, France, Germany, Korea, the Netherlands,
New Zealand, Russia, South Africa, Sp ain, Taiwan, Turkey, and Venezuela
1174, the USITC has always
determined that the "clear dividing lines" existe d between hot-rolled, cold-rolled, corrosion-resistant,
and plate.1175  Korea concludes that the complainants have established that there are significant
inconsistencies between the United States' approach in the anti-dumping and countervailing dutycontext and this safeguards discussion.  In fact, the ten years of consistent precedent was brought
specifically to the attention of the USITC.  The USITC dismissed their relevance on grounds that are
not consistent with the Agreement on Safeguards.  The United States also failed to offer the Panel a
legal basis to exclude the relevance of those findings.
1176  Therefore, those determinations provide
significant evidence of the proper like product in this case.1177
(v) Relevance of like product definitions in previous safeguards investigations
7.418  The United States argues that, while the complainants rely on like product definitions in
certain anti-dumping and countervailing duty investigations, they ignore the similar 1984 Steel
safeguards case, which involved carbon flat steel at various stages of processing similar to those in
this investigation.1178  The USITC defined like products in a manner similar in many respects to the
present safeguards case and different from contemporaneous anti-dumping and countervailing duty
decisions.  Specifically, in 1984 Steel , the USITC defined nine like products, each as discrete
categories of closely-related products, that were like or directly competitive with the imported articles.
Three of these categories involved carbon flat products:  semi-finished, which included slabs as well
as ingots, blooms, billets, and sheet bars; plate; and sheet and strip, which included hot-rolled, cold-
                                                     
1171 USITC Report, Vol. I, footnotes 69, 73-76, 80-82, 84-85, 95-102, 104, 109-117, 125, 127, 129-131,
947, 949-952 (Exhibit CC-6).
1172 Korea's second written submission, paras. 51-52.
1173 See e.g. , USITC Report , footnotes 69, 73-76, 80-82, 84-85, 95-102, 104, 109-117, 125, 127, 129-
131, 947, 949-952 (Exhibit CC-6).
1174 Certain Cold-Rolled Steel Products from Argentina, Belgium, Brazil, China, France, Germany,
Korea, the Netherlands, New Zealand, Russia, South Africa, Spain, Taiwan, Turkey, and Venezuela , Invs. Nos.
701-TA-423-425 (Final) and 731-TA-964, 966-970, 973-978, 980, and 982-983 (Final), USITC Publication
3551 (November 2002).
1175 Korea's second written submission, paras. 54-57.
1176 United States' first written submission, paras. 85-90.  The distinction made between safeguards and
anti-dumping is simply the US argument that the purposes of the Agreements are different, so "like product"must be interpreted differently.  See United States' first written submission, para. 108; USITC Report, Vol. I,
pp. 30-31 (Exhibit CC-6).
1177 Korea's second written submission, para. 60.
1178 The 1984 Steel investigation included such carbon fl at products as slab, hot-rolled, plate, as well as
billets/blooms, wire rod, wire, railway-type products, bars, structural shapes, and pipes and tubes.  USITC
Publication 1553 at 10 (US-24).WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
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rolled and coated steel (each of which had been defined as separate domestic like products in anti-
dumping and countervailing duty investigations).1179
7.419  The USITC recognized in the present case that there had been a number of technological
changes in the steel industry since the 1984 Steel  case.  The advent of the continuous casting process
for the production of slab rather than the ingot te eming process had resulted in less similarity among
the semifinished products (slabs, ingots, blooms, and billets) and processes and more continuity in the
production processes between slab and hot-rolled products.1180  Moreover, the evidence demonstrated
that the distinction between the production of a semifinished and hot-rolled product had been further
blurred due to the increased use of electric arc furnaces that produce "thin slabs" that continueimmediately into hot-rolled production.  The USITC also recognized in this investigation that in
defining separate like products for plate and sheet/strip, the USITC in 1984 Steel  focused in part on
differences in production.  However, the evidence in this investigation shows that the production of
plate, similar to the production of sheet/strip, has become more continuous, as the same or similar hot-
strip or Steckel mills are often used to make both.  Thus, the USITC found that the productionprocesses and equipment for plate and sheet/strip products have become similar and slab production is
less distinct with more continuity in the processing to the next hot-rolling stage than at the time of the
1984 Steel  safeguards case.  Contrary to the complainants' proposals that the USITC should have
applied certain like product definitions from anti-dumping and countervailing duty investigations, it is
clear that if any other definitions should have been taken into account it would be those made for asafeguards case under the same provisions that also had a similar diversity of products within the
investigation.
1181
7.420  Korea responds that the United States' reasoning is circular.  As the United States admits, the
definition of like product utilized by the USITC in Section 201 is guided by the purpose of
Section 201 – which is, according to the USITC, to protect domestic productive resources.1182  Since
this "purpose" is found in the Trade Act of 1974, any "guidance" to be gained from the USITC's 1984
safeguards decision as to "clear dividing lines" would be circular.  The object and purpose of the
Agreement on Safeguards, as opposed to the Trade Act of 1974, provides no basis to "move" the clear
dividing line between like products that has b een established in ten years of anti-dumping and
countervailing duty cases defining "like" product.1183
(vi) Separate remedy for slab
7.421  New Zealand argues that although both the USITC and the President grouped slab together
with a range of other steel products, a separate remedy recommendation and a separate remedy
determination were made for slab: a tariff rate quota instead of a tariff.  This rather novel approach of
differentiating the remedy that it applied to what are supposedly "like" products represents an implicit
acknowledgement that they are not really "like".1184   Similarly, according to China and the European
Communities, a final demonstration of the unsoundness of the United States' approach is that the
                                                     
1179 USITC Publication 1553, pp. 10 and 15-23 (US-24).
1180 USITC Report, pp. OVERVIEW-8-9.  complainants' attempts to distinguish slab from CCFRS in
other stages of processing fails to recognize that hot- rolled steel and cold-rolled steel also are primarily
feedstocks or "semi-finished products" and the fact that  technological advances have resulted in less similarity
among such "semi-finished products" as slab, billets, ingots, and blooms than at the time of 1984 Steel.  Japan's
first written submission, paras. 81 and 114; Brazil's first written submission, para. 81; New Zealand's firstwritten submission, paras. 4.60-4.62.
1181 United States' first written submission, paras. 131-135.
1182 USITC Report, Vol. I, pp. 30, 31 (Exhibit CC-6).
1183 Korea's second written submission, para. 46.
1184 New Zealand's first written submission, para. 4.70.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
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USITC Report (and the Presidential Proclamation) determine a separate remedy for slab;  one of the
products aggregated into the CCFRS like product cat egory.  The different remedy cannot be anything
other than an acknowledgement that this product is both physically different from other products in
the category, and that it also faces vastly different competitive conditions.1185
(b) Tin mill products
(i) General
7.422  Norway argues that the United States failed to correctly identify the domestic products which
are "like or directly competitive" with the specific imported product in relation.  Japan also challenged
the like product determination given that the USITC failed to agree on a definition, meaning theUnited States failed to correlate the injury determination, like product definition, and the safeguard
measure.
1186
7.423  The United States insists that the USITC considered the facts, using long established factors
and looked for clear dividing lines among the various types of certain carbon and alloy flat steel
corresponding to imports subject to this investigation.  The methodology employed by the USITC isunbiased and objective.  The USITC's like product definitions regarding tin mill products are
consistent with Articles 2.1 and 4.1 of the Agreement on Safeguards and should be upheld by the
Panel.
1187
7.424  The United States recalls that the USITC started this analysis with the range of steel broadly
categorized as certain carbon and alloy flat products, all of which had been identified as importssubject to this investigation in the President's request (as well as the Senate Committee on Finance's
request).  The USITC then applied its long established factors in considering whether to analyse
specific types of CCFRS separately or as a whole.   After examining the evidence and conducting its
analysis regarding the corresponding domestic certain carbon and alloy flat products, four
Commissioners subdivided this category into three separate like products, one of which was definedas tin mill products, and two Commissioners determin ed that the steel in this category, including
tin mill, should be defined as a single like product.
1188 1189
7.425  According to the United States, tin mill products are cold-rolled steel that have been coated
with tin or chromium or chromium oxides.1190  In defining tin mill products as a separate like product,
Commissioner Miller found that the cold-rolled feedstock used to make tin mill products generally
was further processed than was required to produce other finished products although she recognized
that tin mill products shared common manufacturing processes with CCFRS and GOES.1191
                                                     
1185 European Communities' first written submission, para. 255; China's first written submission,
para. 207.
1186 Norway's first written submission, para. 216; Japan's first written submission, paras. 153-157.
1187 United States' first written submission, para. 153.
1188 Four Commissioners found clear dividing lines so as to define three separate like products within
this category, and two Commissioners determined that this entire category was a single like product.Commissioners Okun, Hillman, Miller, and Koplan defined the following three separate like products:  1)certain carbon flat-rolled steel ("CCFRS"); 2) grain-oriented electrical steel ("GOES"); and 3) tin mill products.Commissioners Bragg and Devaney defined a single like product, consisting of carbon and alloy flat products(including slab, hot-rolled sheet and strip, cut-to-length plate, cold-rolled sheet and strip, corrosion resistant,
grain oriented electrical steel, and tin mill products).
1189 United States' first written submission, para. 143.
1190 USITC Report, p. FLAT-4.
1191 USITC Report, pp. 48-49.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
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Commissioner Miller also found that tin mill products were overwhelmingly sold directly to end-
users, were sold almost exclusively by long-term contract to those end-users1192, and were used in the
production of containers, packaging and shipping materials.1193  She found that domestic and imported
tin mill products shared the same physical attributes, generally were interchangeable, and were
primarily sold to end-users under contract for the same uses.1194  In defining a single like product for
carbon and alloy flat products, including tin mill, Commissioner Bragg found that these carbon flat
products share certain basic physical properties, possess a common metallurgical base, and travel
through similar channels of distribution.1195  She recognized that there was limited overlap in end-
uses, but found that production was shifted among these products.  In defining a single like productfor all flat products, including tin mill, Commissioner Devaney found that there was a continuous
manufacturing process for flat steel products.  Regarding tin mill steel, he indicated that it was
dedicated at the inception of production as tin mill steel and used cold-rolled steel as its feedstock.
1196
7.426  Norway argues that on the basis of WTO jurisprudence in other cases, it can be deduced that
the United States should at least have looked at the following elements:  (i) the physical properties ofthe products;  (ii) the extent to which products are capable of serving the same or similar end-uses;
(iii) the extent to which consumers perceive and treat the products as alternative means of performing
particular functions in order to satisfy a particular want or demand;  and (iv) the international
classification of the products for tariff purposes.
1197
7.427  The United States contends that Norway's allegations regarding the USITC's like product
definitions involving tin mill products are based on an erroneous interpretation of what factors the
USITC was either "required or not permitted" to consider in making its like product decisions.1198
Norway fails to recognize  the factors suggested by the Working Party on Border Tax Adjustments ,
with respect to tax adjustments, were for a different purpose, and that "[n]o one approach to
exercising judgement will be appropriate for all cases".1199  Thus, the USITC was not required to
consider the four factors derived from the Working Party that are urged by Norway.1200
(ii) Like product criteria
Physical properties
7.428  Norway submits that the majority of the Commissioners defined the domestic industry as "all
producers of tin mill products"1201, thus making no distinctions between the various products included
in this group.  The two other Commissioners employed even broader groupings related to all sorts of
flat products.  In Norway's view, a flat product which is not coated with "tin" cannot be "like" another
product which is so coated.  The first minimum requirement is thus that the products be coated.
Also, thicknesses and surfaces vary greatly depending on the end-use of the product.1202  This is well
                                                     
1192 USITC Report, p. 48; USITC Report, Table FLAT-18.
1193 USITC Report, Table OVERVIEW-2 and p. FLAT-4.
1194 USITC Report, p. 49.
1195 USITC Report, pp. 272-273.
1196 USITC Report, pp. 36, n.65, 38, n.83, 43, n.126, 45, nn. 137 and 139.
1197 Appellate Body Report, EC – Asbestos , para. 101.
1198 Norway's first written submission, paras. 222-232.
1199 Appellate Body Report, EC – Asbestos , para. 101.
1200 United States' first written submission, para. 146.
1201 USITC Report, Vol. 1, footnote 367. (Exhibit CC-6)
1202 Tin mill products is the description of mainly 6 different product categories with sub-divisions,
made in tin mills:
1. Electrolytic coated tinplate –  single reduced cold  rolled, batch-annealed steel with a tin coatingWT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
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exemplified by the specific exclusions provid ed for in the initial request by the USTR1203 where five
categories of tin mill products are excluded from the request based on their coating (chromium),thickness, width, length and chemical composition.
1204  Further examples of the different products
comprised within this group of products may be found in the later exclusions provided by the USTR,
where ten different tin mill products were excluded from the United States' measures on
22 August 2002.1205  Were one to look at flat products gl obally, as two Commissioners did, one would
                                                                                                                                                                    
1a. Electrolytic coated tinplate – sing le reduced cold rolled, continuos- annealed steel with a tin coating.
2. Electrolytic coated tinplate – dou ble reduced cold rolled, batch-an nealed steel with a tin coating.
2a. Electrolytic tinplate – double reduced cold rolled, continuos-annealed steel with a tin coating.3. Tin free steel (TFS) – single reduced cold rolle d, batch-annealed steel with chromium coating.
3a.Tin free steel (TFS) – single reduced cold rolled,  continuos-annealed steel with chromium coating.
4. Tin free steel (TFS) – double reduced cold rolled, batch-annealed steel with chromium coating.4a. Tin free steel (TFS) – double reduced cold rolled,  continuos-annealed steel with chromium coating.
5. Polymer coated steel – single reduced cold ro lled, batch-annealed steel with chromium coating,
covered with a polymer top coating.
5a. Polymer coated steel – single reduced cold rolled, continuos-ann ealed steel with chromium coating,
covered with a polymer top coating.
5b. Polymer coated steel – double reduced cold rolle d, batch-annealed steel with chromium coating,
covered with a polymer top coating.
5c. Polymer coated steel – double reduced cold rolled, continuos-annealed steel with chromium
coating, covered with a polymer top coating.
6. Black plate – single reduced cold rolled, batch- annealed steel, temper rolled with no coating.
Thickness – Gauge – of the Tin mill products  is in following range:
Tinplate: 0.10 mm – 0.375 mm.
Flat rolled tinplate: 0.375 mm –  0.90 mm.
Tempergrade – hardness – of the Tin mill products is in following range:
Batch annealed: T1 – T 2 – T 3 – T 4.Continuos annealed: T 3 – T 4 – T 5 – T 6 – T 7.
Dimensions of the Tin mill products:
Plate: Rolling width min. 600 mm – max. 1100 mm. y)
Cut length min. 485 mm – max. 1180 mm.
Coil: Width min. 600 mm – max. 1180 mm.Slitted: Width min. 25 mm – max. 510 mm.
Different surface structure.
Bright, Light stone, Stone,  Matt, or Silver
End use of Tin mill products:
Food packaging.Technical packaging. (Paint, lacquers, oil etc.)Beer and beverage cans.
Aerosol cans.
Closures. (Jars for jam etc.)Non – packaging applications. (Trays, oil-filters, convenience goods etc.)
1203 Exhibit CC-1.
1204 United States Trade Representative's (USTR) request to the United States International Trade
Commission (ITC) to initiate a safeguard investigation under Section 201 of the Trade Act of 1974, at Annex II.
(Exhibit CC-1).
1205 USTR, "List of additional products to be excluded from the Section 201 safeguards measures, as
established in Presidential Proclamation 7529 of March 5, 2002", August 22, 2002, available at the USTRWT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 179
see that there are stark differences in thicknesses, shape and finished stage between e.g. slabs and tin
mill products.1206
7.429  In the United States' view, Norway's challenge is directed not only at the definition of a single
like product for carbon flat products, but also to the definition of tin mill as a separate like product.
Norway, on one hand, points out that tin mill products could be defined as 6 to 13 different like
product categories and, on the other hand, refers to the different product exclusions requested and
granted to infer that each should have been defined as a separate like product.  Thus, the issue for
Norway goes beyond whether the flat product is coated with "tin".  Moreover, contrary to Norway's
allegations, the level of product distinction considered necessary for a product exclusion does notwarrant finding dozens of like products.  The USITC looks for clear dividing lines in conducting its
like product analysis which is far from the narrow or microscopic lines that Norway urges.  While
Norway alleges that there are different products within the tin mill group, it is not clear how narrow
Norway would have the USITC consider the uses for the product.  Norway also seems to ignore the
fact that the USITC has no authority to exclude imports from those identified in the request or petitionas subject to investigation.
1207
End-use
7.430  Norway argues that the major end-uses of tin plate are the manufacture of welded cans.  There
are, however, considerable differences between the end-uses depending on the thickness of the tin
mill plates.  Oil filters for cars and soft drink cans require different thicknesses.  The type ofproduction of the buyer will thus require different types of tin mill products.  In this category, as
defined by the USITC and the President, chromium coated products are also included.  The USITC
explains, in footnote 403 of its report, that chromium coated products have a different use from tin
coated products, due to differences in their surfaces.  Tin-plate will be used for the can itself, because
of its shinier surface (which also makes it more suitable for paint) while chromium coated plates areemployed for the bottoms of cans.  The USITC, in its discussion of the domestic industry producing
tin mill products, does not distinguish between the different products within the group.  Its brief
discussion is premised on an assumption that all imports are a single article that is "like" the
domestically produced products.  End uses is only referred to in passing, stating that "[T]in mill
products are used almost exclusively in the pro duction of containers, such as beverage cans,
packaging and shipping materials.  They are unsuitable for other end-uses".
1208  Norway notes that it
is, nevertheless, clear from this statement that tin mill products are not interchangeable with other flatproducts.  Norway also points out that the procedures for exclusion request to be granted by the USTR
as mandated in the Presidential Proclamation, details that the USTR will consider  inter alia  whether
the product is currently being produced in the United States, whether substitution is possible and
whether qualification requirements affect the requestor's ability to use domestic products.
1209  In light
                                                                                                                                                                    
website (Exhibit CC-92).  This list shows that 10 different tin mill products, with specific product specifications,
are excluded.
1206 Norway's first written submission, para. 223.
1207 United States' first written submission, para. 148.
1208 USITC Report, Vol. I, at pp. 48-49.  The citation is from p. 48, with original footnotes omitted.
(Exhibit CC-6)
1209 "Procedures for Further Consideration of Requests for Exclusions of Particular products from
Actions With Regard to Certain Steel products Under Section 203 of the Trade Act of 1974, as Established inthe Presidential Proclamation 7529 of March 5, 2002", Federal Register/ Vol. 67, N° 75/ 18 April 2002,p. 19307 (Exhibit CC-19).WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 180
of the exclusions granted ex post it would seem that the original determination of one single like
product is flawed.1210
7.431  In applying the traditional like product factors to the general category of carbon and alloy flat
steel, four Commissioners found a clear dividi ng line between CCFRS and tin mill products.1211  In
particular, they found that cold-rolled feedstock used to make tin mill products was further processed
than required to make CCFRS steel.  In addition, tin mill is used, for example, for the production of
containers, packaging, and shipping materials.  In contrast, CCFRS was used primarily in production
for the automotive and construction industries.  Ti n mill steel was overwhelmingly sold directly to
end users, almost exclusively under long-term c ontracts, whereas the majority of CCFRS was
internally transferred for use in later stages of processing CCFRS.1212
Consumer perception
7.432  Norway submits that consumers of tin mill products, here understood as end-users of the
imported products and the like domestic products, should perceive that plates of different thicknesses
and with different coatings have different uses.  This is not discussed by the USITC in its report.1213
Tariff classification
7.433  Norway submits that, in the United States, the tin mill products covered by the measure were
(before the imposition of extra duties) divided into four broad customs categories (7210.11.0000;
7210.12.0000; 7210.50.0000; and 7212.10.0000).1214  This indicates that there could be several
different "like" products.  The different customs classifications are not discussed by the USITC in itsreport in respect of tin mill products.  The only reference in passing can be found in footnote 176
1215
where reference is made to the fact that the USITC did not find consideration of customs treatment tobe a useful factor for the carbon and alloy flat products in this investigation.  In Norway's view, the
United States failed to identify the domestic products that are "like or directly competitive" to the
specific imported product or products, by not making comparisons – at a minimum – against thecriteria for establishing likeness acknowledged in WTO jurisprudence.  The findings of the United
States thus fall short of the requirement imposed by Article 2.1 of the Agreement on Safeguards that
the competent authorities determine that the domestic articles, the producers of which they want to
group into one domestic industry, are either a "single like product" or one or more directly
competitive products compared with specific imports.
1216
7.434  In response, the United States recalls that, as the Appellate Body has stated, "the adoption of a
particular framework to aid in the examination of evidence does not dissolve the duty or the need to
examine, in each case, all of the pertinent evidence".1217  The tariff classifications are interrelated with
the physical properties/characteristics criterion which the USITC clearly considered and found to be
an important factor in its like product definitions.  The USITC exercised its discretionary judgement
to determine which factors were useful, and which were not, in examining the particular facts of this
investigation.  While Norway seems to allege that the USITC should have defined its like productsusing tariff classifications, the evidence does not co mport with Norway's suggestions for 6 to 13 or
                                                     
1210 Norway's first written submission, paras. 224-228.
1211 United States' first written submission, paras. 143-144; USITC Report, pp. 48-49.
1212 United States' written reply to Panel question No. 27 at the first substantive meeting.
1213 Norway's first written submission, para. 229.
1214 USITC Report, Vol. I, at p. 10 (Exhibit CC-6).
1215 USITC Report, Vol. I, at p. 49 (Exhibit CC-6)
1216 Norway's first written submission, paras. 230-232.
1217 Appellate Body Report, EC – Asbestos , para. 102.WT/DS248/R, WT/DS249/R,
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more like products.  There are four tariff classifications at the ten-digit level and two at the four-digit
level covering tin mill products.1218
Production processes
7.435  Norway submits that because Congress intended Section 201 to "protect the productive
resources of domestic producers", rather than ameliorate unfair trade practices, the USITC has
considered "both the productive facilities and processes and the markets for these products" in making
its like products determination in the safeguards context, in addition to the like product factors.1219
According to Norway, this clearly goes beyond th e factors permitted by the Appellate Body is  US –
Lamb  as other products produced at the same facilities should not be included when defining the
domestic industry producing the like product.  The six commissioners employed different groupings
when considering tin mill products.  Of the commissioners treating "tin mill products" as one "like
product category", only one voted in favour of the measure.  The two other commissioners voting in
favour of imposing a safeguards measure employed broader product categories.1220  The President,
when determining that measures should be imposed on a category he termed "tin mill products",based himself on the views of three commissioners looking at a domestic industry producing:  (i) tin
mill products;  (ii) carbon and alloy flat products;  and (iii) all flat products respectively.
1221
7.436  The United States submits that contrary to Norway's contentions, the Appellate Body in US –
Lamb  recognized that when confronted with the question of whether two articles are separate
products, "it may be relevant to inquire into the production processes for those products".1222
(iii) Identification of domestic producers
7.437  Norway also argues that the United States failed to appropriately define the domestic industry
of the like product and therefore acted inconsistently with its obligations under Articles 2.1 and 4 of
the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994.1223 The USITC Report does
not explain who are the producers of the like product.  The tables are deleted from the report.1224
Norway requested the information of table FLAT-1 during the consultations, but no such information
was forthcoming.  Norway is, thus, unable to ascertain whether there, indeed, are domestic United
States' producers of any specific tin mill products and is also unable to ascertain whether there indeed
exists an industry injured by imports or the relevant ratios of imports to domestic production.  This
lack of information on the relevant domestic industr y (companies and production) is a clear breach of
Article 4.1(c) of the Agreement on Safeguards.  When all informative tables are excluded regarding
the domestic industry producing the like product, there is no way of ascertaining how thedeterminations are made, thus making it impossi ble to investigate a possible wrongdoing by the
United States.  As such, this is also a breach of Article 3.1 of the Agreement on Safeguards , and this
information cannot be regarded as confidential information under Article 3.2.  There is also a failure
to ensure that only producers of domestic articles that are "like or directly competitive" to the specific
imported product are grouped together in one domestic industry for the purpose of the investigationand determination.  In respect of tin mill products, Norway refers to the USITC Report, Vol. 1 at
                                                     
1218 United States' first written submission, para. 149.
1219 USITC Report, pp. 30-31.
1220 Commissioner Bragg, employed a category of " carbon and alloy flat products" (USITC Report,
p. 272) and Commissioner Devaney employed a category of "all flat products", see USITC Report, Vol. I, p. 36,footnote 65. (Exhibit CC-6)
1221 Norway's first written submission, paras. 216, 219-221.
1222 Appellate Body Report, US – Lamb , para. 94, footnote 55.
1223 Norway's first written submission, para. 238.
1224 See USITC Report, p. I-72 and the asterisk for table FLAT-1 in volume II.WT/DS248/R, WT/DS249/R,
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page 72, where it is stated that an unspecified number of tin mill producers also produce a variety of
other types of CCFRS, including slab, and also hot-rolled end products (slabs).  There is no evidencethat operating results from these parts of the firms have been singled out when addressing the
grouping "tin mill products".  There is, thus, a strong presumption that also for tin mill products,
producers and facilities producing products that are not "like" have been included in the "domestic
industry", contrary to the requirement of the Agreement on Safeguards.
1225
7.438  The United States responds that Norway's contentions that the USITC "exclud[ed] all
informative tables regarding the domestic industry producing the like product"1226 is erroneous and
grossly misleading.  The essence of Norway's allegation is that because the USITC did not releaseconfidential responses of individual producers of tin mill products, it must be assumed that the USITC
did not limit its analysis to producers of tin mill products.  This allegation is only relevant to the
determination of Commissioner Miller, since each of the definitions of like product and corresponding
domestic industry made by Commissioners Bragg and Devaney considered data for the carbon and
alloy flat products and not the tin mill specific data.  This complaint centres on one table (TableFLAT-1) in the USITC Report which lists individual domestic producers responding to the USITC
questionnaire and provides their individual production data by type of carbon and alloy flat steel that
they produce.  Individual firm data provided in response to the USITC questionnaires and the firms
responding to the USITC questionnaires is considered confidential business information and not
publicly released.  Rather, the individual firm data generally is publicly released in aggregate form asit was here.  Norway ignores the fact that individual tin mill production data was combined and
publicly released in aggregate form in Table FLAT-18.
1227  Contrary to Norway's allegations, the fact
that the USITC has not publicly released the identity  of those responding to the questionnaires or the
individual producer data does not provide a "strong presumption" that products other than tin mill
products were included in USITC's domestic industry analysis.1228  Norway fails to show how release
of the individual firm data would show anythi ng more than whether the USITC can simply add
correctly.  The Panel need not only have to rely on the USITC's representations alone concerning the
proper aggregation of appropriate data on tin mill production.  Parties to the underlying safeguards
investigation did not challenge the USITC's aggregation of the tin mill data, including counsel to
parties that had access to the contested table along with all other confidential business information,
under Administrative Protective Order.1229 1230
7.439  Norway responds that the USITC Report states that an unspecified number of tin mill
producers also produce a variety of other types of CCFRS, including slab and also hot-end production
(slabs).1231  The crucial importance of this integration is the failure of the United States to ensure
separation of operating costs and results for tin mill products as separate from CCFRS because of the
diverging "like product analyses" involved.1232  There is no evidence that the operating results from
these parts of the firms have been separated out when establishing which firms are the "producers ofthe like product".
1233  When this is not done, one gets an incorrect assessment of injury to the tin mill
industry, as the alleged injury may be caused to other parts of the operations of these firms.  This is
                                                     
1225 Norway's first written submission, paras. 233-237.
1226 Norway's first written submission, para. 239.
1227 USITC Report, Tables FLAT-10, FLAT-18, FLAT-26, FLAT-46, FLAT-57, FLAT-58, FLAT-59,
FLAT-63, FLAT-75, FLAT-76, FLAT-78, FLAT-79, FLAT-80, and FLAT-C-8.
1228 Norway's first written submission, para. 237.
1229 Under US law, confidential business information is released to counsel for parties under
administrative protective order.
1230 United States' first written submission, paras. 150-154.
1231 USITC Report, Vol. I, p. 72.
1232 Norway's written reply to Panel question No. 20 at the second substantive meeting.
1233 Norway's first written submission, paragraph 236.WT/DS248/R, WT/DS249/R,
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what happened for the analyses by at least Commi ssioners Bragg and Devaney.  Norway still cannot
understand why the names of the tin mill producers (as the USITC defines the industry) areconfidential (and the United States has given no explanation of why this is necessary,) and does
consider that this in itself represents a breach of Article 4.1(c) of the Agreement on Safeguards.
Norway also notes that whatever counsels to individual firms may or may not know
1234 is irrelevant to
the United States' obligations under the Agreement on Safeguards towards other Member States to
provide a report that details all relevant issues of law and fact.1235
7.440  Brazil adds that three of the principal producers of tin mill products – Bethlehem Steel,
Weirton Steel, and US Steel are fully integrated mills producing a full range of CCFRS products,including slab.
1236  The fourth producer, Ohio Coatings, is a joint venture and, in effect, the tin mill
line of vertically integrated Wheeling-Pittsburgh Steel, which produces a full range of CCFRS
products and is 50% owner of Ohio Coatings.1237  The fifth producer, US Steel-Posco is a joint
venture between United States Steel Corporation and Posco of Korea, both vertically integrated
producers of a full range of CCFRS products.  However, US Steel-Posco is not vertically integrated.It has no raw steel making capacity, no slab production and no hot strip mill.  Rather, it purchases
domestic and imported CCFRS products and processes these products through cold rolling,
galvanizing and tin mill lines.
1238 1239
7.441  The United States responds that, indeed, a number of tin mill producers also produce types of
CCFRS.  However, the United States does not agree with Norway's assertions that data for productionof other types of steel were included in the data for tin mill products.  Norway's contentions are
erroneous.  The essence of Norway's allegation is that because the USITC did not release confidential
responses of individual producers of tin mill products, it must be assumed that the USITC did not
limit its analysis to producers of tin mill products.  Norway fails to recognize that the reason why this
issue is only relevant to the determination of Commissioner Miller is because Commissioners Braggand Devaney did not define tin mill as a separate  like product.  Thus, the fact that Commissioners
Bragg and Devaney did not separate out tin mill data is because they did not find tin mill products to
be a separate like product/domestic industry.  They  defined carbon and alloy flat steel, including tin
mill, as a single domestic like product and, appropriately, looked at data for carbon and alloy flat
products and not the tin mill-specific data.  Norway's allegation centres on one table (Table FLAT-1)
in the USITC Report which lists individual domestic producers responding to the USITC
questionnaire and provides individual production data by type of carbon and alloy flat steel that eachproduces.  Individual firm data provided in response to USITC questionnaires and the firms
responding to the USITC questionnaires is considered confidential business information and not
publicly released.  Rather, the individual firm data generally is publicly released in aggregate form as
it was here.  The United States notes that it is not the only country that withholds the names of
questionnaire respondents.  Norway ignores the fact that individual tin mill production data wascombined and publicly released in aggregate form in a number of tables, including Table FLAT-26,
which includes financial data and operating results.
1240  Contrary to Norway's allegations, the fact that
the USITC has not publicly released the identity of those responding to the questionnaires or the
                                                     
1234 United States' first written submission, paragraph 154
1235 Norway's second written submission, paras. 73-75.
1236 See Iron and Steel Works of the World  (14th Edition), Metal Bulletin Books Ltd. (2001), pp. 647-48,
714-715 and 717-718.
1237 Ibid. at 693.
1238 Ibid  at 716.
1239 Brazil's written reply to Panel question No. 20 at the second substantive meeting.
1240 USITC Report, Tables FLAT-10, FLAT-18, FLAT-26, FLAT-46, FLAT-57, FLAT-58, FLAT-59,
FLAT-63, FLAT-75, FLAT-76, FLAT-78, FLAT-79, FLAT-80, and FLAT-C-8.WT/DS248/R, WT/DS249/R,
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individual producer data does not provide a "strong presumption" that products other than tin mill
products were included in the USITC's domestic industry analysis, nor may any presumption, strongor otherwise, be drawn.
1241  The United States submits that this complainant fails to show how release
of the individual firm data would show anything more than whether the USITC can correctly tally the
individual company information.  In the USITC's questionnaire, domestic producers were clearly
instructed to provide separate data for tin mill.  Each domestic producer was required to certify the
truthfulness of its questionnaire responses.  The Panel need not rely solely on the USITC's
representations concerning the proper aggregation of appropriate data on tin mill production.  Parties
to the underlying safeguards investigation had access to all of the individual company data; thisincluded counsel to parties that had access to the contested table along with all other confidential
business information, under administrative protective order.
1242  None of them challenged the USITC's
aggregation of individual company data on tin mill ma terial.  The USITC is confident that the tin mill
data provided in the USITC Report does not include data for other types of steel.1243
(c) Welded pipe
(i) General
7.442  Korea and Switzerland argue that for the category of welded pipe products, the USITC
acknowledges that "welded pipe encompasses a ra nge of products, including both commodity and
speciality products"1244, but analysed neither the various types of welded tubular products nor the
different end-uses of those where "the various forms of welded pipe are made by the same process,largely by the same firms, in the same facilities and on the same equipment and are used for the same
purposes, namely the conveyance of steam, water, oil, gas and other fluid".
1245  It declined to identify
specific products by pointing to:  (i) the common physical properties and characteristics of those
products;  (ii) their common end-use;  (iii) the customs classification; and (d) consumer
perceptions.1246
7.443  The United States insists that the USITC consid ered the facts present in this investigation
using long established factors and looked for clear dividing lines among the various types of certain
carbon and alloy pipe and tube subject to this investigation.  The methodology employed by the
USITC is unbiased and objective.  The USITC's definition of certain welded pipe as a single like
product is consistent with Articles 2.1 and 4.1 of the Agreement on Safeguards and should be upheld
by the Panel.1247 The USITC started this analysis with the range of steel broadly categorized as certain
carbon and alloy pipe and tube, all of which had been identified as imports subject to thisinvestigation in the President's request (as well as the Senate Committee on Finance's request).  After
examining the evidence and conducting its analysis regarding the corresponding domestic certain
carbon and alloy pipe and tube, the USITC found clear dividing lines so as to delineate four separate
like products.
1248  The USITC found that domestic certain welded pipe was like the corresponding
                                                     
1241 Norway's first written submission, para. 237.
1242 Under US law, confidential business information is released to representatives for parties, usually
outside counsel and economic consultants, under administrative protective order.
1243 United States' written reply to Panel question 20 at the second substantive meeting.
1244 USITC Report, Vol. I, p. 383.
1245 USITC Report, Vol. I, pp. 154-155 (emphasis added) (Exhibit CC-6).
1246 Korea's first written submission, paras. 61; Switzerland's first written submission, paras. 207-208.
1247 United States' first written submission, para. 171.
1248 Four Commissioners found clear dividing lines and defined four separate certain carbon and alloy
pipe and tube like products from this category, and two Commissioners divided this category into three separatelike products.  Commissioners Okun, Hillman, Miller, and Koplan defined the following four separate likeproducts:  1) welded pipe, other than OCTG ("certain welded pipe"); 2) seamless pipe, other than OCTG; 3)WT/DS248/R, WT/DS249/R,
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imported certain welded pipe.1249  The USITC applied its long established factors in considering
whether there existed clear dividing lines between specific types of welded pipe.1250  T h e  U S I T C
found that certain welded pipe included tubular products that have a weld seam that runs either
longitudinally or spirally along the length of the product.   Welded pipe is used in the conveyance of
water, petrochemicals, oil products, natural gas, and other substances in industrial piping systems.
The presence of a welded seam generally makes certain welded pipe slightly less reliable and durable
than seamless tubular products.  Thus, it is used to transport liquids at or near atmospheric pressure
rather than for high pressure containment.1251  The various types of  welded pipe in this investigation
include standard pipe and pipe used primarily for mechanical, line, pressure, and structuralpurposes.
1252  Welded pipe is generally produced on electric resistance weld (ERW) mills.  The
USITC found that the various forms of welded pipe are made by the same process, largely by the
same firms, in the same facilities and on the same equipment and are used for the same purposes,
namely the conveyance of steam, water, oil, gas, a nd other fluids at or near atmospheric pressure.1253
7.444  The European Communities submits that the United States has not adequately responded to
the specific arguments why the products grouped as certain tubular products were not like due to their
different physical properties and functions.  On pages 147 and 148 of the USITC Report, the USITC
did not do more than asserting that "there are four domestic industries producing articles like the
corresponding imported articles subject to investigation within the tubular products category".  The
other reference, on page 158, after a discussion as to whether the domestic industry producing FFTJ(sic) should be defined as a separate industry, the USITC simply repeated its previous conclusion that
"there are four domestic industries producing articles like or directly competitive with the
corresponding imported articles subject to investigation within the tubular products category",
although with a puzzling extension to the broader concept of "directly competitive" products without
any supportive analysis between pages 147 and 157.  This is neither a sufficient like nor directlycompetitive product analysis, because it is not based on a reasoned consideration of all relevant
criteria as laid out above.  Specifically, as can be learned from Chapter 73 of the HS, which is
contained in exhibit CC-105, internationally agreed customs classifications at the four and six-digit
level separate welded pipe on the basis both of size and function.
1254  This and all the arguments made
by Korea and Switzerland in this respect, which the European Communities adopts, further
corroborates that the products bundled as welded pipe are not "like or directly competitive".1255
7.445  The United States submits that no importance shou ld be attached to the reference to "directly
competitive" with respect to the USITC's consid eration of welded tubular products.  The USITC
clearly made a finding for each of the four tubular products on the basis of a like product analysis and
not on the basis of a directly competitive product analysis.1256  Moreover, there is a footnote to this
                                                                                                                                                                    
OCTG, welded and seamless; and 4) fittings, flanges, and tool joints.  Commissioners Bragg and Devaney
defined the following three separate like products:  1) carbon and alloy welded tubular products (includingwelded tubular other than OCTG and welded OCTG); 2) carbon and alloy seamless tubular products (includingseamless tubular other than OCTG and seamless OCTG); and 3) carbon and alloy fittings, flanges, and tooljoints.
1249 USITC Report, p. 147, footnote 893.  This issue was not disputed in the underlying proceeding.
1250 USITC Report, pp. 147-157.
1251 USITC Report, p. TUBULAR-2.
1252 Certain welded pipe used in the movement of o il and gas is produced to standards set by American
Petroleum Institute (API), while many other forms of certain welded pipe are produced to standards set by theAmerican Society for Testing and Materials (ASTM) and the American Water Works Association (AWWA).
1253 United States' first written submission, paras. 156-157
1254 Paras. 73.05 and 73.06.
1255 European Communities' second written submission, paras. 283-285.
1256 USITC Report, p. 147.WT/DS248/R, WT/DS249/R,
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sentence in which the USITC explicitly states that it did not make findings on the basis of a directly
competitive product analysis.1257  The USITC's findings on the basis of a like product, and not directly
competitive product, analysis for each of these four like products is clearly demonstrated in its
discussion, its findings section and the noted footnote.  The summation sentence which refers to
"domestic industr[ies] producing … article[s] like or directly competitive with … [the] imported
article[s]"1258 merely recites the United States' statutory language.1259  The United States believe that,
in spite of the inadvertent inclusion of "directly competitive", that it is clear that the USITC's findings
were on the basis of a like product analysis.1260
7.446  The European Communities, Japan, Korea and Norway also submit that no significance
should be attached to the mentioned reference.  The European Communities notes that the assertion
on page 157 of the USITC Report that imported welded pipe, fittings and flanges and domestic ones
are "directly competitive" has been explained as "clerical error".1261
7.447  The United States submits that complainants who challenge the like product definition for
certain welded pipe do not agree on what the definition should have been; Korea seems to proposetwo like products based on size and Switzerland seems to propose three like products based on
function.
1262 1263
(ii) Like product criteria
General
7.448  Korea submits that the USITC rejected arguments that LDLP (16 inches or over) should be
treated as a separate like product.1264  The USITC analysis failed to address the key product
characteristics of LDLP versus other welded pipe and their different applications (end-uses).  Instead,
just as with CCFRS, the USITC focused on the common United States' production facilities and
"continuum" of production by United States producers for its like product determination while
rejecting the utility of Customs classification as well as the like product determination in theconcurrent anti-dumping and countervailing duty investigations of LDLP from Japan and Circular
Welded Non-Alloy Pipe from China.  The Appellate Body in US – Lamb  rejected this "continuum" of
production approach
1265 where, as here, the products are fundamentally different.1266 1267
                                                     
1257 USITC Report, p. 147, footnote 893.
1258 USITC Report, p. 157.
1259 See Trade Act of 1974, § 202(c)(4), 19 USC. § 2252(c)(4).
1260 United States' written reply to Panel question No. 22 at the second substantive meeting.
1261 European Communities', Japan's, Korea's and Norway's written replies to Panel question No. 22 at
the second substantive meeting.
1262 Korea's  first written submission, paras. 41-44; Switzerland first written submission, paras. 209-225.
See the discussion in section VII.D.1(c).
1263 United States' first written submission, para. 104.
1264 While arguments could have been made that other products within the USITC's welded category
were also separate like products, these other products in  the welded category were much smaller in quantity than
LDLP and, in large part, appeared to follow similar demand patterns as the largest component, standard pipe.
1265 Appellate Body Report, US – Lamb , para. 90.
1266 Moreover, the record does not even support the conclusion that there was an overlap in production.
According to the USITC, "[o]f the seven firms that reported the capability to produce welded large diameter line
pipe in 2000, [only] three of those firms also indicated that they produced smaller sizes of welded pipe in 1998."USITC Report, Vol. I , p. 155, footnote 952 (Exhibit CC-6).
1267 Korea's first written submission, paras. 61-63.WT/DS248/R, WT/DS249/R,
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7.449  Switzerland contends that, if the USITC had actually applied its traditional methodology and
applied, at least, the criteria of end-use, customs classification and physical properties, it would havecome to the conclusion that the category of welded tubular products as it was defined could not serve
as a basis in order to identify like or directly competitive products because it bundled together too
many different products.
1268
Physical properties
7.450  The United States argues that the USITC considered arguments that it should find that large
diameter line pipe (pipe 16 inches or over in outside diameter) was a separate like product from other
welded pipe.1269  The evidence showed that while welded large diameter line pipe generally is made
on mills designed to make large pipe, these mills also are capable of producing other types of large
diameter pipe, such as pipe for water transmission, piling, and structural members.1270  A substantial
portion of welded large diameter line pipe is made by the ERW process1271, which is the process used
to make virtually all types of certain welded pipes.1272  Moreover, many of the firms that produce
welded large diameter line pipe also produce other welded pipe that is less than 16 inches in outsidediameter.  Large and small diameter welded pipe also share common physical characteristics,
particularly a weld seam that has an effect on its uses relative to other tubular products such as
seamless pipe.  Based on this evidence, the USITC found large and small welded pipe to be part of a
continuum of certain welded pipe and saw no reason to define large diameter line pipe separately
from other certain welded pipe.
1273  An important factor in the USIT C's finding of a clear dividing line
between certain welded pipe and other tubular products was the physical characteristic of the welded
seam.  All welded pipe, large and small, share the common physical characteristic of a weld seam that
runs either longitudinally or spirally along the length of the product and that has an effect on the pipe's
uses relative to other tubular products such as seamless pipe.  The presence of a welded seam
generally makes certain welded pipe slightly less reliable and durable than seamless tubular products.The USITC found that welded pipe ranging from small to large shared similarities in physical
characteristics, uses, marketing channels, and production processes as discussed above to be part of a
continuum of certain welded pipe and saw no clear dividing lines to define separate like products
within this continuum.
1274
7.451  Switzerland submits that the USITC considered that all the pipes belonged to the same
category.  However, pipes are made out of very different and subtle chemical compositions of steel,
depending on the purpose of their use.  The difference is due to the diversity of the alloys (aluminium,boron, etc.) added to the steel.  There are approved norms indicating the tolerance of the various
chemical components possibly entering into the composition of the steels.  These various nuances in
composition have precise consequences namely on the resistance, the elongation, the harden ability
                                                     
1268 Switzerland's second written submission, para. 55.
1269 Prehearing Brief of European Steel Tube Association (September 12, 2001), pp. 3-6 (US-30).
1270 USITC Report, p. 154, citing  Certain Welded Large Diameter Line Pipe From Japan and Mexico ,
USITC Publication 3400, pp. I-5-6 (March 2001) (US-29).
1271 In 2000, 45.6% of domestic welded large diameter line pipe was produced by the ERW process as
compared to 54.4% by the SAW process.  Certain Welded Large Diameter Line Pipe From Japan and Mexico ,
USITC Publication 3400, Table 1-2, p. I-14 (March 2001) (US-29).  ERW pipe is normally produced in sizesfrom 2 3/8 inches through 24 inches outside diameter.  Id. at I-5.
1272 Certain Pipe and Tube from Argentina, Brazil, Canada, India, Korea, Mexico, Singapore, Taiwan,
Thailand, Turkey, and Venezuela , Invs. Nos. 701-TA-253 (Review) and 731-TA-132, 252, 271, 273, 276, 277,
296, 409, 410, 532-534, 536, and 537 (Review), USITC Publication 3316, p. CIRC-I-19 (July 2000) (US-31).
1273 United States' second written submission, para. 90.
1274 United States' second written submission, para. 91.WT/DS248/R, WT/DS249/R,
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and the cold forming of steels.  In other words, the different and very subtle compositions of steels are
determinant in characterising their quality, and therefore the quality of the products made of them.1275
7.452  Korea rejects the United States' argument that that welded non-OCTG pipe has a "weld" so it
was treated as a single like product.  Korea submits that this is at best a perfunctory analysis.1276  The
other two products in the pipe and tube category, OCTG and pipe fittings, also have a weld but they
were treated as separate like products by the USITC in the same investigation.  The United States
refers to this as a deciding factor but do not explain its lack of significance for "welded" OCTG which
was grouped with seamless OCTG as a single like product.1277  1278
7.453  Switzerland recalls that the USITC Report only mentions that the physical differences begin
with the chemistry of the steel in the billet or hot-rolled strip, and continue through the forming and
finishing process.  It also says that seamless pipes are more reliable, and that pipe used in OCTG
applications must meet higher standards than pipe used in line pipe, which in turn must meet higher
standards than so-called standard pipe.1279  Switzerland considers that this analysis is too vague and
that it does not reflect the importance that the United States claims the USITC did give to this factor.Switzerland submits that the USITC did not analyse the common properties and physical
characteristics of the products it compared in depth enough and therefore could not draw any
conclusion in this respect.
1280
End-use
7.454  Korea submits that the USITC itself said in the introductory section describing its like product
determination that there were grounds to distinguish the five like products in the tubular category as
follows:  "Most pipe is made to standards that reflect its intended use, and this affects the physical
properties of the pipe.... Pipe used in OCTG applicati ons must meet higher standards than pipe used in
line pipe, which in turn must meet higher standards than so-called standard pipe.1281  Yet, the USITC
did not reach the obvious conclusion that these major distinctions in end-use should have resulted in a
separate like product for LDLP as well.1282 1283
7.455  Korea points out that LDLP is primarily used in the transmission of oil and gas so that
demand for LDLP correlates with changes in oil and gas prices and the level of activity in the energy
sector more generally ( i.e., investment in large-scale pipeline projects).1284  In contrast, the remaining
products in the non-OCTG welded pipe category (standard pipe being the largest component) tend to
track general economic conditions.1285  As a consequence, demand trends for line pipe depend on the
level of activity in the energy sector while the demand for other tubular products tends to move in line
                                                     
1275 Switzerland's first written submission, para. 209.
1276 United States' first written submission , para. 157;  United States' written reply to Panel question
No. 148 at the first substantive meeting.
1277 United States' written reply to Panel question No. 148 at the first substantive meeting;  United
States' written reply to Korea's question No. 1(d) at the first substantive meeting.
1278 Korea's second written submission, paras. 75-76.
1279 USITC Report, Vol. I, p. 151
1280 Switzerland's second written submission, paras. 62-63.
1281 USITC Report, Vol. I, p. 151 (Exhibit CC-6).
1282 Korea's second written submission, paras. 71-72 and 84.
1283 USITC Report, Vol. I, p. 149 (footnote omitted; emphasis added) (Exhibit CC-6).
1284 Joint Respondents' Prehearing Brief for Welded Other , p. 33 (Exhibit CC-78);  Joint Respondents'
Posthearing Brief  for Welded Other , Exhibit 1 – pp. 24-25, 29-30, 35-37, 40-45 (Exhibit CC-79).
1285 USITC Report, Vol. II, p. TUBULAR-43 (Exhibit CC-6).WT/DS248/R, WT/DS249/R,
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with general economic conditions.1286  The USITC actually acknowledged the "recent increase in
demand for large diameter line pipe" and projected "growth due to rising demand for pipelineprojects" in the context of its threat of injury anal ysis but completely failed to address these separate
demand conditions and applications in the like product analysis.
1287  In fact, demand was falling for
standard pipe at the end of the investigation period but increasing for large diameter line pipe.1288
Commissioner Okun, in her separate remedy recommendation specifically referenced "the diversenature of demand … in particular the divergent trends in demand for pipeline projects and for other
applications".
1289  Therefore, the USITC was aware of these important distinctions between LDLP and
other welded pipe.  It simply ignored those differ ences for purposes of their like product analysis.1290
7.456  Switzerland also argues that, contrary to what the USITC said, welded tubular products (other
than OCTG) can be divided into three large categories :  the "pipes" whose finality is to conduct fluids
(e.g. oil carried by pipelines); the mechanical tubes used for mechanical purposes (e.g. scaffoldings);
and the precision tubes intended to conduct forces and used by the automotive industry (e.g.
assembled camshafts, shock absorbers, etc.).  In addition, precision tubes falling under the category ofwelded tubular products (other than OCTG) are intended to conduct forces and used by the
automotive industry.  They have a different end-use as other products falling in the above-mentioned
categories as their purpose is not to convey steam, water, oil, gas and other fluids.  They are of high
quality because of their chemical properties and because also of the precision of their manufacturing.
The consistency of that quality is determinant for security reasons.
1291  Switzerland adds that some of
the tubes are indeed used to conduct fluids (e.g. oil carried by pipelines), while others are precision
tubes intended to conduct forces and used by the automotive sector (e.g. camshafts used in internal
combustion engines to actuate valves at precise timi ng intervals).  Although hydraulic fluids also go
through precision tubes, this is just a mechanism to convey forces and not the end-use of such tubes,
the end-use being to make for instance a car work.  On the contrary, tubes for the purpose of theconveyance of water, oil or gas have as their end-use the conveyance of such fluids for instance to
consumers.
1292
7.457  In the United States' view, Switzerland seems to contend that the USITC should have
separated certain welded pipe into at least three separate like products, primarily by function or use –
pipes used to conduct fluids, mechanical tubes used for mechanical purposes, and precision tubes
intended to conduct forces and used by the automotive industry.1293  However, it also seems to argue
that separate like products should have been defined by tariff classification (40 like products)1294,
                                                     
1286 USITC Report, Vol. II , p. TUBULAR-43 (Exhibit CC-6) ("Demand for tubular products will
depend on both general economic conditions, as increased production and construction spurs demand forseamless and welded, and conditions in the somewhat counter-cyclical oil and gas industry, as increased energyprices spur increased drilling, extraction, and refining (and thus demand for both OCTG and line pipe)").
1287 USITC Report, Vol. I , p. 166 (Exhibit CC-6).
1288 USITC Report, Vol. I , p. 166 (Exhibit CC-6) (ITC acknowledging the increase in demand for large
diameter line pipe and the projections for continued growth but noting that overall demand for the categorystabilized, when both standard and line pipe products are viewed together).
1289 USITC Report, Vol. I, "View of Vice Chairman Deanna Tanner Okun on Remedy", p. 482
(Exhibit CC-6).
1290 Korea's first written submission, paras. 66-68.
1291 Switzerland's first written submission, paras. 210-219.
1292 Switzerland's second written submission, para. 56.
1293 Switzerland's first written submission, para. 210.
1294 Switzerland's first written submission, paras. 220-223.WT/DS248/R, WT/DS249/R,
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different physical properties such as different chemical composition1295, specific use in the automotive
industry, particularly for precision tubes (8)1296, and consumer perceptions (8).1297 1298
7.458  Switzerland contends that the USITC considered that all welded tubular products (other than
OCTG) are used in the conveyance of water, petrochemicals, oil products, natural gas, and other
substances in industrial piping systems.  In reality, however, the USITC grouped into this category
also products which are used as precision tubes to convey forces – e.g. in cars – which are products
very different from the ones mentioned by the USITC.  If products so different are bundled together,
the standard of likeness becomes impossible to apply.1299
7.459  The United States insists that the USITC found that certain welded pipe included tubular
products that have a weld seam that runs either longitudinally or spirally along the length of the
product.  Certain welded pipe is used in the conveyance of water, petrochemicals, oil products, natural
gas, and other substances in industrial piping systems.  The presence of a welded seam generally
makes certain welded pipe slightly less reliable and durable than seamless tubular products.  Thus, it
is used to transport liquids at or near atmospheric pressure rather than for high pressurecontainment.
1300  The various types of certain welded pipe in this investigation include standard pipe
and pipe used primarily for mechanical, line, pressure, and structural purposes.1301  Certain welded
pipe is generally produced on electric resistance weld (ERW) mills.  The USITC found that the
various forms of certain welded pipe are made by the same process, largely by the same firms, in the
same facilities and on the same equipment and are used for the same purposes, namely theconveyance of steam, water, oil, gas, and other fluids at or near atmospheric pressure.
1302
7.460  Korea notes that the end-use of LDLP determin ed that the demand was more similar to OCTG
(oil and gas demand) than the other welded pipe (general economic trends).  The USITC record
confirms that demand for LDLP was based on its distinct use for the movement of oil and gas and the
demand trends were distinct.1303 1304  Korea submits that the United States does not deny that LDLP
does not compete with other welded pipe due to differences in specifications and use.1305  In fact, a
critical factor for finding welded and seamless OCTG as single like product was that they both
"compete with each other" and are "often used interchangeably".1306  Yet, this factor was ignored for
LDLP.  The United States seeks to avoid the question on competition by referring to the physical
                                                     
1295 Switzer land's  first written submission, para. 209.
1296 Switzerland's first written submission, paras. 211-219.  For example, they discuss eight types of
precision tubes used in the automotive industry which they seem to imply should have been defined as separate
like products.  Based on their descriptions, it is evident that many of these precision tubes contain hydraulic
fluid; the carrying of fluids, however, was used as a fact or to allege that "pipes" could be distinguished as a
separate like product.
1297 Switzerland's first written submission, paras. 224-225.
1298 United States' first written submission, para. 169.
1299 Switzerland's second written submission, para. 53.
1300 USITC Report, p. TUBULAR-2.
1301 Certain welded pipe used in the movement of o il and gas is produced to standards set by American
Petroleum Institute (API), while many other forms of certain welded pipe are produced to standards set by theAmerican Society for Testing and Materials (ASTM) and the American Water Works Association (AWWA).
1302 United States' second written submission, para. 89.
1303 USITC Report, Vol. I, p. 166 (Exhibit CC-6). Accord Certain Welded Large Diameter Line Pipe
From Japan , USITC Publication 3464, pp. 14-15 (Exhibit K-8).
1304 Korea's second written submission, paras. 85-86.
1305 United States' replies to questions from other Parties, para. 44.
1306 USITC Report, Vol. I, p. 152 (Exhibit CC-6).WT/DS248/R, WT/DS249/R,
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characteristics – "welded seam" – as an important factor.  As noted, welded-OCTG also has a welded
seam, so Korea does not see that this can qualify as a "clear dividing line".1307
Consumer perception
7.461  Switzerland submits that having very different end-uses, consumers would perceive precision
tubes intended to conduct forces and used by the automotive industry as different from tubes used for
the purpose of conveyance of steam, water, oil, gas and other fluids.1308
Tariff classification
7.462  Korea argues that the USITC never analysed whether HS classifications could provide a
useful starting point for the analysis of whether LD LP should be considered a separate like product.
In fact, HTS categories 7305.11-7305.19 apply only to LDLP.1309  This distinction between the HS
classifications of line pipe and the HS classifications of the other welded pipe confirms a significant
difference in the products themselves and should have been considered by the USITC.  The USITC
ignored other significant evidence in the record and its own precedent which demonstrated that there
are significant differences in the products.1310  The USITC acknowledged that pipe used in line pipe
applications must meet higher standards than "so-called standard pipe"1311 and that the distinct
physical characteristics of each product reflect their distinct use.1312 1313  Korea adds that the
difference in tariff classifications reflects the fact that the large diameter line pipe which is included in
this investigation (small diameter line pipe imports are subject to a separate safeguards case and thus
are not subject to this investigation) is produced to completely different specifications.1314 1315
7.463  Similarly, Switzerland argues that the USITC also rejected the use of the customs
classifications of tubular products as not "useful" because of the large number of HTS categories.
With respect to pipe and tube, the USITC correctly  noted that "the (non-OCTG) welded pipe in this
investigation includes standard pipe and pipe used primarily for mechanical, line, pressure, and
                                                     
1307 Korea's second written submission, paras. 87-88.
1308 Switzerland's first written submission, para. 224.
1309 Small diameter line pipe was excluded from the case since safeguard measures already applied to
that product.  (Exhibit CC-1, Annex II.)
1310 Joint Respondents' Prehearing Brief for Welded Other, pp. 9-10 (Exhibit CC-78); Joint
Respondents' Posthearing Brief for Welded Other,  Exhibit 1 – pp. 29-30 (Exhibit CC-79) (suggesting inresponse to USITC questions that data should have been collected separately on at least two like products inCategory 20); USITC Report, Vol. II , p. TUBULAR-43 (Exhibit CC-6) (noting that "[s]ome respondent welded
importers divide the welded market into large diameter welded for line pipe (which they estimate as 20-30% of
the US welded market) and other welded, generally standard pipe").
1311 USITC Report, Vol. I , p. 151 (Exhibit CC-6) (the USITC cited this same factor as a basis for
treating OCTG as a separate like product than other tubular products).
1312 Standard pipe is pipe "ordinarily used for low-pressure conveyance of air, steam, gas, water, oil, or
other fluids used for mechanical applications.  It is used primarily in machinery, buildings, sprinkler systems,
irrigation systems, and water wells  rather than in pipe lines  or utility distribution systems.  It may carry fluids at
elevated temperatures which are not subject to external heat applications.  It is usually produced in standard
diameters and wall thicknesses to ASTM . . . specifications."  USITC Report, Vol. I , p. 149, n. 912
(Exhibit CC-6) (quoting the American Iron and Steel Institute (AISI) definition of standard pipe) (emphasisadded).  "AISI defines line pipe as pipe 'used for the transportation of gas, oil, or water generally in a pipeline orutility distribution system.  It is produced to API . . . and AWWA (American Water Works Association)
specifications.'"  USITC Report, Vol. I , p. 149, n. 912 (Exhibit CC-6).
1313 Korea's first written submission, paras. 64-66.
1314 USITC Report, Vol. I, p. 149 (footnote omitted; emphasis added) (Exhibit CC-6).
1315 Korea's second written submission, para. 84.WT/DS248/R, WT/DS249/R,
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structural purposes".1316  As respondents in opposition to import relief further specified, the USITC's
welded pipe category included circular welded standard pipe1317, LDLP, structural pipe, square and
rectangular pipe, and piling pipe.1318  The category also included mechanical tubing and boiler tubing,
which accounted for a small percentage of the imports.1319  LDLP, the second largest single import
component of USITC Category 20, after circular welded standard pipe, accounted for approximately
30% of world imports of Category 20 in interim 2001 and is easily identified.1320  The LDLP products
were easily segregated from the rest of the welded category based on the USITC's concurrent anti-
dumping investigation of that industry.1321  A breakdown of the HTS numbers covering LDLP
products subject to the 201 investigation, and the correlating import statistics for LDLP, were placedon the record early in the investigation by Joint Respondents in opposition to relief.
1322  These figures
formed the basis for a variety of separate analyses of the vastly different market forces affecting the
large diameter line pipe industry.  Yet, the USITC rejected the use of customs classification as
relevant to the segregation of LDLP from other circular welded pipe and tube.  Switzerland submits
that the lack of any analysis of tariff classification runs counter the guidance provided by theAppellate Body in EC – Asbestos  where it clarified that customs classifications provide important
indications for the like-product determination which must be considered.  The existence of many
different classifications is no excuse for not considering them at all for the purpose of the like product
determination.  To the contrary, this suggests that the products concerned are not alike.
1323
7.464  The United States submits that Korea and Switzerland mistakenly contend that the primary
basis for the USITC's like product definitions should have been tariff classification.  They focus on
the products of interest to them in arguing that tariff classifications would have permitted the USITC
to segregate these types of certain welded pipe.  Under their approach, the USITC would arguably
have had to define separate like products for each of the 40 classifications using the ten-digit level,
despite similarities in physical characteristics, uses, marketing channels, and production processes forthe continuum of certain welded pipe.
1324  The Appellate Body has stated, "the adoption of a particular
framework to aid in the examination of evidence doe s not dissolve the duty or the need to examine, in
each case, all of the pertinent evidence".1325  In spite of the complainants' contentions, the USITC
clearly considered all of the evidence pertinent to defining the appropriate like product.  The tariff
classifications are interrelated with the physical properties/characteristics criterion which the USITC
clearly considered and found to be an important factor  in its like product definitions.  In particular, the
physical characteristic of the welded seam was an important factor in the USITC's definition ofcertain welded pipe as a single like product.  The USITC exercised its discretionary judgement to
                                                     
1316 USITC Report, Vol. I, p. 149.
1317 None of the tariff classifications within the we lded pipe group included welded line pipe of an
outside diameter that does not exceed 406.7 millimeters (16 inches), which was covered by Section 201 relief on
line pipe.
1318 Joint Respondents' Prehearing Brief in Opposition to Import Relief for Welded Tubular Products
Other than OCTG (Category 20) (11 September 2001), p. 9.
1319 Joint Respondents' Prehearing Brief in Opposition to Import Relief for Welded Tubular Products
Other than OCTG (Category 20) (11 September, 2001), p. 9.
1320 Joint Respondents' Prehearing Brief in Opposition to Import Relief for Welded Tubular Products
Other than OCTG (Category 20) (11 September 2001), p. 10.
1321 Certain Welded Large Diameter Line Pipe from Japan, Inv. No. 731-TA-919 (Final), Publication
3464 (November 2001).
1322 Joint Respondents' Prehearing Brief in Opposition to Import Relief for Welded Tubular Products
Other than OCTG (Category 20) (11 September 2001), Exhibit CC – 78.
1323 Switzerland's first written submission, paras. 220-223.
1324 The two tariff classifications using the 4-digit level – 7305 and 7306 – for certain welded pipe are
also used for seamless pipe and thus do not provide a clear dividing line.
1325 Appellate Body Report, EC – Asbestos , para. 102.WT/DS248/R, WT/DS249/R,
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determine which factors were the most pertinent in ex amining the particular facts of this investigation.
The USITC clearly found the physical characteristics factor to be useful but, given the large numberof tariff classifications, found tariff classifications not to be useful because they provided no clear
dividing lines between products.
1326
7.465  Switzerland responds that the cumbersomeness of a methodology, however, cannot be used as
an argument for not applying it.  If the United States chose to investigate on a very large number of
steel products, the fact that the investigation becomes very extensive because of the large number of
different products involved, is not a reason not to use a certain methodology.  This is all the more so,
as the criterion of customs classification is not only  used by the USITC but is a fundamental criterion
to be used according to the Appellate Body.  The assertion that tariff classifications were not useful
because they provided no clear dividing lines between the products1327 is not correct as the customs
classification provides several dividing lines, for instance between products used for oil or gas
pipelines and other products.  Such a customs classification supports the conclusion found using the
end-use criteria, i.e. that products used to convey oil or gas are different from other tubular products.the HS tariff classifications contained in Chapter 73 differentiates welded pipe at the four digit level
and even more at the six digit level.
1328 1329  It is clear therefore, that this product (welded pipe) is not
a single product but is further defined by size and/or use and thus the United States should have at
least followed the clear distinctive lines set by the HS.
7.466  The European Communities notes that United States failed to rebut the Swiss and Korean
argument that the primary basis for distinguishing the many different products bundled together
should have been tariff classifications by claiming that the ten-digit level contains too many different
entries.1330  As can be learned from Chapter 73 of the HS1331, internationally agreed customs
classifications at the four and six-digit level separate welded pipe on the basis both of size and
function.1332  This further corroborates that the products bundled as welded pipe are not "like or
directly competitive".1333
Production processes
7.467  Switzerland submits that the USITC used the ve rtical integration of the industry and the
common production processes to aggregate the five different products into one category.  More
particularly, Switzerland contends that the USITC paid "particular attention" to the "sharing of
productive processes and facilities" which "is a fundamental concern in defining the scope of the
domestic industry under Section 201".1334  Moreover, the USITC considered itself to be required "to
define like or directly competitive in a manner that reflects the realities of the market and at the same
time accomplishes the fundamental purpose of Section 201, protection of the productive resources of
domestic producers".1335  Switzerland insists that the United States ignored the guidance given in US –
Lamb  and, again, relied on "productive facilities" rather than on "the product" itself.1336  According to
Switzerland, it is simply irrelevant, under the Agreement on Safeguards, that there is a continuous line
                                                     
1326 United States' first written submission, paras. 167-168.
1327 United States' first written submission, para. 168
1328 Exhibit CC-105 a
1329 Switzerland's second written submission, paras. 58-60.
1330 United States' first written submission, para. 167.
1331 Exhibit CC-105
1332 The European Communities refers to paras. 73.05-73.06.
1333 European Communities' second written submission, paras. 283-285.
1334 USITC Report, Vol. I, pp.30 and 151
1335 USITC Report, Vol. I, p. 31
1336 Switzerland's second written submission, paras. 66-69.WT/DS248/R, WT/DS249/R,
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of production between the input product and the end-product … producers of these products, if it
cannot be established otherwise that these input products are like products.1337
7.468  Switzerland contends that the USITC explains that it traditionally establishes the "likeness"
on the basis of the five characteristics: physical properties of the product, its customs treatment, its
manufacturing process, its uses, and the marketing channels through which the product is sold.1338
However, for this specific case, the USITC used a different methodology, as it "focused [its] analysisin this investigation primarily on the degree to which the products in question are produced in
common production facilities and using similar production processes"
1339 1340  T h e  U S I T C  p a i d
"particular attention" to the "sharing of productive processes and facilities" which "is a fundamentalconcern in defining the scope of the domestic industry under Section 201".
1341  Moreover, the USITC
considered itself to be required "to define like or directly competitive in a manner that reflects the
realities of the market and at the same time accomplishes the fundamental purpose of Section 201,
protection of the productive resources of domestic producers".1342  Switzerland insists that the United
States ignored the guidance given in US – Lamb  and, again, relied on "productive facilities" rather
than on "the product" itself.1343  Korea further argues that the United States has failed to acknowledge
that OCTG is also made by the same producers who make standard pipe1344, but it is no more "like"
standard pipe than line pipe is.  The United States also does not explain how shared production
facilities was an important factor for treating LD LP as other welded but not for treating OCTG as a
single like product with all other welded pipe made in the same production facilities in its answers to
questions.1345 1346
7.469  In the United States' view, the complainants mistakenly challenge the USITC's consideration
of production processes in determining "like product" on the basis of the Appellate Body Report in
US – Lamb .  Contrary to the complainants' contentions the Appellate Body in US – Lamb  recognized
that when confronted with the question of whether two articles are separate products, "it may berelevant to inquire into the production processes for those products".
1347
7.470  The United States submits that the specific allegations raised by Korea and Switzerland
regarding the USITC's certain welded pipe like product definition are based on their erroneous
interpretation of what factors the USITC was either "required or not permitted" to consider in making
its like product definitions.1348  The complainants can identify nothing in the Agreement on
Safeguards addressing what factors may or may not be considered in determining like products.  They
instead assert that the USITC was bound to use the four factors suggested by the Working Party onBorder Tax Adjustments.   These factors, which were suggested for use in border tax adjustments, were
for a different purpose, and the Appellate Body has recognized that "[n]o one approach to exercising
                                                     
1337 Switzerland's first written submission, para. 226-233.
1338 USITC Report Vol. I p. 30.
1339 USITC Report, Vol. I, p. 151
1340 Switzerland's second written submission, paras. 54, 65.
1341 USITC Report, Vol. I, pp. 30 and 151
1342 USITC Report, Vol. I, p. 31
1343 Switzerland's second written submission, paras. 66-69.
1344 Korea's written reply to the Panel question No.148 at  the first substantive meeting, noting that five
to eight producers of "welded other" pipe also make welded-OCTG in contrast to only three of the sevenproducers of LDLP which manufacture "welded other;"; United States' replies to questions from other Parties,para. 47, referring to " many " producers of  LDLP which also produce other welded.
1345 United States' replies to questions from other Parties, para. 44.
1346 Korea's second written submission, paras. 75-76.
1347 Appellate Body Report, US – Lamb , para. 94, n.55.
1348 Switzerland's first written submission, paras. 207-233.WT/DS248/R, WT/DS249/R,
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judgement will be appropriate for all cases".1349  Thus, the USITC was not required to consider these
four factors.1350
7.471  Korea reiterates that welded OCTG is just like all other pipe in the other welded category has
a weld and is produced by the same producers.  The United States does not deny this.  This is very
significant because the USITC's principal and overriding considerations in treating LDLP as a single
like product with non-OCTG pipe is the common production facilities and the existence of a
"weld".1351  Thus, clearly, these characteristics do not create a "clear dividing line" between OCTG,
LDLP, or other welded pipe.  Instead, the United States says that the USITC relied on the outside
"finishing operations" which are sometimes used af ter the OCTG has been produced to distinguish
OCTG.  However, the USITC opinion is clear that the critical aspect of this distinction was the
physical attributes conferred by this additional processing and not the mere (separate) process
itself.1352 1353
Marketing channels
7.472  Switzerland stresses that this factor is used by the USITC, although it is not used in the
traditional WTO approach regarding like products.  The USITC, however, seems not to apply this
factor, even if it recognizes that the channel of distribution for the various pipe and tube products
tends to be specialized depending on the market served.  Some distributors specialize in certain forms
of pipe, other in certain products sold primarily to the construction industry for use in HVAC
(heating, ventilating, and air conditioning) and other piping systems that allow for the transmission ofwater, steam, oil, gas, and chemicals in commercial and residential structures, including high-rise
structures.
1354  In the case of welded pipe other than OCTG the USITC indicated that although large
pipe is more likely than small diameter pipe to be sold directly to end-users, there is substantial
overlap in the channels of distribution of all welded pipe. The USITC said in its report that specialty
tubes that require more heat-treatment or testing are often sold directly to end-users.1355  I f  t h e
marketing channels were to be part of the method ology used to determine likeness, in this case the
proper application of this criterion would have suppo rted what has been shown thus far, namely that
many different products were unduly bundled and therefore no proper analysis of likeness could take
place.1356
Other factors
7.473  Korea also argues that the USITC's aggregation of large diameter line pipe and standard pipe
is in direct conflict with its findings that OCTG should be a separate like product from the rest of thetubular category.  The USITC specifically cited as one of the bases for its determination that OCTG is
a separate like product from other pipe and tube the fact that "OCTG products and other pipe and tube
products are sold into different markets and demand is driven by different economic factors ".
1357  In
particular, the USITC explained, "[d]emand for OCTG products is driven primarily by the level of oil
                                                     
1349 Appellate Body Report, EC – Asbestos , para. 101.
1350 United States' first written submission, para. 159.
1351 USITC Report, Vol. I, pp. 154-155.
1352 It is also worth noting that the distinction the United States makes between "production facilities"
and the "finishing operations" is a false distinction.  The OCTG is produced before it goes to the finishingoperations.  USITC Report, Vol. I, p. 148.
1353 Korea's second written submission, paras. 82-83.
1354 USITC Report, Vol. I, p. 150.
1355 USITC Report, Vol. II, TUBULAR-39
1356 Switzerland's second written submission, para. 64.
1357 USITC Report, Vol. I , p. 154 (emphasis added).WT/DS248/R, WT/DS249/R,
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and gas exploration, while demand for other products is driven primarily by the overall level of
activity in the general economy, which do not necessarily coincide and can, in fact, move inopposition to one another".
1358  As demand for LDLP is similarly driven by activity in the oil and gas
sector, and not by the level of activity in the general economy, it too should have been treated as a
separate like product in the USITC's analysis of injury and remedy.  At the very least, the differences
in applications and demand factors between LDLP and other welded pipe should have been
considered by the USITC in determining whether LDLP should have been segregated from the other
carbon tubular products.1359
(iii) Definitions proposed by the complainants
7.474  The United States points out that both Korea and Switzerland challenge the USITC definition
of certain welded pipe as a single like product, but that each complainant has different proposals for
what the appropriate definitions should have been.  Korea contends this single like product should
have been divided into at least two like products, primarily by diameter size, and Switzerland
contends it should have been divided into at least three like products, primarily by function.1360
7.475  Switzerland responds that it argued that the precision tubes were incorrectly grouped in the
same category of products as large diameter welded pipe for the conveyance of steam, water, oil, gas
and other fluids.  In making this argument, Sw itzerland did not at all propose that the category of
welded pipe/tubular products be subdivided into three categories.  Switzerland mentioned the three
different tubes as examples, in order to explain the differences of the products bundled together in thecategory of welded tubular products and to show that the United States grouped together products
which are so different that they should not have been grouped together.  Switzerland is of the view
that it is not its task to propose what the proper category should be and that the Panel need not decide
which breakdown of categories presented in the complainants' submissions is most appropriate.
1361
7.476  Korea insists that it is not arguing for a like product division for welded pipe based on
diameter size, as the United States incorrectly asserts.1362  This is a convenient but inaccurate
characterization of Korea's like product argument for welded pipe.  Korea maintains that LDLP
should have been considered a separate like product from other welded pipe.  The basis for that like
product distinction is not the size of the pipe but rather the distinct physical characteristics and the
distinct end-uses of the two products.1363
(iv) Relevance of like product definitions used in the anti-dumping and countervailing duty
contexts
7.477  The United States submits that the complainants' arguments1364 fail to recognize that the like
product definitions in anti-dumping and countervailing duty investigations, as in safeguard
investigations, are dependent on the imports subject to that particular investigation and thus the
definitions have varied.1365  The starting point for the USITC's like product analysis is the imports
identified as within the investigation by the Presid ent's request.  In the present case, the USITC began
with the subject imports which included a range of welded and tube and looked for clear dividing
                                                     
1358 USITC Report, Vol. I , p. 154 (Exhibit CC-6).
1359 Korea's first written submission, paras. 69-70.
1360 United States' first written submission, para. 158.
1361 Switzerland's second written submission, paras. 46-47.
1362 United States' first written submission, para. 104.
1363 Korea's second written submission, para. 69.
1364 See paras. 7.448 and 7.463 above.
1365 Korea first written submission, paras. 41-44.WT/DS248/R, WT/DS249/R,
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lines between the domestic steel pipe and tube products that corresponded to these subject imports,
using well-established factors.  The anti-dumping and countervailing duty investigations generallybegin with a more narrow starting point for the scope of subject imports so the analysis frequently
involves whether the like product definition should be defined more broadly than the subject imports,
i.e., it starts small and looks at whether to broaden rather than starts large and looks where to divide.
The complainants also fail to acknowledge, as  discussed above, that the anti-dumping and
countervailing duty investigations have a purpose that is different from that in a safeguards
investigation.
1366  The USITC considered and rejected the argument that should have defined at least
two like products – certain welded large diameter pi pe (16 inches or over) ("LDLP") and other welded
pipe in making its like product definition in this safeguard investigation.  The USITC did not have
before it in either of these anti-dumping investiga tions the issue of a scope of subject imports that
included both of these types of certain welded pipe as it did in this safeguard investigation and thus
did not decide to treat them as separate domestic like products in a single investigation.  Rather the
USITC defined separate domestic like products in two separate investigations; each like productdefinition was coextensive with the narrow scope of imports subject to investigation.
1367  The USITC
did not consider whether it was appropriate to broaden the like product to include other types of
certain welded pipe that did not correspond to the subject imports in either of these anti-dumping
cases.  In this investigation, the USITC considered arguments that it should find that large diameter
line pipe (pipe 16 inches or over in outside diameter) was a separate like product from other weldedpipe.
1368  The evidence showed that while welded large diameter line pipe generally is made on mills
designed to make large pipe, these mills also are capable of producing other types of large diameter
pipe, such as pipe for water transmission, piling, and structural members.1369  A substantial portion of
welded large diameter line pipe is made by the ERW process1370, which is the process used to make
virtually all types of certain welded pipes.1371  Moreover, many of the firms that produce welded large
diameter line pipe also produce other welded pipe that is less than 16 inches in outside diameter.
Large and small diameter welded pipe also share common physical characteristics, particularly a weld
seam that has an effect on its uses relative to other tubular products such as seamless pipe.  Based on
this evidence, the USITC found large and small welded pipe to be part of a continuum of certain
                                                     
1366 United States' first written submission, paras. 161-162
1367 Contrary to Korea's allegations, the "ITC did not treat LDLP as a like product with standard pipe"
in Certain Welded Non-Alloy Steel Pipe from China  because it was not part of the scope of investigation in that
anti-dumping case; the issue of whether to include LDLP in the domestic like product also was not raised by anyparties to that investigation nor was it considered by the USITC.  Circular Welded Non-Alloy Steel Pipe from
China, Indonesia, Malaysia, Romania, and South Africa , Investigation Nos. 731-TA-943-947 (Preliminary),
USITC Publication 3439, pp. 3-5 (July 2001) (US-28); Circular Welded Non-Alloy Steel Pipe from China ,
Investigation No. 731-TA-943 (Final), USITC Publication 3523, pp. 3-5 (July 2002) (CC-80); see also  Certain
Welded Large Diameter Line Pipe From Japan and Mexico , Inv. Nos. 731-TA-919-920 (Preliminary), USITC
Publication 3400, pp. I-5-6 (March 2001) (US-29); Certain Welded Large Diameter Line Pipe From Japan , Inv.
No. 731-TA-919 (Final), USITC Publication 3464 (November 2001) (CC-81).
1368 Prehearing Brief of European Steel Tube Association (September 12, 2001), pp. 3-6 (US-30).
1369 USITC Report, p. 154, citing  Certain Welded Large Diameter Line Pipe From Japan and Mexico ,
USITC Publication 3400, pp. I-5-6 (March 2001) (US-29).
1370 In 2000, 45.6% of domestic welded large diameter line pipe was produced by the ERW process as
compared to 54.4% by the SAW process.  Certain Welded Large Diameter Line Pipe From Japan and Mexico ,
USITC Publication 3400, Table 1-2, p. I-14 (March 2001) (US-29).  ERW pipe is normally produced in sizes
from 2 3/8 inches through 24 inches outside diameter.  Id. at I-5.
1371 Certain Pipe and Tube from Argentina, Brazil, Canada, India, Korea, Mexico, Singapore, Taiwan,
Thailand, Turkey, and Venezuela , Invs. Nos. 701-TA-253 (Review) and 731-TA-132, 252, 271, 273, 276, 277,
296, 409, 410, 532-534, 536, and 537 (Review), USITC Publication 3316, p. CIRC-I-19 (July 2000) (US-31).WT/DS248/R, WT/DS249/R,
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welded pipe and saw no reason to define large diamet er line pipe separately from other certain welded
pipe.1372
(d) FFTJ
7.478  In the view of the European Communities, the USITC did not show that imported flanges are
like domestically produced fittings, although the USITC explicitly recognized the heterogeneity of
fittings, flanges and tool joints, and that this "category contains a mix of products ".1373
7.479  The United States submits that neither the European Communities nor any other complainant
provides further arguments to the Panel on this like product definition.1374
7.480  The European Communities further submits that the USITC has not done what is its essential
obligation under WTO law and its own self-set task: to compare the domestic products with the
imported products and to determine whether these are like in accordance with Articles 2.1 and 4.1(c)
of the Agreement on Safeguards.  Instead, the USIT C only attempts to explain why it groups together
different domestic products into a bundle that "consists of about one-third flanges, one-third butt-weld
pipe fittings, and one-third other products".1375  However, it does not establish that all the elements it
bundles together are like the imported products.  Even in its irrelevant attempt to justify the bundling
of a heterogeneous group of domestic products, the USITC misapplied its own self-set criteria.  First,
the USITC did not even consider tariff classifications and concessions .  However, fittings and flanges
are subject to different customs treatment even at the six-digit level and subject to different
concessions.  Second, the different classifications reflect well-known different physical properties offittings and flanges, which were equally not mentioned by the USITC.  As illustrated by the two
photos attached as Exhibit CC-104, fittings are made from pipes by cutting and forming them.
1376
They do not contain holes as flanges do.  These holes are necessary to disassemble flanges.  This
directly leads to the third point, the different uses of both products.  The USITC essentially relied on
some "common use" argument by claiming that "fittings, flanges, and tool joints are all used to join orcap pipe".  However, this broad statement fails to take account of different end-uses of fittings and
flanges.  The USITC itself acknowledged that flanges are used to join pipe in non-permanent
connections, and are designed to facilitate the disassembly of lengths of pipe.
1377  Butt-weld-pipe
fittings, by contrast, are used to create a permanent joint.1378   Because of their different technical
properties (flanges contain holes and fittings do not), fittings and flanges are not even substitutable.
Finally, if the USITC was entitled to  look at common production processes ( quod non ), even the
production processes for flanges and fittings only confirm the distinctions between these products.The USITC itself had to acknowledge that flanges are produced by forging carbon steel billets.
Fittings, by contrast are made from pipes by cutting and forming them.
1379  The USITC's assertion that
these processes are similar because they typically in corporate "heat-treating, machining, beveling, and
washing"1380 raises the question why it then has not included also knives and forks in its product
mix.1381
                                                     
1372 United States' first written submission, paras. 163-166.
1373 USITC Report, Vol. I, pp. 175 and 179.
1374 United States' first written submission, para. 114, footnote 139.
1375 USITC Report, Vol. I,  pp. 156 and 157.
1376 USITC Report, Vol. I, p. 148.
1377 USITC Report, Vol. I, p. 150.
1378 USITC Report, Vol. I, p. 150.
1379 USITC Report, Vol. I, p. 148.
1380 USITC Report, Vol. I, p. 157.
1381 European Communities' written reply to Panel question No. 146 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
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7.481  The European Communities submits that the United States does not attempt to rebut the
European Communities' specific claims that the bundling of FFTJ was not justified.1382  The USITC's
determination is the conclusion made before the reasoning (and unsupported by the subsequent
reasoning) that "there are four domestic industries producing articles like the corresponding articles
subject to investigation within the tubular products  category … (fittings, flanges, and tool joints)".1383
The second reference provided by the USITC then directly contradicts this statement by stating that
"purchasers of fittings and flanges reported that imported and domestically produced fittings and
flanges produced to the same grade and specification are used in the same applications"1384, thereby
confirming the acknowledgement given by the USITC elsewhere that this is a heterogeneous productmix.
1385  The United States also concedes that there are even separate markets for fitting and
flanges.1386 1387
7.482  The European Communities notes that the United States did not respond to the specific claim
that the products bundled as "FFTJ" were not even "like" each other.  Thus, all determinations based
on such imported product "FFTJ" and the domesti c industry producing "FFTJ" should be found
incompatible with the Agreement on Safeguards.1388
F. INCREASED IMPORTS
1. Introduction
7.483  Brazil and Japan argue that the United States failed to meet the threshold requirement of
increased imports under Articles 2.1 and 4.2(a) of the Agreement on Safeguards and Article XIX(a) ofthe GATT 1994.
1389  Similarly, China and Switzerland believe that the condition of increased imports
was not fulfilled.1390  Korea affirms that the USITC's analysis of increased imports for flat-rolled and
tin mill products was not consistent with Articles  2, 3 and 4 of the Agreement on Safeguards as well
as Article XIX of the GATT 1994.1391  New Zealand claims that the United States has failed to
comply with the requirement of Article 2.1 of the Agreement on Safeguards that there be an increasein imports before a safeguard measure is imposed.
1392
7.484  The European Communities submits that the United States has not demonstrated that the steel
products covered by its safeguard measures are  "being imported … in such increased quantities" as
required by Article 2.1 of the Agreement on Safeguards.  The USITC applied a methodology that
plainly ignores the conditions set by Article 2.1 of the Agreement on Safeguards, as clarified by the
Appellate Body.  The USITC has committed essentially three methodological errors rendering all its
conclusions on the existence of increased imports for each individual product flawed and inconsistent
                                                     
1382 United States' first written submission, para. 114, which does not respond to the specific claims in
the European Communities' first written submission, paras. 218, 230 and European Communities' reply to Panelquestion 146.
1383 USITC Report, Vol. I, p. 147.
1384 USITC Report, Vol. I, p. 175.
1385 See references in European Communities' first writtensubmission, paras. 218 and 230.
1386 United States' written reply to Panel question No. 149 at the first substantive meeting.
1387 European Communities' second written submission, para. 286.
1388 European Communities' second written submission, para. 286; European Communities' written
reply to Panel question 22 at the second substantive meeting.
1389 Brazil's first written submission, para. 117; Japan's first written submission, para. 175.
1390 China's first written submission, para. 210; Switzerland's first written submission, para. 244;
Norway's first written submission, para. 250; Norway's second written submission, para. 81.
1391 Korea's first written submission, para. 71.
1392 New Zealand's first written submission, para. 4.93.WT/DS248/R, WT/DS249/R,
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with Article 2.1 of the Agreement on Safeguards.  Th us, it (i) fails to cons ider intervening downward
trends, in particular at the sensitive end-point of the investigation as reflected in the most recent dataavailable for 2001, (ii) it generally fails to calculate and consider the trends in imports over the entire
period of investigation, and (iii) it only aims at finding a "simple increase" without considering and
establishing through a reasoned and adequate explanation that such increase was sufficiently recent,
sudden, sharp and significant.  The European Communities therefore considers that the United States
has not demonstrated that the steel products covered by its safeguard measures are  "being imported …
in such increased quantities … as to cause or threaten to cause serious injury" to its domestic industry,
as required by Article 2.1 of the Agreement on Safeguards.
1393
7.485  In Japan's view, perhaps the most glaring deficiency of the United States' safeguard measures
is that they were imposed even though steel import volumes were declining.  Imports of all subject
flat-rolled steel products (whether aggregated or separated, and including tin mill products) have
declined since 1998 or 1999, depending on the product, both absolutely and as a percentage of
domestic production.  These declines are even more pronounced for steel imports from countriesactually subject to the safeguard measures.  Because the Government of the United States did not
demonstrate a "recent", "sudden", "sharp", and "s ignificant" increase in import volume for these
products, its steel safeguard measures on flat-rolled products – grouped or separated – are inconsistent
with Articles 2.1 and 4.2(a) of the Agreement on Safeguards and Article XIX:1:1(a) of the GATT
1994.  The same is true for other products subject to the relief.
1394
7.486  In response, the United States asserts that the requirement of "increased imports" of the
Agreement on Safeguards was satisfied.
2. The Legal Standard
(a) Recent increase
7.487  The European Communities submits that a safeguard measure may only be taken if there is an
extraordinary surge in imports ("such increased quantities and under such conditions").  Moreover, a
safeguard measure may only be taken if that product continues "being imported" in such increased
quantities.1395
7.488  The European Communities, Japan, Korea, Switzerland and Norway emphasize that, as the
Appellate Body has clarified in Argentina – Footwear (EC)1396, the use of the present tense "is being
imported" in Article 2.1 of the Agreement on Safeguards  means that competent authorities must show
a sharp and significant increase in imports which continues until the very recent past.1397  I n
interpreting this requirement, WTO panels have focused on the last one to three years.1398  Norway
and Switzerland add that allowing a WTO Member to take a decision on whether to adopt safeguards
measures by ignoring available data from the most recent past would disregard the extraordinary
nature of safeguard measures, which must be taken into account when "construing the prerequisites
                                                     
1393 European Communities' first written submission, paras. 282-290; European Communities' second
written submission, paras. 142-147.
1394 Japan's first written submission, para. 176.
1395 European Communities' first written submission, para. 143.
1396 Appellate Body Report, Argentina – Footwear (EC) , para. 130.
1397 European Communities' first written submission, para. 271; Japan's first written submission, paras.
184-185; Korea's first written submission, para. 71; Norway's first written submission, para. 256; Norway's
second written submission, para. 87; Switzerland's first written submission, para. 238.
1398 Panel Report, Argentina – Footwear (EC) , paras. 8.160 and 8.162; Panel Report, US – Wheat
Gluten , paras. 8.32 and 8.33; Panel Report, US – Line Pipe , para. 7.204.WT/DS248/R, WT/DS249/R,
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for such actions".1399  Similarly, Brazil and Japan argue that the present tense in Article 2.1 of the
Agreement on Safeguards – "such product is being imported " (emphasis added) – indicates that the
increase in import volume must be in the present, th at is to say, as of the time of the safeguards
investigation, and not in the past.1400
7.489  The United States argues that the Agreement on Safeguards does not specify how long the
period of investigation in a safeguards investigation should be, or whether or how that period should
be segmented for purposes of analysis.1401
7.490  As regards the question of how "recent" the increase in imports must be, the United States
argues that the Appellate Body's statement that the investigation period must be the recent past mustbe read in the light of other findings.  The Appellate Body Report in US – Lamb  made clear that, in
conducting their evaluation under Article 4.2(a), competent authorities cannot rely exclusively on data
from the most recent past, but must assess that data in the context of the data for the entire
investigative period.
1402  US – Lamb  involved a determination of threat of serious injury, which by
definition is future oriented, and 21 months as the length of the investigation period was deemed tooshort.  Presumably, therefore, the Appellate Body would accept a considerably longer period of
investigation for a serious injury determination.  Th e United States submits that the complainants also
attempt to downplay the panel report in US – Line Pipe
1403, which states that it is not necessary to find
that imports are still increasing in the period immediately preceding the competent authority's
determination, or up to the very end of the period of investigation.1404  If the Agreement on Safeguards
prevented the application of a safeguard measure any time that imports abated, however slightly, after
an increase, Members would have to commence safe guard proceedings immediately after detecting an
increase in imports.  This likelihood would create a major disincentive against waiting to see whether
the domestic industry could cope on its own.1405
7.491  In response, China submits that the United States is trying to create confusion between the
requirement, on the one hand, to give specific attention to the most recent imports and, on the other
hand, the requirement to consider trends in imports rather than making an end-point comparison.1406
Japan, Korea, China, New Zealand and Brazil contend that reliance on US – Lamb is misplaced.  In
that case, the Appellate Body was not examining increased imports, but the appropriate period for
assessing the state of the domestic industry with regard to threat of serious injury.1407 1408
7.492  The United States responds that the complainants draw an artificial distinction.  Import data
are part of the overall data to be assessed by competent authorities.  If the question of the temporalfocus of data evaluation did not encompass import data, the Appellate Body would not have referred
in the US – Lamb  Report to its discussion of increased imports in Argentina – Footwear (EC) .
1409 1410
                                                     
1399 Norway's first written submission, para. 256; Switzerland's first written submission, para. 246.
1400 Brazil's first written submission, para. 121; Japan's first written submission, para. 180.
1401 United States' first written submission, para. 174.
1402 Appellate Body Report, US – Lamb , para. 137.
1403 Panel Report, US – Line Pipe , para. 7.207.
1404 United States' first written submission, paras. 182-190.
1405 United States' written reply to Panel question No. 40 at the first substantive meeting, para. 82.
1406 China's second written submission, para 92.
1407 Appellate Body Report, US – Lamb,  paras. 137-138.
1408 Japan's second written submission, para. 84; Korea's first written submission, para. 96; China's
second written submission, para. 96; New Zealand's second written submission, para. 3.63; EuropeanCommunities' first written submission, para. 172.
1409 Appellate Body Report, US – Lamb , para. 138, footnote 88.WT/DS248/R, WT/DS249/R,
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7.493  The European Communities, Japan, Korea, Norway, New Zealand and Brazil further argue
that in US – Line Pipe, the Panel was confronted with a slight and brief decrease in the absolute level
of imports at the very end of the investigation period, imports which remained at high levels and
continued to increase in relative terms.1411 1412  Thus, US – Line Pipe  does not in anyway diminish the
Appellate Body's interpretation of the timing of the increased imports – i.e., that they must be recent.
Rather, US – Line Pipe stands for the proposition that a modest and short decline in imports at the end
of the period of investigation, that started in the last half year of the five and a half year period, does
not exclude a finding that imports "remain" at "such increased quantities" if such finding is based on
an explicit analysis of intervening decreasing trends and supported by a reasoned and adequateexplanation.
1413  This does not mean, as the United States implies, that any increase in imports at any
time during the period of investigation, no matter how  remote in time and even if followed by a
significant and continuing decline, satisfies the requirement of increased imports.1414  The increase in
imports was fully 30 months in the past by the time the United States initiated its safeguard
investigation, hardly what one would term "immediately after detecting an increase in imports".1415
(b) Evaluation of trends
7.494  The European Communities, Japan, Korea and China further point out that the Appellate
Body has also made clear that there is an obligation to evaluate trends in imports over the entire
period of investigation, rather than simply comparing end-points.  Where imports have declined
"continuously and significantly", a product is no longer "being imported in such increased quantities"and the purpose of the safeguard remedy to address an urgent situation is not met.
1416 1417  Norway and
Switzerland submit in summary that an increase in  imports should be evident both in an "end-point-
to-end-point comparison and in an analysis of the intervening trends over the period".1418 1419
7.495  According to the United States, the complainants also misconstrue the Appellate Body finding
in Argentina – Footwear (EC)  regarding trends in imports over the period of investigation.  The
Appellate Body addressed trends in order to s how that consideration of end points alone was
insufficient, and that an examination of intervening points must be made.  The Appellate Body did not
state that a comparison of the end points of a period of investigation is entirely irrelevant or
impermissible. The United States also notes that Article 4.2(a) of the Agreement on Safeguards
requires an evaluation of "the rate and amount of the increase in imports," and thus trends do not
trump the amount of imports.  The Appellate Body also  did not state that trends must show a constant
increase in imports or an increase that lasts for the entire period of investigation.1420
                                                                                                                                                                    
1410 United States' second written submission, para. 104.
1411 Panel Report, US – Line Pipe , paras. 7.210 and 7.213.
1412 Norway's first written submission, para. 245; Norway's second written submission, para. 88.
1413 European Communities' first written submission, paras. 175-180; Korea's first written submission,
para. 104; New Zealand's second written submission, para. 3.64.
1414 Japan's second written submission, para. 85; Brazil's second written submission, paras. 48-50.
1415 Brazil's second written submission, para. 60.
1416 Panel Report,  Argentina – Footwear (EC) , para. 8.162, confirmed in Appellate Body Report,
Argentina – Footwear (EC) , para 129.
1417 European Communities' first written submission, paras. 272-274; Japan's first written submission,
para. 186; Korea's first written submission, para. 72; China's first written submission, paras. 88-89.
1418 Panel Report, Argentina – Footwear (EC) , para. 8.157.
1419 Norway's first written submission, para. 246; Norway's second written submission, para. 89;
Switzerland's first written submission, para. 239.
1420 United States' first written submission, para. 178-180.WT/DS248/R, WT/DS249/R,
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7.496  Japan responds that there must be some examination of the relative trends in imports over the
period of investigation in terms of their nature, extent, and magnitude vis-à-vis the recent imports.  Itis similar to the point the Appellate Body made in US – Lamb  regarding serious injury – that the real
significance of short term trends at one point in a period of investigation "may only emerge when
these short term trends are assessed in the light of  the longer-term trends in the data for the whole
period of investigation".
1421  Japan and New Zealand submit that the point is to consider trends in
context, in comparison with longer-term trends.  Undertaking such an analysis is separate from the
issue of causation, which concerns the "effect" of the increase.1422
7.497  With regard to the relative importance of trends and of recent imports, the European
Communities argues that the most recent imports are part of an overall trend.  However, as clarified
by the Appellate Body, the most recent import trends  should be the focus of safeguard determinations
on the increased imports requirement contained in Article 2.1 of the Agreement on Safeguards.
Overall trends over a longer period of time are particularly important to determine whether the first
prong of the increased imports analysis, i.e., "such increased quantities", is met.  GATT and WTOjurisprudence require an "abnormal development in the imports of the product in question"
1423, or as
the Appellate Body has put it an "unforeseen" or "unexpected" or "sudden, sharp and significant"
increase in imports.1424   As argued by the European Communities, to establish this, the competent
authorities are obliged to:  (i) identify the rate and amount of imports over a longer period;  and (ii) to
compare the recent developments to previous import developments and to show that an abnormalincrease took place.  The USITC failed to consider these essential issues, but contended itself with
"any increase" in imports.  The European Communities submits that this has already been explicitly
ruled out by the Appellate Body in Argentina – Footwear (EC) .
1425  Recent imports are decisive to
establish that a product continues "being imported" in such increased quantities.  The Panel's report in
US – Line Pipe  did not contradict the unambiguous obligation clarified by the Appellate Body to
consider any intervening trend and in particular th e sensitive end points of an investigation.  The
USITC did not even do what was required by the Panel in US – Line Pipe , that is, to establish for all
products through a reasoned and adequate explanation imports that have at least remained at recently,
sharply and suddenly increased levels.  Instead, the United States invoked a passage of the Panel's
report in Argentina – Footwear (EC) , allegedly rejecting the argument of the European Communities
that only a "sharply increasing trend in imports at the end of the investigation can satisfy this
requirement" and adding that there might be a "temporary downturn", which would nevertheless notinvalidate a finding of increased imports.
1426  According to the European Communities, the first
reference is irrelevant, because the United States has (far from establishing that imports continue
increasing in the interim 2001 period) not even demonstrated that imports remained at sharply
increased levels although the most recent interim 2001 data confirmed a steady and significant
decline.  Even if temporary and insignificant declines do not necessarily exclude a finding that aproduct is being imported at increased levels, the ex istence of more than a half-year downward trend
requires an explanation why such trend is only considered temporary and insignificant.  The USITC
did not do so for any of the products.  This is particularly glaring, since for many of those products
                                                     
1421 Appellate Body Report, US – Lamb , para. 138.
1422 Japan's second written submission, para. 91; New Zealand's second written submission,
paras. 3.61-3.62.
1423 US – Fur Felt Hats , para. 4.
1424 Appellate Body Report, Argentina – Footwear (EC) , para. 131.
1425 Appellate Body Report, Argentina – Footwear (EC) , para. 131.
1426 United States' second oral statement, para. 37, referring to Panel Report, Argentina – Footwear
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countervailing duty and anti-dumping orders were in place, therefore making such trends
predictable.1427 1428
7.498  Japan submits that there are both a temporal element and a comparative element embodied in
the "increased imports" requirement.  As interpreted by the Appellate Body in Argentina – Footwear
(EC) , the temporal element requires that increased imports must be "sudden and recent".1429  T h e
comparative element requires a comparison: "between recent import trends … and import trends over
the entire period of investigation". 1430  This is why the Appellate Body emphasized that an authority
must examine recent imports and imports over the entire period of investigation.1431  China submits
that, on the one hand, only the consideration of trends allows determinations as to whether theevolution of imports meets the requirements of Article 2.1 of the Agreement on Safeguards and
Article XIX of GATT 1994.  In this regard, the requirement to consider trends is of a methodological
nature.  On the other hand, among the different trends, specific attention should be granted to the most
recent ones in order to determine whether they showed an increase in imports that was recent. In this
regard, the requirement to consider recent imports is rather of a qualitative nature.
1432  Norway asserts
that the trend confirming that there actually is a recent, sudden, sharp and significant increase in
imports, of the magnitude required by the Agreement on Safeguards, must continue until the very
recent past.  When the trend in the recent past is a decrease in imports, the condition for imposing a
safeguard measure no longer exists.  As such, the importance of a confirming trend in the very recent
past has a very high importance.1433  New Zealand submits that both trends and recent imports have
been recognized as important in Argentina – Footwear (EC) , which also confirmed that a simple
comparison of end-points will not suffice.1434  In the present case, the requirement of a "recent"
increase in imports was not satisfied because in the most recent period (interim 2001), imports
actually decreased by 40%.  Moreover, this was simply an acceleration of the downward trend in
imports since 1998.1435
7.499  Korea argues that the primary focus must be recent imports.  The Appellate Body in
Argentina – Footwear (EC)  stated in its report that  "it is necessary for the competent authorities to
examine recent imports, and not simply trends in imports".1436  It further stated that "the investigation
period should  be  the recent past".1437  Trends are relevant to the relationship between increased
imports, on the one hand, and causation on the other, in accordance with Article 4.2 of the Agreement
on Safeguards.  The United States refers to the Panel in Argentina – Footwear (EC)  as authority for
the proposition that the Panel rejected the EC's argument that imports had to be "sharply increasing"at the end of the period.  However, the United States is referring to the Panel analysis of increased
imports in Argentina – Footwear (EC)  where the Appellate Body specifically commented that "the
Panel's interpretation of [the increased imports] requirement [is] somewhat lacking".
1438 1439
                                                     
1427 USITC Report, Vol. II, Table OVERVIEW-3.
1428 European Communities' written reply to Panel question No. 14 at the second substantive meeting.
1429 Appellate Body Report, Argentina – Footwear (EC) , para. 130.
1430 Japan's second written submission, para. 82.
1431 Appellate Body Report, Argentina – Footwear (EC) , para. 130.
1432 China's written reply to Panel question No.14 at the second substantive meeting.
1433 Norway's written reply to Panel question No.14 at the second substantive meeting.
1434 Appellate Body Report, Argentina – Footwear (EC), para. 129.
1435 New Zealand's written reply to Panel question No.14 at the second substantive meeting.
1436 Appellate Body Report, Argentina – Footwear (EC) , para. 130.
1437 Appellate Body Report, Argentina – Footwear (EC) , footnote 130.
1438 Appellate Body Report, Argentina – Footwear (EC) , para. 130.
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7.500  Korea also notes that the United States relies heavily on the analysis of the increased imports
requirement in the Panel report in US – Line Pipe .1440  Korea fundamentally disagrees with the
analysis of the Panel in that case.  Korea submits  that it is important to recall that the Panel in US –
Line Pipe  interprets a fundamental modification of the Appellate Body's holding in Argentina –
Footwear (EC) .  The Panel in that case concluded that the Appellate Body's reliance on the phrase "is
being imported" had to be considered in light of the rest of the sentence, which referred to "increased"
(as opposed to "increasing") imports ( i.e., "in such increased quantities").  To the Panel, this
"supported" an interpretation that imports could have increased in the recent past rather than the
"present" as long as they remained at high levels.  First, Korea does not agree that the phrase "is beingimported" can mean anything other than that the increase must be present.  After all, the Appellate
Body specifically found that  "it is necessary for th e competent authorities to examine recent imports,
and not simply trends ... during any ... period of several years". (emphasis added)  The Appellate
Body holding that the increase also had to be sudden, sharp, and significant bolsters this interpretation
since those terms conform to the emergency nature of safeguards.  Nor does Korea read the use of theadjective  "increased", which clearly modifies "imports" and denotes a greater quantity, as somehow
modifying the present tense of "is being imported".  Finally, such a reading does not clarify what the
adjective "increased" refers to (relative to what time period?) as opposed to the Appellate Body ruling
that makes clear that the increase must be recent ( i.e., the "present tense") and not in the past.  It is
also significant that in US – Line Pipe , the Panel states that the temporary nature of the decrease was a
factor in its analysis of the imports in that case since "a temporary change in the behaviour of the
imports may not be sufficient to reverse an overall trend".
1441  In the present case of flat-rolled,
however, there was solid evidence that these declines in imports were not temporary because they
were directly the result of the anti-dumping and countervailing duties margins at high levels on hot-
rolled.1442  In fact, the six-month decline in imports in the interim period for line pipe contrasts with
the two and one-half-year decline in flat-rolled impor ts in the present case.  One final comment on the
panel in US – Line Pipe.  That Panel cited to the Appellate Body in US – Lamb  as authority.
However, the Appellate Body was addressing a separate question in that case of relative importance
of domestic industry threat data over the period.  The Appellate Body properly concluded in that case
that, given the extraordinary nature of safeguard relief, the United States had to consider data during
any time in the period that called into question whether the data actually demonstrated a threat of
serious injury.1443  Korea submits that this finding is not at all inconsistent with the Appellate Body
holding in Argentina – Footwear (EC)  that the condition of "increased imports" must be "present".
Korea argues that the United States' tactic is to try to diminish the significance of Argentina –
Footwear (EC) , but that decision is consistent with each and every subsequent decision by the
Appellate Body concerning the Agreement on Safeguards, including US – Lamb .  In every case, the
Appellate Body has interpreted strictly the provision of the Agreement on Safeguards in light of theextraordinary nature of these actions.  It is fundamental that increased imports must exist and must be
present, or emergency action is no longer justified.
1444 1445
7.501  Finally, regarding trends and recent imports, in Korea's view, the United States implies that,
for the complainants, the existence of an inde pendent increased imports requirement excludes
consideration of the relationship between increased imports and causation and serious injury.  Koreasubmits that, in fact, it does not and the complainants have not made such a claim.  The Agreement on
Safeguards requires both a separate quantitative and qualitative analysis of increased imports and, if
                                                     
1440 United States' second written submission, para. 92.
1441 Panel Report, US  – Line Pipe , footnote 182 (in para. 7.210).
1442 Korea's first written submission, paras. 81, 89-93; Korea's  second written submission, para. 120.
1443 Appellate Body Report, US – Lamb , paras. 136-138.
1444 Korea's written reply to Panel question No. 14 at the second substantive meeting.
1445 Korea's written reply to Panel question No. 14 at the second substantive meeting.WT/DS248/R, WT/DS249/R,
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imports have increased, an analysis of the relationship between increased imports and causation and
serious injury.  The United States asserts that it is  not possible or reasonable to analyse increased
imports separate and apart from causation.1446  Korea argues that that is contradicted by the language
of Article 2.1 and by the Appellate Body precedents:  In fact an analysis of "recent", "sudden", and
"significant enough" explain the context, extent, and nature of the increase.  In Argentina – Footwear
(EC), the Appellate Body found no increased imports and questioned why the panel had bothered to
analyse causation.1447
7.502  Brazil would not categorically state that trends are more important than recent imports in an
analysis of increased imports or vice-versa.  Brazil submits that trends are obviously importantbecause Article 2.1 specifies that imports must be increasing in order to impose safeguard measures
and whether or not imports are increasing depends on the trend in imports.  Trends are also important
because they provide context for determining whether the increase in imports is sudden, sharp and
significant.  It is difficult, for example, to see how a uniform and gradual increase in imports over a
66-month investigative period could be sudden or sharp, although it might be significant.  Thus, theincrease must be viewed in the context of trends over the period of investigation.  At the same time,
recent imports are necessarily important in light of the fact that Article 2.1 refers to increased imports
in the present tense – "is being imported".  Recent imports, of course, must also be looked at in the
broader context.  Thus, in US – Line Pipe  a brief decline in the absolute level of imports at the end of
the period of investigation was not important in the broader context because imports remained at highlevels and, even in the most recent period, continued to increase relative to domestic production.
1448
The importance of the most recent period would also seem to depend on how long that period is(three months, six months, one year) and whether it continued a trend or reversed a trend and, if so,
how decisively.  In other words, how important th e most recent period is may depend on the particular
facts of the period in question and the context.
1449
7.503  The United States submits that the complainants' insistence on the importance of recent data,
to the point of excluding trend analysis, is mispl aced and overlooks a significant amount of Appellate
Body and panel analysis indicating that both trends and recent imports must be considered.
According to the United States, in  Argentina – Footwear (EC) , the Appellate Body found that "it is
necessary for the competent authorities to examine recent imports, and not simply trends in imports
during the last five years".1450  In US – Lamb , the Appellate Body cited the language from Argentina –
Footwear (EC)  but then found that, "although data from the most recent past has special importance,
competent authorities should not consider such data in isolation from the data pertaining to the entire
period of investigation ... . [I]n conducting their evaluation under Article 4.2(a), competent authorities
cannot rely exclusively on data from the most recent past, but must assess that data in the context of
the data for the entire investigative period".1451  Finally, the Panel in US – Line Pipe found that "the
same considerations apply when it comes to which part of the period of investigation is the mostrelevant in a determination of increased imports".
1452  Both Appellate Body and panel reports endorse
the idea that a competent authority must consider both trends throughout the period of investigation
and recent imports.  The panel in US – Line Pipe  went on to reject Korea's claim that the USITC's
finding of increased imports was inconsistent with Article 2.1.1453  The USITC applied precisely the
                                                     
1446 United States' second oral statement, para. 38.
1447 Appellate Body Report, Argentina – Footwear (EC) , para. 145.
1448 Brazil's first written submission, paras. 49-50.
1449 Brazil's written reply to Panel question No.14 at the second substantive meeting.
1450 Appellate Body Report, Argentina – Footwear (EC) , para. 130.
1451 Appellate Body Report, US – Lamb , para. 138.
1452 Panel Report, US – Line Pipe , para. 7.208.
1453 Panel Report, US – Line Pipe , para. 7.214.WT/DS248/R, WT/DS249/R,
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same analysis in its steel determinations as in its line pipe determination, namely, considering both
trends and recent imports in its analysis.1454 1455
(c) Rate and amount of the increase
7.504  Brazil and Japan claim that the competent authorities are required, under Article 4.2(a), to
evaluate "the rate and amount of the increase in imports in absolute and relative terms".  In order to be
meaningful, this provision by necessity requires that imports have a positive rate of increase – that is,
an acceleration.1456  If the rate at which imports have increased has declined, either absolutely or
relatively, there cannot possibly be serious injury as envisioned by Article 4.2(a).1457
7.505  The United States objects to Japan's and Brazil's assertion that imports must be increasing at
an accelerating pace.1458  The dictionary definition of "rate" adduced by Japan as "speed of movement,
change, etc.; rapidity with which something takes place" does not necessarily require an acceleration
in the amount by which imports increase.1459  The "rate" of an increase in imports can be stated by
observing that imports increased by a certain percentage from one year to the next.1460  The United
States submits that, more importantly, Article 4.2(a) does not require an accelerating rate ofincrease.
1461
(d) "Sharp" and "significant" increase
7.506  The European Communities argues that in addition to the above qualitative requirements for
"increased imports", the Appellate Body has made clear that there is a quantitative criterion: the
increase must be "sharp" and "significant".  Ac cording to the European Communities, Japan and
Norway, this requirement is derived from the expression "in such increased quantities" where "such"
clarifies that not any increase is sufficient.1462  The Agreement on Safeguards does not specify which
particular rate of increase is sufficient to meet the requirement of a sharp and significant increase, but
it obliges the competent authorities to correctly evaluate the trends in imports over a longer period.
On the basis of a proper evaluation of such trends, panels can review whether import surges aresufficiently sharp and significant.
1463  China adds that the WTO standard is much higher than the
simple demonstration of imports in increased quantities required by United States law.1464
7.507  China and Switzerland recall that safeguard measures are measures of extraordinary nature.
These "emergency measures" do not allow a finding on increased imports where there has been such a
                                                     
1454 Contrary to Korea's assertion at the second panel meeting, the panel in US – Line Pipe  specifically
endorsed the USITC's finding that subject imports had increased absolutely  despite a recent decline in import
volume. Panel Report, US – Line Pipe , para. 7.210.
1455 United States' written reply to Panel question No.14 at the second substantive meeting.
1456 New Shorter Oxford English Dictionary  at 2481 (1993) (defines "rate" as "speed of movement,
change, etc.; rapidity with which something takes place").
1457 Brazil's first written submission, para. 123; Japan's first written submission, para. 182.
1458 Japan's first written submission, para. 182
1459 United States' first written submission, para. 181.
1460 The word "rate" is defined as "a fixed relation (as of quantity, amount, or degree) between two
things."  Webster's Third New International Dictionary , p. 1884.
1461 United States' first written submission, para. 218.
1462 European Communities' written reply to Panel question No. 37 at the first substantive meeting;
Japans' written reply to Panel question No. 37 at the first substantive meeting; Norway's first written
submission, para. 83.
1463 European Communities' first written submission, paras. 275-277.
1464 China's first written submission, para. 223.WT/DS248/R, WT/DS249/R,
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steady and gradual increase of imports over a longer period that the domestic industry could have
adjusted to.1465  New Zealand and Norway add that a "steady increase" could very well be the natural
and foreseeable consequence of tariff concessions.1466
7.508  Brazil and Japan add that the increase in import volume must be "such" as – i.e., sufficient –
to cause or threaten serious injury to the domestic  industry producing the like or directly competitive
product.  It would therefore be insufficient to find a minor increase in imports even if there were a
causal link between imports and the industry's injury ( e.g., a price-related impact with no concomitant
volume-related impact).  Rather, the increase itself must be big enough to cause the damage.1467
7.509  New Zealand affirms that a Member wishing to impose safeguard measures thus faces a high
threshold when making determinations with respec t to increased imports.  A competent authority must
analyse the trend in imports over the period of investigation to establish that there is a sharp and
sudden increase.  It must also examine the direction of the most recent imports – any sharp sudden
increase needs to have occurred in the "very recent pa st".  Finally, it must consider the significance of
any increase – both in quantitative and qualitative terms.1468
7.510  China and Japan also point out that the panel must asses whether the USITC explicitly
demonstrated that increases in imports have been recent enough, sudden enough, sharp enough, and
significant enough, both quantitatively and qualitatively, to cause or threaten to cause "serious
injury".1469
7.511  According to the United States, the Agreement on Safeguards does not set out absolute
standards for how recent, sudden, sharp or significant an increase in imports must be.  Indeed, the
Agreement on Safeguards contains none of those descriptive terms.  The Appellate Body's use of
those terms can only have been intended to provide a shorthand exposition of the requirement that
increased imports must ultimately be found to be enough to cause serious injury or threat to the
relevant domestic industry.1470
7.512  New Zealand submits that the United States seems determined to divert attention from the
"recent", "sudden", "sharp" and "significant" references of the Appellate Body.  These references
seem to disappear in the United States argumentation, replaced with an emphasis that imports must
simply be "enough" with none of the adjectives em ployed by the Appellate Body to describe what
really informs the test.  The United States casts no real light on how the USITC could, on any
reasonable basis, have arrived at a determination of increased imports.  It is clear from the rapidity
with which the United States follows its statement that there is no absolute standard1471 to determine
increased imports, with a statement that "an increase in  either absolute or relative import levels alone"
may suffice1472, that the United States continues to be attached to the notion that "any increase" meets
the standard.1473
                                                     
1465 China's first written submission, para. 216; Switzerland's first written submission, para. 249.
1466 New Zealand's written reply to Panel question No. 42 at the first substantive meeting; Norway's
written reply to Panel question No. 42 at the first substantive meeting.
1467 Brazil's first written submission, para. 122; Japan's first written submission, para. 181..
1468 New Zealand's first written submission, para. 4.76.
1469 China's first written submission, para. 220; Japan's first written submission, para. 185.
1470 United States' first written submission, para. 216.
1471 United States first written submission, para 216.
1472 Ibid, para. 217.
1473 New Zealand's first written submission, para. 3.70.WT/DS248/R, WT/DS249/R,
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7.513  The United States argues that the complainants misconstrue or ignore the Appellate Body and
panel reports addressing the "increased imports" requirement of the Agreement on Safeguards.  Theymisconstrue the Appellate Body's report in Argentina – Footwear (EC)  by arguing that an increase in
imports must be recent, sudden, sharp, and significant, according to some absolute standard.  It is
clear that there are no such absolute standards for how recent, sudden, sharp or significant the increase
in imports must be.  As the Appellate Body said, it is not a "mathematical or technical
determination".
1474  The Appellate Body was very clear – the imports must be recent enough, sudden
enough, sharp enough, and significant enough  to cause or threaten serious injury.  These are questions
that are answered as competent authorities proceed with the remainder of their analysis ( i.e., with their
consideration of serious injury/threat and causation).  These analyses need not form a part of the
evaluation of the threshold issue of whether the imports have increased either absolutely or relative to
the domestic industry.1475 The United States notes that Article 4.2(a) of the Safeguards Agreement
(which the Appellate Body was interpreting when it spoke of "recent enough, sudden enough, sharp
enough, and significant enough") encompasses the entire investigative responsibility of competentauthorities under the Safeguards Agreement.  The United States adds that the fact that the drafters of
the Agreement on Safeguards did not intend to impose a specific "increased imports" standard is
reinforced by a comparison with Article 5 of the Agreement on Agriculture, in which the drafters laid
out specific numeric standards for measuring increased imports and setting specific measures for each
level of imports.
1476
7.514  The European Communities and Japan respond that they have not argued that a quantitative
analysis is a purely mathematical or technical determination according to some absolute numerical
standard.  Rather, such determination should be made on a case-by-case-basis, by carefully analysing
import trends in the most recent period and by contrasting them with trends in earlier parts of the
investigation period.1477  Japan adds that a competent authority must not declare that increased imports
exist, for example, simply because imports have in creased by some negligible amount over the period
of investigation.  There are quantitative and qualitative judgments to be made regarding the existence,
as opposed to the effect, of increased imports.1478  New Zealand adds that a "mathematical or technical
determination" is in fact at the heart of the United States approach to "increased imports".  Behind the
United States position that "there is no minimum quantity by which imports must have increased; a
simple increase is sufficient" is the notion that "any increase" can suffice.1479
7.515  Japan and Brazil respond that the qualitative and quantitative requirements concerning
increased imports should be viewed within the context of the purposes of safeguard measures – that is
"emergency action" against a product.  The word "emergency" is defined as "a situation, especially of
danger or conflict, that arises unexpectedly and requires urgent action; a condition requiring
immediate treatment"1480, implying something that has happened quickly or suddenly.1481  Since the
increase in imports is supposed to be causing serious injury, this would seem to imply more than aninsignificant or small increase.  While this aspect ultimately relates to the issue of causation, Korea
and Brazil argue that it remains a threshold issue separate from the issue of causation; it concerns the
extent of the increase rather than the effect of the increase.
1482  In contrast, the United States attempts
                                                     
1474 Appellate Body Report, Argentina – Footwear (EC),  para. 131.
1475 United States' first written submission, para. 177.
1476 United States' second written submission, para. 96.
1477 European Communities' first written submission, para. 149; Japan's second written submission,
para. 90.
1478 Japan's first written submission, para. 90.
1479 New Zealand's second written submission, para. 3.67.
1480 The New Shorter Oxford English Dictionary (1993) at 806.
1481 Japan's second written submission, para. 87.
1482 Korea's first written submission, para. 91; Brazil's first written submission, paras. 52-53.WT/DS248/R, WT/DS249/R,
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to collapse the "increased imports" requirement with the separate "causation test".1483  According to
New Zealand, the United States in effect says that the increased import requirement simply forms partof the causation analysis required under Article 4.2(b) of the Agreement on Safeguards.  But there is
no support to be found for this assertion in the law.
1484
7.516  The United States responds that, on the contrary, the United States recognizes that the
Agreement on Safeguards contains a separate "increased imports" requirement.  However, unlike the
complainants, the United States does not invest this requirement with more significance than is
warranted by the text of the Agreement on Safeguards.  This separate "increased imports" requirement
is satisfied, in the first instance, by any incr ease in imports, absolute or relative to domestic
production.  However, this does not mean that ultimately "any increase will do".  As competent
authorities consider the other conditions necessary for imposition of a safeguard, they determine as
directed by the Appellate Body in Argentina – Footwear (EC) , whether the increase in imports was
recent enough, sudden enough, sharp enough, and significant enough to cause or threaten serious
injury.1485  The United States submits that for each of the products for which the United States applied
a safeguard measure, the USITC found that the pertinent domestic industry was seriously injured or
threatened with serious injury and found the requisite causal link between the increased imports and
that injury or threat.  This analysis, taken as a whole, established that the increases in imports were
"recent enough, sudden enough, sharp enough, and significant enough"1486 to cause serious injury or
the threat of serious injury.1487
7.517  The United States also argues that the complainants seek to support their position that the
increased imports requirement encompasses temporal, quantitative and qualitative conditions that are
independent of the causation analysis by pointing to the fact that the Appellate Body addressed the
question of increased imports as "a stand-alone issue" in Argentina – Footwear (EC) .1488  The fact that
the Appellate Body organized its Report in Argentina – Footwear (EC)  in a certain way (i.e., with
subheadings entitled "Increased Imports", "Serious  Injury", and "Causation" – all under the heading of
"Interpretation and Application of Articles 2 and 4 of the Agreement on Safeguards") does not detract
from the fact that the Appellate Body was interp reting Article 2.1, which encompasses the entire
investigative responsibility of competent authorities under the Agreement on Safeguards.1489
7.518  Korea submits that the reason emergency action is permitted under the Agreement on
Safeguards is that the unforeseen and sudden increase in imports is still occurring – i.e., the need for
emergency action is still present.1490  Korea also argues that high volume imports having a significant
presence in the market, if they are not suddenly and sharply increasing, either absolutely or relatively,
cannot serve as a basis for concluding that an "emergency" exists caused by the imports.  There is
nothing extraordinary about import levels per se .1491
7.519  The European Communities submits that the term "in such quantities" read contextually with
"as a result of unforeseen developments" and "eme rgency action", requires some extraordinary and
unexpected increase in import volumes which must be established by comparing recent import
                                                     
1483 Korea's first written submission, para. 90.
1484 New Zealand's second written submission, paras. 3.60-61.
1485 United States' second written submission, para. 93.
1486 Appellate Body Report, Argentina – Footwear (EC) , para. 131.
1487 United States' second written submission, para. 94.
1488 Japan's written reply to Panel question No. 36 at the first substantive meeting.
1489 United States' second written submission, para. 97.
1490 Korea's first written submission, para. 93.
1491 Korea's first written submission, para. 110.WT/DS248/R, WT/DS249/R,
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volumes against those in earlier parts of the investigation period.1492  China argues that the United
States attempts to create confusion between the requirement that a product is being imported inincreased quantities, on the one hand, and the requirement that the increased imports cause or threaten
to cause serious injury, on the other.  According to the European Communities, China and Norway,
the Appellate Body has clearly stated, in Argentina – Footwear (EC) , that there are three separate
conditions to be met for the application of safeguard measures
1493, hence the increased imports
requirement should be subject to separate analysis and determination.1494  The European Communities
adds that the analysis of whether there is a substantial and genuine link between increased imports and
serious injury is qualitatively something differ ent than showing an abnormal import development.1495
7.520  Japan adds that a comparison is required, not so much to determine the effect of increased
imports in a causal sense, but to determine the existence of increased imports in light of the relative
trends in imports.  The comparison is made between recent import trends, which are at the heart of the
increased imports inquiry, and import trends over the entire period of investigation.  It serves as a
litmus test to determine if an emergency exists and, therefore, if emergency action is required.1496
7.521  The European Communities and Switzerland further argue that the more gradual and steady
or otherwise "normal" and foreseeable an increase in imports becomes, the higher is the burden for a
WTO Member wishing to take a safeguard measure to analyse import volumes and explain to its
trading partners why it considers that their exports have increased more than expected.1497
3. Requirement of reasoned and adequate explanation
7.522  Korea adds that, at a minimum, Articles 2.1 and 4.2(a) of the Agreement on Safeguards
required the USITC to explain and reconcile its conclusion that imports had increased with the fact
that imports were declining.1498
4. Case-specific arguments
(a) Consideration of 2001 data
(i) Full-Year 2001 data
7.523  The European Communities, China1499, Norway1500 and Switzerland1501 further argue that the
USITC ignored import trends in the most recent past, i.e. 2001.  The import data for the full year of
2001 were available when the USITC updated its Report and completed its determination in February
2002, but there is no explanation why the USITC did not use this information about crucial
developments, i.e. import decreases, in the "very rece nt past".  These data are relevant for determining
                                                     
1492 European Communities' first written submission, para. 156; European Communities' written reply
to Panel question No. 4 at the second substantive meeting.
1493 Appellate Body Report, Argentina – Footwear (EC) , para.92.
1494 European Communities' first written submission, paras. 157-160; China's first written submission,
paras. 83-85; Norway's second written submission, paras. 81-82.
1495 European Communities' first written submission, para. 160.
1496 Japan's second written submission, para. 82.
1497 European Communities' first written submission, para. 166; Switzerland's first written submission,
para. 76.
1498 Korea's first written submission, para. 73.
1499 China's first written submission, para. 231.
1500 Norway's first written submission, para. 255-256.
1501 Switzerland's first written submission, para. 247.WT/DS248/R, WT/DS249/R,
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whether a product still "is being imported …".1502  In any event, according to the European
Communities and Japan1503, the full year data for 2001 were available to the President when he took
the decision to impose the safeguard measures.1504  They had to be taken into account even if they had
not been available to the USITC1505 and, according to Brazil, the European Communities and New
Zealand1506, they confirmed the decreases already present in interim 20011507, and showed that they
were no temporary phenomenon.1508
7.524  According to the United States, fundamental legal and practical considerations should lead the
Panel to reject the complainants' attempts to expand the period of investigation to encompass full-year
2001 data that are not on the record of the USITC's investigation that began in early July 2001.  TheUnited States submits, first, that to the extent th at the complainants are suggesting that the USITC
should have relied on full-year 2001 data without giving interested parties an opportunity to comment
on those updated data, the complainants' position is directly at odds with Article 3.1 of the Agreement
on Safeguards.
1509
7.525  The United States points out that if the USITC had updated the import data to include full-
year 2001 figures, it would also have had to update all the data in the record, including data
concerning injury and causation because increased imports must be examined in the context of their
effects on the domestic industry.  By the time that this could have been accomplished, full-year 2001
data would no longer be the most current.  Thus, the complainants' proposed use of full-year 2001
data would have required an endless process of updating data that would preclude any final decisionin a safeguards investigation.  The United States submits that it is obvious that competent authorities
must be permitted to set the end of a period of investigation at a point that will permit them to gather,
compile and analyse not only import data but also information concerning the condition of the
domestic industry and the overall market environment.  It is also clear that in setting the end of the
period of investigation at 30 June 2001, the USITC was gathering the most recent information itcould.
1510
7.526  The United States adds that the complainants are also wrong in suggesting that, even if the
USITC could not, the President should have taken into account full-year 2001 data.  Such an approach
would sever the connection between the investigation by a Member's competent authorities and the
Member's decision to take a safeguard measure.  This would be inconsistent with the fundamental
premise of the Agreement on Safeguards that a measure should only be taken following a proper
investigation by a Member's competent authorities.1511
(ii) Interim 2001 data
7.527  New Zealand sees no need to rely on 2001 full-year data to make its case.  Annualized 2001
import volume data based on the interim 2001 data1512 recorded in the USITC Report should have
                                                     
1502 European Communities' written reply to Panel question No. 38 at the first substantive meeting;
Norway's written reply to Panel question No. 38 at the first substantive meeting.
1503 Japan's written reply to Panel question No. 38 at the first substantive meeting.
1504 European Communities' first written submission, para. 284-286.
1505 Japan's written reply to Panel question No. 39 at the first substantive meeting.
1506 New Zealand's written reply to Panel question No. 38 at the first substantive meeting.
1507 European Communities' written reply to Panel question No. 39 at the first substantive meeting.
1508 Brazil's written reply to Panel question No. 38 at the first substantive meeting.
1509 United States' first written submission, para. 202-204.
1510 United States' first written submission, paras. 205-206.
1511 United States' first written submission, para. 207.
1512 Interim 2001 data divided by first half interim 2000 data multiplied by full year 2000 data.WT/DS248/R, WT/DS249/R,
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indicated to the USITC by the middle of 2001 the sharply decreasing trend in import volumes and
market share.1513  These annualized trends were, as it turned out, almost exactly matched by the full
year 2001 data which was available at the time the two Supplementary Reports were made by the
USITC.1514 1515
7.528  Similarly, the European Communities notes that the United States accepts that full year 2001
data was available to the USITC when it considered for the first time whether non-FTA imports had
increased, i.e., in February 2002.  However, the United States denies that the Second Supplementary
Report was a "determination" within the meaning of Article 2.1 of the Agreement on Safeguards and
submits that the USITC's determination for the purpose of the Panel's review were the determinationson pages 1, 17 and 18 of the original  USITC Report issued on 22 October.
1516  The European
Communities submits that even if the Panel agreed with the United States that full year 2001 data was
not available when the USITC made its "determination", the use of "full year 2001" data is not
"critical" to the complainant's case.  The European  Communities built its case on the lack of proper
consideration of the most recent import data available, be it interim 2001 or full year 2001. Upon"clarification" by the United States that only the USITC Report from October 2001 forms the relevant
determination,  the graphs illustrating the import trends provided by the complainants in common
Annex A to the first written submission were revised so as to strictly reflect only annualized interim
2001 data that was available to the USITC at the time of the original report in October 2001.  The
European Communities explains that annualizing the interim 2001 data does not mean to "double"them.
1517  The European Communities annualized the interim 2001 data according to the following
formula:  annualized interim 2001 = (interim 2001/interim 2000) x full year 2000.  The European
Communities submits that this approach fully preserves the USITC's assumption of seasonal
fluctuations and essentially compares interim 2001 data with interim 2000 data, as was done by the
USITC during the investigation, while allowing to fit the resulting trend onto a yearly graph and
therefore to discern an overall trend.1518
7.529  Brazil submits that the 2001 data points can be represented in various ways.  Given that the
United States had full 2001 data while it was both still considering whether to impose safeguard
measures and obtaining additional information from the USITC, one could rely on actual 2001 data.
In the alternative, one could construct a surrogate for full year 2001 data in various ways, including
deriving the second half of 2001 based on actual first half 2001 data adjusted by the ratio of first and
second half 2000 data.  Brazil submits that what is important is not how it is done, but why.  Theobjective is to determine how import levels during the first half of 2001, the interim period, compared
with import levels during the entire period of investigation.  Because import levels for 1996, 1997,
1998 and 1999 are only provided based on annual levels, in order to measure the magnitude of interim
2001 imports, it is necessary to convert these imports into a full year equivalent basis in order to put
interim 2001 import levels in the proper context.
1519
                                                     
1513 New Zealand's first written submission, Figures 2 and 3 (p. 50).
1514 Compare New Zealand's first written submission, Figure 2 (p. 50) with the European Communities'
first written submission, Figure 5 (para 299).
1515 New Zealand's first written submission, para. 3.71.
1516 The European Communities disagrees with the United States and submits that because the October
2001 USITC Report only analyzed imports from all sources, the determination violates the parallelism principle.See European Communities' second written submission, paras.  40-51, 186.
1517 United States' oral statement at the second substantive meeting, para. 41; European Communities's
second written submission, para. 188; European Communities's written reply to Panel question No. 16 at the
second substantive meeting.
1518 European Communities' written reply to Panel question No. 16 at the second substantive meeting.
1519 Brazil's written reply to Panel question No. 16 at the second substantive meeting.WT/DS248/R, WT/DS249/R,
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7.530  According to the United States, interim data was available to the USITC in the course of the
investigation, and interim data was used by the USITC.  The United States submits that nocomplainant has been able to show that a competent authority is required to do more than the USITC
did in gathering or using the most recent and complete data set available at the time the
determinations were made.  Interim data for 2001 should be compared to interim data for 2000, while
interim data should be segregated from full-year data.  With regard to the argument by the European
Communities that "annualizing" interim data would preserve the proportionate relationship between
interim 2000 data and interim 2001 data while allowing them to be placed on the same chart as annual
data, the graphic representation would suggest that the "annualized" 2001 data were comparable tofull year 1996, 1997, 1998, 1999, and 2000 data, the United States submits that that is simply not the
case.
1520
7.531  While the USITC gathered data for the first half of 2001 (interim 2001), in the European
Communities' and Switzerland's view, it did not properly consider them.1521  Whenever the interim
2001 data showed a decrease, the weight was given to the 1996-2000 development.  This generalapproach could not, in itself, demonstrate that imports are "being imported" in increased quantities.
1522
7.532  The United States argues that the complainan ts' criticism that the USITC failed to give
enough weight to interim 2001 import data when these showed a decrease in imports is unfounded.
An exclusive focus on import data in interim 2001 would disregard the annual data in preceding years,
and the trends examined must cover the entire period of investigation.1523
7.533  The European Communities further submits that the USITC's approach does not explicitly
analyse the intervening decreasing trends discernible from 2001 data and does not give an adequate
and reasoned explanation why such development would still justify a determination that imports
remain at "such increased quantities".  Instead, the USITC did nothing more than describing the 2001
interim data or stating that despite the decrease in the interim data, the statutory criterion was stillsatisfied.
1524
7.534  China contends that it was not possible for the USITC to consider the very last portion of the
period of investigation when determining trends in imports because the amount of imports for a half-
year period cannot be compared to the amount of imports for a full-year period.  It would also be false
to assume that a trend in imports can be determined for the very last portion of the period of
investigation by comparing interim 2001 with interim 2000.  China submits that this comparison can
only reveal whether the amount of imports during the first half of 2001 was more or less important
than the amount of imports 12 months earlier, bu t not what happened between the two periods and
how imports fluctuated over the period of the last  18 months, which would be necessary in order to
determine a trend.  Hence, the USITC did not give most recent imports all the importance that they
deserved.1525  China notes that it is not suggesting that the United States should have disregarded the
2001 data.  Indeed, the 2001 data constitute the most recent data and China is of the opinion that theUSITC should have given proper attention to the mo st recent trends which, for most of the products,
as for instance CCFRS, show a clear declining trend.  However, China is of the view that the United
                                                     
1520 United States' written reply to Panel question No. 16 at the second substantive meeting.
1521 United States' written reply to Panel question No. 16 at the second substantive meeting.
1522 European Communities' first written submission, para. 280, 287; Switzerland's first written
submission, para. 247.
1523 United States' first written submission, para. 196.
1524 European Communities' first written submission, para. 182; European Communities's second
written submission, paras. 169-182.
1525 China's first written submission, para. 227-231.WT/DS248/R, WT/DS249/R,
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States should have considered the full year data for 2001, since the final determinations were made
after the end of 2001 at a time were full-year data for 2001 were available. In doing so, the UnitedStates would have allowed to analyse the overall trend and to verify the USITC's assumption of
seasonal fluctuations, which is used to justify the comparison between interim 2000 and 2001 data.
1526
7.535  The European Communities also argues that the 2001 data (full year or interim) constitute the
most recent data and are decisive to determine whether products "are being imported" at increased
quantities.  The European Communities considers that the USITC failed to give proper weight to the
interim 2001 data.1527  Brazil submits that the interim 2001 data is extremely important for two
reasons.  First, it confirms that the downward tr end in CCFRS imports begun in 1999 continued and,
in fact, accelerated, toward the end of the period of investigation.  Second, it confirms that CCFRS
imports at the end of the period of investigation had reached the lowest level of the entire
investigation period.  Given that interim 2001 was the most recent period investigated by the USITC,
Brazil sees no basis for ignoring the import levels during this period.  Furthermore, since the period
encompassed a full six months and the declines during the period followed declines in imports duringthe immediately preceding semi-annual period, the sh arp decline shown in CCFRS imports during the
interim period cannot be considered either temporary or an aberration.
1528  Korea notes that the fact
that 2001 is "interim" does not prevent a direct comparison of imports relative to production – the
percentages are directly comparable.  Moreover, the fact that the period is six months in length does
not prevent a meaningful analysis of the import data per se .  In the case of flat-rolled, the interim data
is particularly telling.
(b) Period of investigation
7.536  The European Communities and Norway1529 argue that the choice of 1996 as a base year
apparently served the purpose of disguising significant and steady decreases in imports for eight of the
ten product groups since a peak in 1998 or later.  With very few exceptions, the USITC does not relyon the trends over the years between 1996 and 2001.
1530 1531  New Zealand argues that the USITC
manifestly failed to consider trends throughout the period of investigation.1532 China adds that the
USITC's approach, in line with its tradition, of considering import trends over the most recent five and
a half-year period prevented the USITC from considering fully the most recent imports.1533
7.537  The United States argues that the complainants' assertion that the USITC selected 1996 as a
base year in order to achieve a particular result has no merit.  The USITC followed its established
practice in safeguards investigations of using a period of investigation of five years plus whateverinterim period is available.
1534  The United States also rejects China's assertion that the USITC's
period of investigation prevented the USITC from "considering fully the most recent imports"1535  The
                                                     
1526 China's written reply to Panel question No. 15 at the second substantive meeting.
1527 European Communities's first written submission, para. 284 and 287;  European Communities'
written reply to Panel question No. 15 at the second substantive meeting.
1528 Brazil's written reply to Panel question No. 15 at the second substantive meeting.
1529 Norway's first written submission, para. 254.
1530 The only two exceptions are the findings on certain tubular products, and certain carbon alloy
fittings and flanges, the only products for which the 2001 data did not reveal a manifest decrease in imports andtherefore supported the predetermined conclusion. USITC Report, Vol. I, pp. 157 and 171.
1531 European Communities' first written submission, paras. 280 and 283.
1532 New Zealand's first written submission, para. 4.78.
1533 China's first written submission, paras. 224 and 226.
1534 United States' first written submission, para. 194.
1535 China's first written submission, para. 226.WT/DS248/R, WT/DS249/R,
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period of investigation must be long enough to draw appropriate conclusions regarding the state of the
domestic industry.1536
7.538  China responds that the methodology of investigating the last five and a half years does not
allow meaningful conclusions to be drawn as far as the assessment of increased imports is
concerned.1537
7.539  The United States objects to the view that the USITC's practice of reviewing imports over a
five-year period precludes the USITC from considering trends within that period, including recent
trends in imports, as directed by the Appellate Body in Argentina – Footwear (EC) .1538  As an initial
matter, the panel in US – Line Pipe has already upheld the USITC's use of a five-year period of
investigation because it allows an analysis of recent trends in imports, consistent with the Appellate
Body's rulings.1539  Moreover, the record demonstrates that for each of the ten measures at issue in this
proceeding, the USITC in fact examined trends within the five-year period, including recent trends in
imports.1540
7.540  The complainants respond that the United States has misunderstood them.  The complainants
contest the failure to properly consider interven ing trends and the failure to show that where,
unusually, imports did increase, this was extraordinary and unexpected.1541
(c) Method of analysis of increased imports
(i) Quantitative analysis required?
7.541  The European Communities claims that the United  States was not entitled to content itself
with finding a "simple increase" in imports as oppose d to a sudden, sharp and significant or otherwise
extraordinary surge in imports.  The complete lack of a quantitative analysis particularly affects the
two exceptional cases where imports had increased (tubular products and fittings and flanges).  The
USITC should have explained why imports should have been considered to have increased sharply
and significantly enough, as opposed to merely gradually, so as to cause or threaten to cause seriousinjury to the domestic industry.
 1542  New Zealand argues that the USITC manifestly failed to place
any weight on the extent to which increased imports have been "recent enough, sudden enough, sharp
enough, or significant enough both quantitatively and qualitatively" to justify a positive
determination.1543  Norway and Switzerland also point to a flaw in the USITC's methodology affecting
the findings concerning all products resulting from the lack of a quantitative analysis.  Nowhere has
the USITC demonstrated that an alleged increase of imports was sharp and substantial.1544
7.542  The United States argues that the complainants' position that the USITC failed to engage in an
adequate "quantitative analysis" of the import data is unfounded.  Competent authorities are not
required to analyse the import data in every possible permutation when the data speak for themselves.
                                                     
1536 United States' first written submission, para. 195.
1537 China's second written submission, para. 100.
1538 Appellate Body Report, Argentina – Footwear (EC) .
1539 Panel Report, US – Line Pipe , para. 7201.
1540 United States' second written submission, para. 25.
1541 European Communities' second oral statement "Scope and Standard of Review" on behalf of the
complainants, para. 16.
1542 European Communities' first written submission, paras. 288-289.
1543 New Zealand's first written submission, para. 4.78.
1544 Norway's first written submission, paras. 252, 259; Switzerland's first written submission,
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The USITC described the import data in a clear and straightforward manner and, accordingly, acted in
conformity with the Agreement on Safeguards.  The United States submits that the complainantserroneously support their arguments by focusing  only on the "Increased Imports" section for each
product in the USITC Report.  This section, however, must be read together with the "Serious Injury"
and "Substantial Cause" sections, to evaluate the USITC's determination that a product is "being
imported … in such increased quantities, absolute or relative to domestic production, and under such
conditions as to cause or threaten to cause serious injury to the domestic industry".
1545
7.543  In counter-response, Korea submits that the USITC completely failed to conduct a
quantitative and qualitative analysis showing that import surge was of such a nature  as to cause
serious injury or threat thereof.1546 For the counter-responses of the European Communities, see
sections F.2.(b) and (d).
(ii) End-point analysis
7.544  The European Communities, Norway1547 and Switzerland1548 contend that the USITC applied
an erroneous methodology for evaluating increased imports, rendering all findings on increasedimports inconsistent with Article 2.1 of the Agreement on Safeguards.  The USITC's methodology as
applied in this case only aimed at finding a "simple increase" in imports at some point during the
investigation period without considering whether such increase was sufficiently recent, sudden, sharp
and significant.
1549  Korea argues that this basically turns the "increased import" requirement into a
mere "import" requirement.1550  The European Communities, New Zealand, Norway and Switzerland
argue that the USITC failed to focus on the most recent past and to find a sudden and recent increase,
but rather based its determinations on an end-poi nt-to-end-point comparison of import data from 1996
and 2000.1551 1552
7.545  The United States claims that for each of the ten steel products with respect to which it has
taken a safeguard measure, the USITC Report contains an adequate, reasoned and reasonableexplanation of how the facts in the record support  the USITC's determination that there were imports
in such increased quantities, and under such conditions, as to cause or threaten serious injury to the
domestic industry.
1553
7.546  According to the United States, the complainants' claims that the United States made
methodological errors are without merit.  First, the USITC did not engage in a simple-end point
analysis of comparing import data in 1996 with import data in 2000, and it did not fail to consider
intervening movements or trends in imports over the entire period of investigation.  The USITCconsidered trends in imports over the entire period of investigation for each product, often stating the
                                                     
1545 United States' first written submission, para. 198-199.
1546 Korea's first written submission, para. 106.
1547 Norway's first written submission, para. 250.
1548 Switzerland's first written submission, para. 250.
1549 European Communities' first written submission, para. 143.
1550 Korea's first written submission, para. 98.
1551 USITC Report, Vol. I, pp. 49, 71, 91, 101, 109, 157, 171, 205, 213, and 234.
1552 European Communities' first written submission, paras. 280, 282-283; New Zealand's first written
submission, para. 4.78; Norway's first written submission, paras. 252-254; Switzerland's first writtensubmission, paras. 243, 245.
1553 United States' first written submission, paras. 221, 232, 246, 255, 266, 276, 288, 302, 317.WT/DS248/R, WT/DS249/R,
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absolute and relative imports for each year of the period of investigation and for the interim
periods.1554
7.547  The European Communities responds that the United States misconstrues its claim as
attacking the end-point-to-end-point analysis as opposed to the USITC's failure to systematically
consider import trends.  The United States has not indicated where the USITC has systematically
calculated and compared the rate and amount of annual developments in accordance with the Articles
2.1 and 4.2 of the Agreement on Safeguards as interpreted by the Appellate Body. Such analysis is the
basis for adequately considering intervening trends at the sensitive end points of the period of
investigation and whether import volumes are abnormal.1555
(d) Consideration of decline in imports
7.548  Norway adds that the investigation period in Argentina – Footwear (EC)  was 1991-1995, and
the Appellate Body rejected the analysis presented by Argentina, as it did not adequately consider the
steady and significant decline in imports beginning in 1994.1556  Norway submits that this is the same
situation as that in the present case, with increases for most product groupings from 1996-1998, andsteady and significant declines in 1999, 2000 and interim 2001.
1557  Korea adds that the Appellate
Body in Argentina – Footwear (EC)  clarified that an increase in imports at one point in the
investigation period cannot justify a safeguard measure if there has been a steady and significant
decline ever since.1558 1559
(e) Aggregation of products
7.549  The European Communities and Norway criticize the USITC's findings on increased imports
because the safeguard measures applied by the United States are based on data relating to broader
categories of products than those to which safeguard measures apply.1560
5. Measure-specific argumentation
(a) CCFRS
7.550  The European Communities considers that the United States violated its obligations under
Articles 2.1, and 3.1 of the Agreement on Safeguards by imposing safeguard measures on plate, hot-
rolled steel, cold-rolled steel, coated steel and sl abs despite a recent, sharp and significant decrease in
imports both as a single bundle, or "Certain Flat Steel, other than Slabs", or with respect to each
separate product.1561
7.551  The United States argues in response that the USITC Report contains an adequate, reasoned
and reasonable explanation of how the facts in the record support the USITC's determination that
                                                     
1554 United States' first written submission, para. 193.
1555 European Communities' first written submission, paras. 272-274 and 289; European Communities'
second written submission, paras. 190-192.
1556 Appellate Body Report, Argentina – Footwear (EC), para. 129.
1557 Norway's second written submission, para. 93.
1558 Appellate Body Report, Argentina – Footwear (EC), paras. 128-129.
1559 Korea's first written submission, para. 101.
1560 European Communities' first written submission, para. 290; Norway's first written submission,
para. 260.
1561 European Communities' first written submission, para. 293.WT/DS248/R, WT/DS249/R,
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there were imports of CCFRS in such increased quantities, and under such conditions, as to cause
serious injury to the domestic industry.1562
(i) Aggregation
7.552  The European Communities submits that the United States has not explained why the
evidence underlying the increased import determination has been provided on the basis of the
"imported product" entitled "Carbon & Alloy Flat Products" as identified by President Bush1563,
although data was collected for seven different sub-groupings.  Equally contradictory is the fact that
the analysis and findings concerning increased imports in the USITC Report were based on one
CCFRS product, while the increased imports determination by contrast, was based on five differentproduct groupings.
1564 1565  Brazil, China, the European Communities and New Zealand argue that no
matter how the USITC aggregates the five different flat products, under no circumstances has it
demonstrated a recent, sudden, sharp and significant increase in imports for the five products plate,
hot-rolled steel, cold-rolled steel, coated steel and slabs neither as a single bundle, nor for "Certain
Flat Steel, other than Slabs", nor for each separate product.1566
7.553  Similarly, Korea argues that the USITC's analysis of increased imports is flawed because it is
not based on the proper like product for the fi ve flat-rolled products.  The USITC should have
analysed imports of (1) slabs, (2) ho t-rolled steel, (3) cold-rolled stee l, (4) coated steel, and (5) plate
as individual like products.  However, even if "flat-rolled" products are analysed as a single like
product, imports of flat-rolled steel have not increased suddenly, sharply, or recently.1567  According
to Korea, the USITC's erroneous like product analysis  obscured the fact that cold-rolled, coated, and
plate – even an end-point-to-end- point analysis – showed no absolute or relative increase in imports
within the meaning of the Agreement on Safeguards .  The entire increase in the end-to-end point
comparison for certain flat-rolled was due to a modera te increase, over five years, of hot-rolled and
slab, but both had declined significantly in  the period preceding the USITC's decision.1568  N e w
Zealand argues that products falling within the certain carbon flat-rolled category were not, either
separately or in aggregate, being imported in the increased quantities contemplated by the Agreement
on Safeguards as a condition for the application of a safeguard measure.  The USITC's determination
in this matter is manifestly flawed.1569 China adheres to the arguments made by other complainants
with regard to the product included in the categ ory of certain flat steel, taken separately.1570
7.554  In addition, the European Communities points out th at it is not for the complainants or the
Panel to analyse increased imports separately in respect of the individual product groups for which thetwo safeguard measures applying to "Certain Flat Steel" are imposed.  Nevertheless, according to the
European Communities, Brazil and New Zealand, it can be demonstrated that even when considered
separately, there is no basis for concluding that imports of these product groups have increased
                                                     
1562 United States' first written submission, para. 221.
1563 USITC Report, Vol. II, Table Flat 3.
1564 USITC Report, Vol. I, p. 1
1565 European Communities' first written submission, para. 196.
1566 China's first written submission, paras. 245-246.; European Communities' first written submission,
para. 293; Brazil's first written submission, para. 133; New Zealand's first written submission, para. 3.69.
1567 Korea's first written submission, para. 74.
1568 Korea's first written submission, paras. 88-89.
1569 New Zealand's first written submission, para. 4.77.
1570 China's first written submission, para. 250.WT/DS248/R, WT/DS249/R,
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recently, suddenly, sharply and significantly.  Instead, both in absolute and in relative terms, they
showed a sharp decrease.1571
7.555  New Zealand points out that total import volumes for plate decreased 52% between 1996 and
2001 and the ratio of imports to domestic production dropped 20% during the same period.  Imports
of cold-rolled steel increased slightly in absolute  terms during the period of investigation, but there
has been a significant and sustained downward trend since 1998.  The quantities of imports relative to
domestic production remained almost constant between 1996 and 2000, but decreased by
approximately 30% between 1998 and 2000.  Imports of coated steel have declined steadily and
significantly since 1999, and the 2001 data reveals an overall decrease in imports in both absolute andrelative terms since 1996.  Import trends for slab show that although there was an increase in imports
in 1999 and 2000, in 2001 imports decreased by 25% as compared with those two previous years and
by 10% if compared to 1996.
1572
7.556  Brazil adds that on the basis of full-year 2001 data, each of the individual flat-rolled products
also continued to decline.1573  Cold-rolled products were the only exception, due to an anti-dumping
investigation in 2000 which artificially drove imports down.1574
7.557  The United States responds that the complainants raise arguments about the import data for
items for which a separate injury determination was not made.1575  Given the USITC's like product
determinations, the USITC was not required to make separate increased import determinations for
slab or corrosion-resistant steel, and the trends for those products are not relevant to whether theUSITC's analysis of the increase in imports for cer tain carbon flat-rolled steel was consistent with
Article 2.1.
1576
7.558  Korea also claims that the USITC's investigation of increased imports for flat-rolled products
falls far short of the reasoned and adequate explanation of how the underlying facts support its
determination as required by Articles 2.1 and 4.2(a) of the Agreement on Safeguards.  The USITC hadan obligation to explain its conclusion that imports increased in light of the data which directly
conflicts with that conclusion.
1577
(ii) "Increased imports" within the meaning of the Agreement on Safeguards?
7.559  Japan and New Zealand argue that the USITC acknowledged, but ignored, the fact that import
volume declined 40% between the first half of 2000 and the first half of 2001.1578 1579  China, the
European Communities and Korea1580 point out that, at the time the President of the United States
took his decision, the full year 2001 data were available and confirmed that imports had even fallen tolevels below 1996.
1581  Since the most important increase occurred in 1998, three years before the
                                                     
1571 European Communities' first written submission, paras. 305-308; Brazil's first written submission,
paras. 134-135; New Zealand's first written submission, para. 4.87.
1572 New Zealand's first written submission, paras. 4.88–4.92
1573 Brazil's first written submission, paras. 139-143.
1574 Brazil's first written submission, para. 144.
1575 Brazil's written reply to Panel question No. 41 at the first substantive meeting.
1576 United States' second written submission, para. 107.
1577 Korea's first written submission, para. 87.
1578 Korea's first written submission, paras. 49-50.
1579 Japan's first written submission, para. 190; New Zealand's first written submission, para. 4.83.
1580 Korea's first written submission, para. 82.
1581 China's first written submission, para. 241; European Communities' first written submission,
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imposition of the safeguard measures, and was immediately followed by an important decline, China
and Korea believe that increased imports were certainly not recent enough.  They also were not sharpand significant enough.
1582
7.560  Korea submits that imports of flat-rolled declined by roughly 18% between 1998 and 1999.
Imports then remained at 1999 levels in 2000, showing a statistically insignificant increase (0.3%).
Imports then proceeded to decline to their lowest point in the period in the first six months of 2001.
Korea submits that it is the complainants' position that a statistically insignificant increase in imports
in 2000 is not an "increase" for purposes of the Agreement on Safeguards when analysed both
quantitatively and qualitatively.  Those imports were preceded by a deep decline and followed by adeeper decline.
1583
7.561  The United States affirms that the USITC foun d that imports of CCFRS increased both on an
absolute and a relative basis.  The USITC focused its analysis on the surge in imports of CCFRS in
1998, the effects of that surge (which continued to reverberate throughout the remainder of the period
of investigation) and on the continuation of imports at elevated levels in 1999 and 2000.  In absoluteterms, imports increased from 18.4 million short tons in 1996 to 20.9 million short tons in 2000.  In
1998 there was a rapid and dramatic increase, with imports rising to 25.3 million short tons, an
increase of 37.5% over 1996 levels.  While the volume of imports declined in 1999 and 2000, it
remained significantly higher in those years than at the beginning of the period of investigation.
1584
On a relative basis, imports rose from the equivalent of 10.0% of domestic production in 1996 to
10.5% in 2000.1585 1586
7.562  The European Communities also argues that the relative import finding is as flawed as the
determination for actual imports.1587  The European Communities, China and Korea submit that in
addition to ignoring the steady and significant decline since 1998, a 0.5% increase in the ratio in five
years is, also in Korea's and China's view1588, simply not sharp and significant enough to cause or
threaten to cause serious injury.1589  According to Brazil, this increase is nominal at best.1590  China
asserts that the relative increase during 1998 wa s quickly compensated the following year when
imports were back to normal.  Ever since, imports in relative terms remained at levels which were
very close to those of 1996 and 1997.1591
7.563  As regards the degree of the relative increase in imports, the United States points out that an
increase in either absolute or relative import levels alone may satisfy Article 2.1 of the Agreement on
Safeguards.1592
7.564  In counter-response, Korea submits that if the language in Argentina – Footwear (EC)  is to
mean something ( e.g., how much is "enough?")1593, then absolute and relative increases must be put
                                                     
1582 China's first written submission, para. 247; Korea's first written submission, paras. 77-78.
1583 Korea's written reply to Panel question No. 14 at the second substantive meeting.
1584 USITC Report, pp. 49-50.
1585 USITC Report, p. 50.
1586 United States' first written submission, paras. 208-210.
1587 European Communities' first written submission, paras. 300-302.
1588 Korea's first written submission, paras. 84-85; China's second written submission, para. 107.
1589 China's second written submission, para. 107; European Communities' first written submission,
paras. 300-302; Korea's first written submission, paras. 84-85.
1590 Brazil's first written submission, para. 132.
1591 China's first written submission, paras. 242, 248.
1592 United States' first written submission, para. 217.
1593 United States' first written submission, para. 216.WT/DS248/R, WT/DS249/R,
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into context.  The USITC, however, has not done so.1594  In fact imports as a percentage of production
have declined for the last two and a half years of the period of investigation and imports relative toproduction at the end of the period is the lowest of the entire period.
1595
(iii) The USITC's method of analysis
Trends
7.565  The European Communities recalls the USITC finding that imports increased "from
18.4 million short tons in 1996 to 20.9 million short tons in 2000, an increase of 13.7 percent".1596
The USITC also acknowledged that the "volume of imports declined in 1999 and 2000" from the peakin 1998
1597, and that this decrease continued, given that imports "declined from 11.5 million short tons
in interim 2000 to 6.9 million short tons in interim 2001".1598  The European Communities, Korea and
Japan contend that the USITC ignored the general me thodology of evaluating trends, suggested by the
Appellate Body in Argentina – Footwear (EC) , and that the situation for flat steel products closely
resembles the one already ruled out in that case as a sudden and recent increase in imports.1599  China
adds that if the USITC believed that the decreasing trend of imports did not prevent it from findingthat there were increased imports pursuant to Article 2.1 of the Agreement on Safeguards, it had to
give a reasoned and adequate explanation to support this finding and it did not do so by simply stating
that imports were still "significantly" higher in 1999 and 2000 than in 1996.
1600
7.566  The United States also rejects the assertion that the import trends in Argentina – Footwear
(EC)  were the same as those for CCFRS in this case.  In Argentina – Footwear (EC) , there was a
steady decline in imports for two years, following an increase earlier in the period of investigation.1601
Thus, it was possible to discern a declining trend.  In this case, by contrast, there was a three-yearincrease in imports, with a dramatic surge in 1998, followed by a decline in imports from 1998 to
1999, but then there was levelling off and even a slight increase in 2000, which is no clear declining
trend.
1602  The United States submits that import levels in 1999 and 2000 remained well above pre-
surge levels and in fact rose slightly between 1999 and 2000.  According to the United States, this
hardly constitutes a steady decline; rather, this pattern meets the definition of "is being imported in
such increased quantities" as that phrase was interpreted by the panel in US – Line Pipe .1603 1604
                                                     
1594 Korea's first written submission, para. 118.
1595 Korea's first written submission, para. 119.
1596 USITC Report, Vol. I, p. 49.
1597 USITC Report, Vol. I, p. 50.
1598 USITC Report, Vol. I, p. 49.
1599 European Communities' first written submission, paras. 294-297; Korea's first written submission,
para. 80; Japan's first written submission, paras. 195-196.
1600 China's first written submission, para. 244.
1601 The data in Argentina – Footwear (EC)  were as follows:
1991 1992 1993 1994 1995
Total imports (million pair) 8.86 16.63 21.78 19.84 15.07
Relative Imports 12% 22% 33% 28% 25%
Source: Panel Report, Argentina – Footwear (EC) , paras. 8.151 and 8.273.
1602 United States' first written submission, para. 215.
1603 Panel Report, US – Line Pipe , para. 7.207.
1604 United States' second written submission, para. 105.WT/DS248/R, WT/DS249/R,
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7.567  The European Communities, Japan, Korea and Brazil respond that there is no basis to
conclude that imports had only temporarily and recently declined and remained at sharply increasedlevels, the basis for the finding of increased imports endorsed by the Panel in US – Line Pipe.  The
data show a sustained 30-month period of decline, en ding with imports at the lowest level during the
entire five and a half year period investigated by the USITC.
1605  While one can argue the nuances of
Argentina – Footwear (EC), US – Line Pipe  and US – Lamb,  in fact there are no nuances in the import
data.  The only increase in imports was a distant memory by the time the USITC initiated its
investigation.1606  Brazil adds that the United States has determined that CCFRS is being imported
into the United States in increased quantities desp ite the fact that imports are not only at the lowest
level during the entire period of investigation, but also substantially below the peak of 1998, and have
declined sharply over the last three semi-annual periods.  Put simply, there is no factual support for a
determination of increased imports of CCFRS.1607
7.568  Japan adds further that the declining trend in the most recent period is even more pronounced
for flat-rolled steel imports actually subject to the safeguard measure - i.e. without the free trade areaand developing countries which were ultimately excluded from the measure.  Japan argues that when
one removes excluded developing countries from the import trend analysis, it becomes even more
clear how unjustifiable the USITC's increased imports decision really was. Flat-rolled steel imports
remained constant, approximately 13.5 million tons in every year but 1998, before declining sharply
in 2001.  Even under the USITC's flawed comparison of 1996 to 2000, flat-rolled steel importsactually subject to the safeguard measure increased an insignificant 253,884 tons, or 1.9%, for
combined flat-rolled products, and declined as a share of US production.  The same pattern holds true
for hot-rolled, cold-rolled, and plate.  Slab and corrosion-resistant steel imports reached their peak in
1999, before declining slightly in 2000 (corrosion-resistant steel imports declined from 1.43 million
tons to 1.37 million tons), and then declining sharply in 2001.  Obvious beginning-to-end decreaseswere masked (such as with plate) by selection of the overly broad "flat" like product determination.
Moreover, the decreases are all the more apparent once excluded countries are removed from the
analysis.  Absent imports from Canada and Mexico  – both countries which shipped significantly high
volumes of flat products in every year between 1996 and 2000, but were excluded from the remedy
(in violation of the principle of parallelism, as s hown below) – and imports from developing countries
– whose shipments rose from nearly zero to signif icant numbers later in the period of investigation –
most perceivable increases no longer exist.  Indeed, while imports actually subject to the safeguardmeasure show no trend of import increase to satisfy the requirement set forth under the Agreement on
Safeguards and Article XIX:1 of GATT 1994, the absolute volume increase in flat-rolled imports
from excluded developing countries over the 1996 to 2000 period was eight times the increase from
countries subject to the relief, yet they are not subject to the relief, because the United States excluded
them under Article 9.1 of the Agreement on Safeguards.
 1608
End-point analysis
7.569  Brazil1609, China1610, the European Communities, Japan1611, Korea1612 and New Zealand1613
assert that the USITC compared the end points of 1996 and 2000 and made its increased imports
                                                     
1605 Japan's second written submission, para. 97; Korea's first written submission, para. 114; Brazil's
first written submission, paras. 54-55; European Communities' second written submission, para. 200.
1606 Brazil's first written submission, para. 58.
1607 Brazil's written reply to Panel question No. 14 at the second substantive meeting.
1608 Japan's first written submission, paras. 205-206.
1609 Brazil's first written submission, paras.  129, 132.
1610 China's first written submission, paras. 243-244.
1611 Japan's first written submission, paras. 190, 195.
1612 Korea's first written submission, paras. 76, 78.WT/DS248/R, WT/DS249/R,
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finding although it had to recognize that the trends in the most recent period from 1998 to the first half
of 2001 evidenced a steady and continuous fall in imports.  The European Communities, Japan, Koreaand New Zealand consider that even an end-point -to-end-point analysis for 1996-2000 only yields a
very modest increase of 13.7% over a five-year period, which is a not a "sharp", "sudden" or
"significant" increase.
1614  Moreover, the absolute increase of 2.66 million tons between 1996-2000
was entirely accounted for by the increase in imports of hot-rolled coil – 2.84 million tons – that were
subject to anti-dumping and countervailing duty investigations in 1998 and 2000.1615 1616  Korea adds
that the USITC failed to properly note that hot-rolled accounted for the vast majority of the volume
increase in 1998 and the minor "increase" end-point to end-point was a function solely of hot-rolled
and slab imports.  In fact, if imports of hot-rolled coil and slab are separated out of total imports of
flat-rolled, total imports were 6.8 million short tons in 1996, 6.9 million short tons in 1999, and 6.1
million short tons in 2000.1617  Japan adds that the increase could not have been "significant" when it
represented a mere 0.5% increase in imports as a share of production, especially when 38% of the
increase consisted of slab imported by the domestic industry itself.1618
7.570  In response to Japan's argument that the increase in CCFRS imports was not significant
because 38% of it consisted of slab, much of which was imported by the domestic industry, the United
States stresses that this argument is based on a simple end-points comparison.  Japan's argument also
is premised on the erroneous assumption that imports by the domestic industry should not be
"counted".1619  The United States also argues that it is patently untrue that the USITC relied only on an
end-points analysis, comparing import levels in 1996 with those in 2000.  It did not rely exclusively
on such observations to evaluate the increased imports.  The USITC quite clearly considered
intervening years, focusing on the surge in imports in 1998, and the continuation of imports at
elevated levels in 1999 and 2000.1620
(iv) Consideration of 2001 data
7.571  The European Communities, Brazil, China1621 and New Zealand argue that the USITC
ignored the most recent 6-month period in its investigation, the first half of 2001.  If the first half of
2001 is used as the end point, imports of flat-rolled products, both absolute and relative, are
significantly below 1996 levels.1622  Brazil and China1623 affirm that the data from the full year 2001
confirm that the sharp decline in flat-rolled imports continued in the second half of 2001.  As a
percentage of domestic production, imports in 2001 were lower than at any point during the 1996-
2001 period, more than 2 percentage points below 2000 and almost two percentage points below1996.  Remarkably, imports in 2001 were 10.5 million tons below peak 1998 levels and 3.5 million
tons below 1996 levels.
1624  New Zealand points out that the United States has itself recognized the
                                                                                                                                                                    
1613 New Zealand's first written submission, paras. 4.81, 4.84.
1614 European Communities' second written submission, para. 199;  Japan's first written submission,
para. 195; Korea's first written submission, para. 76; New Zealand's first written submission, para. 4.85-4.86.
1615 Respondents' Joint Prehearing Brief on Hot-Rolled Steel , Inv. No. TA-201-73 (11 September 2001)
("Respondents' Joint Prehearing Brief on Hot-Rolled "), Exhibit 4 (Exhibit CC-52) ("subject" hot-rolled imports
increased from 1.75 million tons in 1996 to 4.59 million tons in 2000).
1616 Korea's first written submission, para. 76.
1617 Korea's first written submission, para. 117.
1618 Japan's first written submission, para. 195.
1619 United States' first written submission, para. 219.
1620 United States' first written submission, para. 214.
1621 China's first written submission, paras. 240-241, 246.
1622 Brazil's first written submission, para. 132; New Zealand's first written submission, para. 4.84.
1623 China's first written submission, paras. 238-239.
1624 Brazil's first written submission, paras. 137-138.WT/DS248/R, WT/DS249/R,
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importance of interim 2001 data, explaining that the USITC gathers data for the interim period "so
that it will have information available to it on the most current period possible".1625  The problem is
that, having gathered the most recent available data, the USITC ignores its significance.  Among other
things, this data showed that imports of CCFRS had declined by 40% and demand by 14.9%.  Proper
attention to this data should have indicated to the USITC that an increased imports finding could not
be made, and that increased imports could not have been the cause of alleged serious injury to the
domestic industry.1626
(v) Consideration of decline in imports
7.572  Korea asserts that the USITC's analysis ignored the reason why imports declined – prevailing
anti-dumping and countervailing duty orders.  In this case, the USITC was well aware of the reason
that imports declined and why that trend would continue for the foreseeable future.1627
7.573  The United States rejects Korea's contention that the USITC ignored the reason for the
decline in imports of CCFRS after 1998, namely anti-dumping and countervailing duty cases, and
affirms that the USITC addressed this in its analysis of causation.1628
(b) Tin mill products
(i) "Increased imports" within the meaning of the Agreement on Safeguards?
7.574  Brazil and, based on the import data relevant to the four commissioners who considered tin
mill products separately, China, Japan and Norway assert that the requisite sharp, recent, sudden, and
significant increase was not present, and the affirmative injury finding for tin mill products wasunjustified.
1629
7.575  The United States insists that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the re cord support the determinations of three USITC
Commissioners that there were increased imports of tin mill, or in the case of Commissioners Bragg
and Devaney, of tin mill as part of a like product encompassing certain carbon and alloy flatproducts.
1630
7.576  Norway responds that, with regard to Commissioners Bragg and Devaney, according to the
figures presented by the United States, there is an increase from 1996 to a peak in 1998, but thereafter
a sharp decrease in 1999 which continues in 2000 – and with a new sharp decrease in interim 2001.
Norway submits that this is clearly a "steady and significant decline" in the "recent past", with full
year 2001 ending even lower than 1996.1631
7.577  The European Communities and Norway recall that the USITC made an increased imports
finding for tin mill products although it explicitly acknowledged that after a "peak level of 698,543
short tons" in 1999, imports "declined to 580,196 short tons in 2000" and were another "11.1 percent
                                                     
1625 United States' first written submission, para 197; United States' written reply to Panel question No.
50 at the first substantive meeting, para 95.
1626 New Zealand's written reply to Panel question No. 15 at the second substantive meeting.
1627 Korea's first written submission, para. 81.
1628 United States' first written submission, paras. 209-220.
1629 Brazil's first written submission, para. 257; China's first written submission, para. 289; Japan's first
written submission, paras. 209-210; Norway's first written submission, paras. 263, 272, 273.
1630 United States' first written submission, para. 232.
1631 Norway's second written submission, para. 94.WT/DS248/R, WT/DS249/R,
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lower" in interim 2001 than in interim 2000.1632  The USITC also recognized that the ratio of imports
to domestic production had decreased from "20.1 percent during the import volume peak in 1999" to"17.4 percent in 2000".
1633  The USITC finally disclosed that the official import data used in its
discussion "overstate the imports subject to this investigation" due to prior product exclusions.1634 1635
7.578  China and the European Communities argue that the only increase of imports during the
review period was a surge in 1999, which is not recent enough to justify a safeguard measure.1636  In
addition, China and Norway point out that, subsequently, anti-dumping measures have led to a
substantial reduction of tin mill imports1637, which the USITC completely ignored.1638  Under no
circumstances can the United States claim that tin mill products continue being imported at increasedquantities until the very recent past.  On the contrary, since 1999, actual imports of tin mill products
have declined sharply – by over 20%.
1639
7.579  According to the European Communities, at the time the President of the United States took
his decision to impose safeguard measures, full 2001 year data was available and confirmed that
imports of tin mill products had even receded back almost to pre-1998 levels.1640  The European
Communities submits that, similarly, the ratio of imports to domestic production has seen a steady and
continuous decline since 1999 through the year 2000 and into the interim 2001.1641  Brazil and Japan
confirm this observation for the imports from sources covered by the measure, particularly non-
NAFTA countries, which are the imports that matter given the requirement of parallelism between
injury and remedy.1642  China, the European Communities and Norway assert that such a situation,
that is a significant and steady decrease in imports since a midterm high both in actual numbers as
well as in relation to domestic production, has already been ruled out in Argentina – Footwear
(EC) .1643
7.580  The European Communities and Korea also argues that there was also no relative increase in
tin mill imports.  The ratio of imports to domestic production peaked at a record 20.1% in 1999reflecting Weirton's business decision.
1644  This, however, can only be regarded as a temporary
occurrence, mostly instigated by the US domestic industry's own business decisions.  Imports relative
to production sharply decreased to the 17% range in the year 2000 and in interim 2001.1645  Again,
this does not satisfy the "qualitative" increase requirement.1646
                                                     
1632 USITC Report, Vol., I, p. 71.
1633 USITC Report, Vol.; I, p. 72.
1634 USITC Report, Vol.; I, p. 71, footnote 370.
1635 European Communities' first written submission, para. 359; Norway's first written submission,
para. 265.
1636 China's first written submission, para. 293.
1637 China's first written submission, para. 288; Norway's first written submission, para. 267.
1638 Norway's first written submission, para. 97.
1639 European Communities' first written submission, para. 360.
1640 European Communities' first written submission, para. 361.
1641 European Communities' first written submission, para. 363.
1642 Brazil's first written submission, para. 257; Japan's first written submission, para. 209.
1643 European Communities' first written submission, para. 363; China's first written submission,
para. 287; Norway's first written submission, para. 268.
1644 USITC Report, Vol. I, p. 72 (Exhibit CC-6).
1645 Steel, Inv. No. TA-201-73, USITC Publication 3479 (December 2001), Volume II:  Information
Obtained in the Investigation (Carbon and Alloy Steel Flat, Long and Tubular Products ) (USITC Report,
Vol. II) , Table FLAT-10, p. FLAT-14 (Exhibit CC-6).
1646 Korea's first written submission, para. 129.WT/DS248/R, WT/DS249/R,
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7.581  In response to the allegation that the USITC fail ed to show that the increase in imports that
did occur was sharp, recent, sudden and significant, the United States reiterates that the complainantsare applying an incorrect standard because Ar ticle 2.1 of the Agreement on Safeguards speaks of
whether there were imports "in such increased quantities … and under such conditions as to cause or
threaten to cause serious injury," and not whether imports were sharp, recent, sudden and significant
in the abstract.
1647
(ii) The USITC's method of analysis
7.582  China, Korea and Norway assert that the USITC's end points comparison and a comparison
between the first year of the period of investigation with the 1999 peak demonstrate an increase inimports, but that such an analysis does not consider the trends in imports.
1648
7.583  The United States asserts that there is no merit to the argument that the USITC relied only on
an end-points analysis, comparing import levels in 1996 with those in 2000.  Commissioners Bragg
and Miller discussed import levels during the period of investigation, and in the interim periods, and
quite clearly focused on the increases in imports that occurred within the period ofinvestigation.
1649 1650
7.584  Korea and China argue that the United States should not be able to rely on the analysis of
Commissioners Bragg and Devaney, since their an alysis of increased imports was not based on tin
mill products, but on "certain carbon and alloy flat products including tin mill".  Grouping tin mill
products with other products in a wide group of pr oducts ("certain carbon and alloy flat products")
prevented those Commissioners from making any useful analysis as far as tin mill products alone are
concerned.1651  However, China also notes that the analysis  of the import trends for tin mill "as part of
a like product encompassing certain carbon and alloy flat products" also shows a clear declining trend
from 1999 to 2001.1652 1653
(iii) Requirement of reasoned and adequate explanation
7.585  China, the European Communities, Korea and Norway also argue that the temporary 1999
surge in imports was stimulated by a temporary business decision of the United States domestic
industry, more particularly, Weirton's decision to shut down a blast furnace and rely on imported
slabs.1654  The European Communities argues that if a one-time high in import levels was caused by
an exceptional business decision, the competent aut horities would need to explain how they can rely
on it although this condition is no longer given.1655  Brazil and Korea add that it is relevant that the
very industry seeking import relief brought about, and benefitted from significant parts of the
                                                     
1647 United States' first written submission, para. 228.
1648 China first written submission, paras. 288, 290; Korea's first written submission, paras. 95, 98;
Norway's first written submission, para. 268.
1649  USITC Report, pp. 71-72 (Commissioner Miller); and p. 279 (Commissioner Bragg).
1650 United States' first written submission, para. 229.
1651 Korea's second written submission, paras. 122-123;  China's second written submission, para. 126.
1652 United States' first written submission, para.223.
1653 China's second written submission, para. 127.
1654 European Communities' first written submission, para. 364; China's first written submission,
para. 292; Korea's first written submission, para. 96; Norway's first written submission, paras. 269 and 271.
1655 European Communities' written reply to Panel question No. 43 at the first substantive meeting.WT/DS248/R, WT/DS249/R,
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increase.1656  It would be ironic if a producer decided to increase imports and then turned around to
use that very increase as the basis for pursuing a safeguard action.1657
7.586  With regard to the complainants' argument that the surge in tin mill imports in 1999 occurred
in part because of Weirton's shutting down a blast furnace, the United States rejects the notion that
imports by the domestic industry should not be "counted" as increased imports.1658  The Agreement on
Safeguards does not treat imports that are attributable to domestic producers any differently than other
imports.  Moreover, safeguards proceedings involve decisions about entire industries, not about
individual producers; and industries do not make such business decisions.1659
7.587  In response, Norway insists that if imports enter to replace a shortfall in domestic production,
this is a qualitative factor which is directly relevant to the issue of causation as well.  Disregarding
these important elements in respect of the increase in imports, makes the whole increased import
analysis by the United States in breach of Article 2.1.1660  Korea adds that given the import changes
and the facts underlying such changes at issue, the competent authorities were under a particularly
strong obligation to make an assessment, both quanti tatively and qualitatively, as to the nature of the
increase in imports.  The USITC did not conduct such an assessment.1661  China submits that the
increase in imports ceased in 2000, i.e. 18 months before the measure was taken.  An increase in
imports that occurred 18 months ago and was followed by a decline in those imports cannot be
considered as being "recent enough" and "sudden enough".1662
7.588  The United States responds that the complainants do not divulge the reason for their certainty
that an increase which occurred 18 months ago is "insignificant".  In fact, no such basis exists.
Neither Article XIX nor the Agreement on Safeguards specifies a period beyond which an increase in
imports is "insignificant".  Certainly the Appellate Body in Argentina – Footwear (EC)  did not
attempt to draw a line beyond which an increase in imports would be per se  insignificant.1663
7.589  In the light of the intervening trends and other alternative explanations, the European
Communities and Norway assert that the USITC did not provide an adequate and reasoned
explanation why it could consider that imports continued being imported at sharply and recently
increased levels in the most recent past.1664
7.590  According to the United States, the assertion that the USITC failed to give adequate weight to
the decline in imports since 1999 is irrelevant to the extent that it is based on the views of USITC
Commissioners making negative determinations.  Among the affirmative determinations, only
Commissioner Miller relied on the import data which the complainants cite, that is import data for tinmill alone.  She recognized that, after surging in 1999, import volumes declined between 1999 and
                                                     
1656 Korea's written reply to Panel question No. 43 at the first substantive meeting.
1657 Brazil's written reply to Panel question No. 43 at the first substantive meeting.
1658 United States' first written submission, para. 230.
1659 United States' written reply to Panel question No. 43 at the first substantive meeting, para. 89.
1660 Norway's second written submission, para. 97.
1661 Korea's first written submission, para. 128.
1662 China's second written submission, para. 125.
1663 United States' second written submission, para. 99.
1664 European Communities' first written submission, para. 365; Norway's first written submission,
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2000, and between the interim periods, and she explaine d why these declines were not decisive in her
causation analysis.1665 1666
7.591  Norway responds that the figures of Commissioner Miller (which are also a misrepresentation
as her figures include increases in excluded products1667) show an increase from 1996 to a peak in
1999, with a sharp decrease in 2000 and further declines in interim 2001.  Norway submits that there
is also here clearly a "steady and significant decline" in the "recent past".1668
(iv) Relevance of the like product definition
7.592  Korea and Norway argue that the United States cannot lump together findings of increased
imports with respect to distinct like product groupings – flat-rolled and tin mill – to support a findingof increased imports of the more narrow like product – tin mill.  The requirement of like product is
fundamental to a finding of increased imports.  A mix and match approach as adopted by the United
States suggests that any combination of legal findings, even if they are inconsistent, is insufficient and
presents a clear violation of the Agreement on Safeguards.
1669  The Appellate Body made clear in US
– Line Pipe  that legally consistent decisions with resp ect to the requirements of the Agreement on
Safeguards (serious injury and threat of serious injury) are permitted.1670  However, legally
inconsistent decisions based on different definitions of imported products are not.1671
(c) Hot-rolled bar
(i) "Increased imports" within the meaning of the Agreement on Safeguards?
7.593  China and the European Communities contend that the USITC failed to determine and justify
that the increase in imports was recent enough, sudden enough, sharp enough and significant
enough.1672  In China's view, the USITC also addressed the wrong question when it stated that imports
showed a dramatic and rapid increase in 2000, sin ce "rapid and dramatic" is much less explicit than
"recent, sudden, sharp and significant enough"1673 and was not the vocabulary chosen by the Appellate
Body1674, who has the mandate of clarifying the provisions of the WTO Agreement.
7.594  The United States insists that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the reco rd support the USITC's determination that there
were increased imports.  The USITC noted that imports were higher, both in absolute terms and
relative to United States production, in 2000 than in any prior year of the period examined and
showed a rapid and dramatic increase from 1999.  While imports declined in the interim period
comparison, the ratio of imports to United States production in interim 2001 was higher than that for
                                                     
1665  The European Communities claims that the ratio of imports to domestic production declined in
interim 2001.  European Communities' first written submission, para. 362.  In fact, relative import levels werehigher in interim 2001 (at 17.7%) than in interim 2000 (when they were 17.1%).  USITC Report, p. 72footnote 373.
1666 United States' first written submission, para. 231.
1667 See USITC Report, Vol. 1, at footnote 370 (Exhibit CC-6).
1668 Norway's second written submission, para. 94.
1669 Korea's first written submission, para. 123; Norway's second written submission, para. 94.
1670 Appellate Body Report, US – Line Pipe , paras. 168-170.
1671 Korea's first written submission, para. 124.
1672 European Communities' first written submission, paras. 315-316; China's first written submission,
para. 255.
1673 China's written reply to Panel question No. 45 at the first substantive meeting.
1674 China's first written submission, para. 255.WT/DS248/R, WT/DS249/R,
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the first three years of the period examined, and was only three-tenths of a percentage point below the
1999 level.1675 1676
7.595  In response to China's and the European Communities' contention that there are neither facts
nor explanations justifying a determination that hot-rolled bar is being imported at recently, sharply
and significantly increased quantities, the United States points out that first, the import data which the
USITC analysed on a year-to-year basis show substantial increases.  As the US – Line Pipe  Panel
explained, it is not necessary to find that imports are still increasing up to the very end of the period of
investigation.1677  Second, the appropriate consideration under the Agreement on Safeguards is not
whether imports have increased "recently, sharply and significantly" in the abstract.  The USITCsatisfied the standard set out in Article 2.1 of the Agreement on Safeguards when it first focused on
increased imports and subsequently found injury and a causal link.
1678
7.596  The European Communities responds that the United States cannot rely on the ruling of the
Panel in US – Line Pipe  in its defence.  The Panel in that case only upheld the increased imports
finding given that there was an explicit finding that import levels remained  at increased levels which
the USITC has not demonstrated.1679
7.597  China further argues that the increase in imports of hot-rolled bar was not recent because the
sharpest increase, both in absolute and relative terms, occurred in 1998, and the USITC also failed to
recognize a decline in imports that started in 2000 and lasted until the end of the period of
investigation.1680
7.598  As regards China's argument regarding a decline in imports that "started in 2000 and lasted
until the end of the period of investigation", the United States rejects this attempt to carve up the
investigation period to achieve a desired result.  The United States further submits that the Agreement
on Safeguards does not specify how the period of investigation should be broken down.1681  With
regard to the argument that increased imports were not recent, China overlooks the fact that importswere at their highest level (both in absolute and relative terms) in 2000; and that there were significant
increases in the last year-to-year comparison from 1999 to 2000.
1682
7.599  China responds that a sharp increase that occurred in 1998 cannot be considered as being
"recent" anymore and subsequent imports cannot be characterized as being "sharp".1683
(ii) Consideration of 2001 data
7.600  The European Communities asserts that the USITC acknowledged but disregarded a sharp
decrease both in absolute terms and relative to domestic production in the first half of 2001, that is themost recent and decisive part of the investigation period.
1684  By the time the President imposed the
safeguard measures, the available full 2001 year import data revealed a 32% decrease in imports
                                                     
1675 China's first written submission, para. 255.
1676 United States' first written submission, paras. 235 and 246.
1677 Panel Report, US – Line Pipe , para. 7.204.
1678 United States' first written submission, paras. 239-241.
1679 European Communities' second written submission, para. 203.
1680 China's first written submission, paras. 258-262.
1681 United States' first written submission, para. 244.
1682 United States' first written submission, para. 245.
1683 China's first written submission, para. 114.
1684 USITC Report, Vol. I., p. 92.WT/DS248/R, WT/DS249/R,
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compared to 2000.1685  Even if the 2.6 percentage difference between 1999 and 2000 could be seen as
a recent increase, it was certainly neither sharp nor significant, but part of a slight and gradualincrease at steps between 1.1 and 2.6%, which was then compensated in interim 2001 when the ratio
fell back to 24.6%.
1686
7.601  The United States rejects the European Communities' argument based on full-year 2001 data,
because full-year 2001 data were not, and should not be, considered. 1687
(iii) The USITC's method of analysis
7.602  China argues that the USITC failed to evaluate the rate and amount of increased imports in
absolute and relative terms, and to consider trends, and that it was not enough for the USITC tosimply state the import data for each year of the period of investigation.
1688
7.603  The United States disagrees with China on the question whether it was not enough for the
USITC to "simply state the import data for each year without evaluating the rate and amount of
increased imports in absolute and relative terms".  The USITC noted where the imports increased and
where they decreased.  The United States submits that the Agreement on Safeguards does not requirethat competent authorities characterize the data in certain ways.  It also does not require competent
authorities to intone specific terminology not contained in the Agreement.
1689  Since under Article 3.2
of the DSU, a dispute settlement report cannot add to a Member's obligations under the covered
agreement, the Appellate Body's use of a particular phrase cannot obligate competent authorities to
use the same phrase.1690
(d) Cold-finished bar
(i) "Increased imports" within the meaning of the Agreement on Safeguards?
7.604  The European Communities notes that the alleged recent surge in imports was a one-year
micro-development immediately compensated for by a decrease in 2001.  By the time the President of
the United States took his decision, the full 2001 data was available and demonstrated that thedeclining trend, that was already signalled by the interim 2001 data, proved to be a steady and
significant decrease in imports back to levels even below 1998.
1691
7.605  The United States rejects the European Communities' characterization of the data on absolute
import levels as "a one-year micro-development immediately compensated by a decrease in 2001".
First, full-year 2001 data were not, and should not be, considered, for reasons previously articulated
by the United States.  Second, it is simply not accurate to call a 33.6% increase in imports in one year,
that follows on the heels of increases in two out of the preceding three years, "a one-year micro-development".
1692
7.606  In relation to relative imports the European Communities considers that there is no
justification why a mere 6% increase in the ratio between imports and domestic production could be
                                                     
1685 European Communities' first written submission, paras. 311-312.
1686 European Communities' first written submission, para. 315.
1687 United States' first written submission, paras. 239-241.
1688 China's first written submission, paras. 253, 254 and 256.
1689 United States' first written submission, para. 242.
1690 United States' written reply to Panel question No. 45 at the first substantive meeting, para. 91.
1691 United States' first written submission, paras. 319-320.
1692 United States' first written submission, para. 252.WT/DS248/R, WT/DS249/R,
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seen as a sudden, sharp and significant surge in imports that is capable of causing injury to a domestic
industry, in particular, since actual impor ts already showed a manifest decrease.1693
7.607  As regards relative import levels, the United States insists that the 6.7 percentage point
increase in relative import levels from 1999 to 2000 (from 17.0 to 23.7%) was, in fact, very
significant.  The United States submits that the European Communities' attempt to discount this
increase by pointing to a decline in absolute import levels is unpersuasive, given that an increase in
either absolute or relative import levels alone may satisfy Article 2.1 of the Agreement on
Safeguards.1694
7.608  The European Communities responds that the United States has effectively admitted that the
absolute import levels were not sufficient and that it solely relies on the relative import developments.
Therefore, the European Communities asks the Panel to find that imports did not increase in actual
numbers.1695 As to relative imports, the United States did not explain why the mere 6% increase in
relative imports in 2000 (out of a one-year dip in 1999) combined with the countertrend in actual
imports in 2001 could still justify a finding of cold bar being imported in extra-ordinarily increasedquantities;  and the European Communities asks the Panel to dismiss the relative increased imports
finding for this product.
1696
(ii) Requirement of reasoned and adequate explanation
7.609  The European Communities asserts that the facts and explanations provided by the United
States authorities do not justify a determination that cold-finished bar is being imported in recently,sharply and significantly increased quantities.
1697
7.610  The United States argues that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the reco rd support the USITC's determination that there
were increased imports of cold-finished bar.
(e) Rebar
(i) "Increased imports" within the meaning of the Agreement on Safeguards?
7.611  China and the European Communities argue that the facts and explanations provided by the
USITC do not justify a determination that rebar is being  imported at recently, sharply and
significantly increased quantities.1698
7.612  The United States insists that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the record supported the USITC's determination with
respect to increased imports.  The USITC analysed the surge in imports in 1999 and the continuedhigh levels of imports in 2000 in the context of th eir ability to cause serious injury.  China's argument
that the USITC failed to determine whether the increase in imports of rebar was "recent enough,
sudden enough, sharp enough and significant enough" is premised on an incorrect standard.
                                                     
1693 European Communities' first written submission, para. 321.
1694 United States' first written submission, para. 254.
1695 European Communities' first written submission, para. 207.
1696 European Communities' second written submission, para. 208.
1697 European Communities' first written submission, para. 322.
1698 China's first written submission, para. 268; European Communities' first written submission,
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7.613  The United States further stresses that the USITC recognized that imports had declined
between 1999 and 2000, and between the interim periods, and it explained why these declines werenot decisive to its analysis.  Competent authorities are not required to articulate an intricate trends
analysis.
1699
7.614  In response, China insists that, under the Agreement on Safeguards, as interpreted by the
Appellate Body in  Argentina – Footwear (EC) , import data must be characterized in a certain way,
i.e. as being "sudden enough, sharp enough, recent enough and significant enough".1700
7.615  China and the European Communities argue that the USITC failed to take into account the
decline in rebar imports in 2000 and 2001.1701  Taking a safeguard measure despite a significant
decrease in imports would be tantamount to claiming self defence when shooting at an aggressor who
is already running away, i.e., where the danger is no longer imminent.1702
7.616  With regard to the European Communities' conten tions, the United States reiterates that full-
year 2001 data were not, and should not be, cons idered.  Furthermore, the USITC observed that,
despite the declines from 1999 to 2000, and between interim 2000 and interim 2001, imports in 2000and in interim 2001 were nonetheless at levels that were substantially higher than in earlier years of
the period of investigation before 1999.
1703
7.617  The European Communities counter-responds that the annualised interim 2001 data show that
both, actual and relative imports have decreased significantly in the first part of 2001.  The United
States cannot rely on the ruling in US – Line Pipe  because there are no facts and an adequate and
reasoned explanations that imports "remained" at increased levels.1704
(ii) The USITC's method of analysis
7.618  China argues that the USITC did not satisfy the requirement that it consider the rate and
amount of the relative and absolute increase in imports and the trends by simply stating the import
data for each year of the period of investigations.1705
7.619  The European Communities also argues that the observation that imports were higher in 2000
than in 1996 is irrelevant because it is merely based on an end-point-to-end-point comparison.  The
European Communities submits that recent absolute import levels are irrelevant if the most recent
trend shows a decrease in imports.1706
7.620  The United States also argues that the USITC's analysis was hardly based on a simple end-
points comparison.  In this regard, the European Communities overlooks the fact that the USITC also:
(i) compared 2000 import levels to those in 1998 (and found that 2000 imports were 35.8% higher);(ii) compared interim 2001 imports levels to 1996 and 1997 (and found that imports in the first six
months of 2001 exceeded full-year levels in 1996 and 1997); and (iii) compared the relative import
                                                     
1699 United States' first written submission, para. 265.
1700 China's first written submission, para. 116.
1701 China's first written submission, para. 271; European Communities' first written submission,
paras. 323-328.
1702 European Communities' first written submission, para. 327.
1703 United States' first written submission, para. 262.
1704 European Communities' second written submission, paras. 210-211.
1705 China's first written submission, paras. 266-267.
1706 European Communities' first written submission, para. 327.WT/DS248/R, WT/DS249/R,
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ratio in interim 2001 to 1996, 1997 and 1998 (and found that it was higher than in any of those prior
years).1707
7.621  Finally, according to the United States, it is not true that recent absolute import levels are
irrelevant if the most recent trend shows a decrease in imports, as the European Communities argues.
Article 4.2(a) does not focus on trends to the exclusion of the amount of imports and it is not
necessary that imports be increasing up to the very end of the period of investigation.1708
(f) Welded pipe
(i) "Increased imports" within the meaning of the Agreement on Safeguards?
7.622  The European Communities argues that, although imports have not decreased in the most
recent past, the USITC failed to show that the increases in imports of welded pipe were "sudden,
sharp and significant".  The USITC's consideration that the "24.2 percent" increase in quantity "was
the largest annual percentage increase of the period examined" and that imports "continued at a very
high level in interim 2001"1709 as well as the reference to a large increase in the ratio to domestic
production at the end of the period examined1710 is, submits the European Communities, not
sufficient.1711
7.623  The European Communities and Switzerland argue that because imports of welded pipe
increased steadily throughout the period of investigation, the increase was not "sudden, sharp and
significant".  A safeguard measure may not be used to protect the industry against a gradual and
therefore adjustable increase in imports.1712
7.624  According to Switzerland, even if the Panel finds  that the 24.2% increase in imports in 2000
was recent and sharp enough, the United States failed to provide an adequate and reasonable
explanation of how the facts in the report support it s findings and to demonstrate the relevance of the
factors examined.1713  The European Communities adds that absent such explanation, which cannot be
cured in the dispute settlement proceedings, the Panel cannot and should not determine whether theexisting increase is sufficient to meet the WTO standard.
1714
7.625  Switzerland admits that imports of welded tubular products have increased during the period
of investigation.  However, there must be an extraordinary and abnormal surge in imports as stated in
the first safeguard measure adjudicated by the GATT in the US – Fur Felt Hats  case.  A gradual
increase in imports is the very purpose of trade liberalization between WTO members.  A gradual
increase can, therefore, not be substantial enough to trigger an emergency action like the imposition of
a safeguard measure.1715  The United States omits to say that in 1999 the imports decreased by 6.4%
that the increase of almost 25% in 2000 is based on the comparison with 1999 figures, that is after
there had been a decrease, and not on the comparison with 1998 figures where the increase would
have been less important, for after a decrease, an increase to the previous level gives automatically a
                                                     
1707 United States' first written submission, para. 263.
1708 United States' first written submission, para. 264.
1709 USITC Report, Vol. I, p. 157.
1710 USITC Report, Vol. I, p. 158.
1711 European Communities' first written submission, para. 332.
1712 European Communities' first written submission, para. 335; Switzerland's first written submission,
paras. 253-254.
1713 Switzerland's first written submission, para. 256.
1714 European Communities' first written submission, para. 337.
1715 Switzerland's first written submission, para. 71.WT/DS248/R, WT/DS249/R,
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higher percentage of increase.  The higher percentage increase in 2000 is due to a statistical effect.
Another interesting development is that from 1996 to 1998 imports have increased by almost 44%compared to an increase of only 16 per cent during the period 1998-2000. However, the United States
did not take any safeguard measure at the time wh en imports were more important that is during
1996-1998.
7.626  The United States claims that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the reco rd support the USITC's determination that there
were increased imports of welded pipe.  The European Communities misstates the standard under
Article 2.1 of the Agreement on Safeguards when ar guing that the USITC failed to show that the
increases in imports of welded pipe were "sudden and sharp".  For the same reasons, the United States
rejects Switzerland's argument that because imports  of welded pipe increased steadily throughout the
period of investigation, the increase was not "sudden, sharp and significant".  The United States also
insists that the import data, and their link to the threat of serious injury to the domestic industry, are
described in the USITC Report in a clear and straightforward manner.
1716
7.627  The European Communities responds that the United States does not indicate where in its
Report the USITC has provided a quantitative analysis of import developments showing that there has
been an abnormal and unexpected change in import levels as opposed to the continuation of a
perfectly foreseen gradual and adjustable rise in imports.1717
(ii) The USITC's method of analysis
7.628  The European Communities submits that the USITC has also failed to provide annual
percentage increases and to evaluate all the trends in actual and relative imports by comparing their
increases and decreases over the period of investigation.1718
(g) FFTJ
7.629  The European Communities argues that the USITC Report does not contain an adequate and
reasoned explanation, based on a complete evaluation of import trends over the entire period of
examination for each of the specific products grouped into this broad category, of why the steady
development described by the USITC fulfils the very high and exacting standard of import surges that
are sharp and significant enough so as to cause serious injury or a threat thereof for each of the
specific products it grouped together in its mix of heterogeneous products.1719
7.630  The United States contends that, in arguing th at the increase in imports was steady, rather
than sharp and significant, the European Communities again applies the wrong standard.  TheAgreement on Safeguards requires an evaluation of whether there were imports "in such increased
quantities … and under such conditions as to cause or threaten to cause serious injury", and the
USITC satisfied this standard when it first focused on increased imports and subsequently found
injury and a causal link.
1720
7.631  For the counter-responses of the European Communities, see section F.4c(i).
                                                     
1716 United States' first written submission, paras. 276, 272-273, 274.
1717 European Communities' first written submission, para. 214.
1718 European Communities' first written submission, para. 334.
1719 European Communities' first written submission, para. 344.
1720 United States' first written submission, para. 282; United States' written reply to Panel question No.
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(h) Stainless steel bar
7.632  The European Communities states that it fails to see a reasoned explanation of how the facts
can support a finding of a recent, sudden, sharp and significant surge.  The European Communities
challenges the USITC's finding of increased imports because what might at first glance appear to be
an upward trend between 1999 and 2000 was a mere blip, i.e., a one year peak in imports which
immediately returned to normal levels in 2001.  The USITC itself acknowledged that absolute import
numbers decreased in the first half of 2001.  At the time the US President took his decision, the full
year 2001 data confirmed the significant and enduring plunge in imports.1721
7.633  The United States insists that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the reco rd support the USITC's determination that there
were increased imports of stainless steel bar.  The United States submits that the Panel should not be
misled by the characterization by the European Communities of the rise in imports in 2000 as "a mere
blip".  As regards the decline in imports in 2001 to which the European Communities points, the
United States reiterates that full-year 2001 data were not, and should not be, considered.  According tothe United States, it is readily apparent from the data that the increase in imports in 2000 was sharp
and substantial.
 1722
7.634  The European Communities responds that even on the basis of interim 2001 data, the sharp
decrease in actual imports compensating the earlier increase must have been obvious to the USITC
and required a particularly convincing explanation why imports remained at increased volumes.1723
(i) Stainless steel wire
(i) "Increased imports" within the meaning of the Agreement on Safeguards?
7.635  China and the European Communities contend that the USITC failed to determine whether
the absolute and relative increase in imports was recent enough, sudden enough, sharp enough and
significant enough, and failed to correctly evaluate the rate and amount of the increase in imports andto correctly consider the trends in imports.
1724
7.636  In response to the contention that the USITC failed to determine whether the increase in
imports was recent enough, sudden enough, sharp enough and significant enough, the United States
reiterates that there are no absolute standards for how recent, sudden, sharp or significant an increase
in imports must be.1725
7.637  The European Communities also argues that the increase observed in the period 1999-2000
was merely the flip side of a sharp decrease in imports in 1999.1726  Also in relative terms, the 2000
increase in imports was a "blip development" not resulting in abnormal import levels.  There is also
no adequate and reasoned explanation for how these facts support a conclusion that the micro-
                                                     
1721 European Communities' first written submission, paras. 348, 349, 351.
1722 United States' first written submission, paras. 287-288.
1723 European Communities' second written submission, para. 220.
1724 China's first written submission, paras. 302-303; European Communities' first written submission,
para. 372.
1725 United States' first written submission, para. 316.
1726 USITC Report, Vol. I, p. 235.WT/DS248/R, WT/DS249/R,
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development between 1999 and 2000 was an abnormal, sudden and sharp increase in imports
threatening serious injury.1727
7.638  According to the United States, the European Communities' characterization of the 2000
increase as a "blip development" is not borne out by the facts and overlooks the fact that two of the
USITC Commissioners making affirmative determinations found a threat of serious injury.  In doing
so, they focused not only on the increase in imports in 2000, but particularly on conditions in interim
2001.1728  Chairman Koplan noted the rapid increase in relative import levels in interim 2001.1729
Commissioner Bragg noted the increase in absolute import levels in 2000, and the fact that thesedeclined only slightly between interim 2000 and interim 2001.
1730  Commissioner Devaney noted that
the quantity of imports increased in 2000, an d remained steady between the interim periods.1731
7.639  The European Communities responds that the references to extracts from the causation
analysis are irrelevant and do not contain the required quantitative analysis of the increase in imports.
Nowhere in the analysis of Chairman Koplan (who was the only one looking at stainless steel wire as
a separate product) is there any explanation why relative import levels can be seen as abnormal andthe Agreement on Safeguards does not permit safeguard measures to be taken against threat of
imports, but only after imports have actually or relatively increased.
1732
(ii) The USITC's method of analysis and the requirement of a reasoned and adequate explanation
7.640  China argues that the USITC failed to consider the rate and amount of increased imports in
absolute and relative terms and the trends.1733  China also asserts that the upward trend in imports was
very smooth and, thus, the USITC was wrong in considering the increase from 1999 to 2000 apart
from the rest of the period of investigation.  In any event, the USITC did not provide any reasoned
and adequate explanation concerning the trends in imports.1734
7.641  The United States insists that the USITC Report contains an adequate, reasoned and
reasonable explanation of how the facts in the reco rd support the USITC's determination that there
were increased imports of stainless steel wire.1735  China's assertion that the USITC's analysis of the
import trends was deficient because the upward trend in imports was "smooth", and the USITC failed
to explain the trend in imports is without meri t.  The USITC Commissioners making affirmative
determinations described the import data in a deta iled and straightforward fashion.  They noted the
increases in imports, especially over the interim periods.1736  China's arguments regarding increased
imports are based only on the data considered by Chairman Koplan who defined the like product as
stainless steel wire, but do not address the analysis of increased imports performed by the other twoCommissioners who made affirmative determinations based on broader product categories.
                                                     
1727 European Communities' first written submission, paras. 369-371; European Communities' written
reply to Panel question No. 44 at the first substantive meeting.
1728 As the Appellate Body recognized in US – Lamb, para. 137, because of the future-oriented analysis
involved in a threat determination, it is esp ecially important to focus on more recent data.
1729 USITC Report, pp. 256-259.
1730 USITC Report, p. 280.
1731 USITC Report, p. 343.
1732 European Communities' second written submission, paras. 230-233.
1733 China's first written submission, para. 299.
1734 China's first written submission, para. 301.
1735 United States' first written submission, para. 317.
1736 United States' first written submission, para. 315.