UNITED STATES – MEASURES AFFECTING IMPORTS OF CERTAIN PASSENGER VEHICLE AND LIGHT TRUCK TYRES FROM CHINA
Document: Report of the Panel
Date: 13 December 2010
Document codes: WT/DS399/R
Complainant: China
Respondent: U.S.
Third parties: EU, Japan, Taiwan, Turkey, Vietnam
Dispute stage: Appellate Body
Agreements cited: Art. 16.1, 16.3, 16.4, 16.6  Protocol of AccessionArt. I:1, II, XIX  GATT 1994  Safeguards

UNITED STATES – MEASURES AFFECTING IMPORTS
OF CERTAIN PASSENGER VEHICLE AND
LIGHT TRUCK TYRES FROM CHINA

Report of the Panel

I. INTRODUCTION
1.1 On 14 September 2009, the People's Republic of China ("China") requested consultations
with the United States pursuant to Article XXIII:1 of the GATT 1994, Articles 1 and 4 of the DSU
and Article 14 of the Safeguards Agreement , with regard to certain measures taken by the
United States allegedly affecting the import of cer tain passenger vehicle and light truck tyres from
China.
1 China and the United States held consultati ons in Geneva on 9 November 2009, but failed to
resolve the dispute. At the DSB meeting on 19 Jan uary 2010, China requested the establishment of a
Panel pursuant to Article XXIII:2 of the GATT 1994, Articles 4.7 and 6 of the DSU and Article 14 of
the Safeguards Agreement.2 At that meeting, the DSB establishe d a panel pursuant to the request of
China.
1.2 The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter re ferred to the DSB by China in document
 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.
1.3 On 2 March 2010, China requested the Director-G eneral to determine the composition of the
panel, pursuant to paragraph 7 of Article 8 of the DSU. This paragraph provides:
If there is no agreement on the panelists within 20 days after the date of the
establishment of a panel, at the request of either party, the Director-General, in
consultation with the Chairman of the DSB and the Chairman of the relevant Council
or Committee, shall determine the com position of the panel by appointing the
panelists whom the Director-General consid ers most appropriate in accordance with
any relevant special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in th e dispute, after consulting with the parties
to the dispute. The Chairman of th e DSB shall inform the Members of the
composition of the panel thus formed no later than 10 days after the date the
Chairman receives such a request.
1.4 On 12 March 2010, the Director-General accordingly composed the Panel as follows:
3
 Chairman: Professor Celso Lafer

 Members: Professor Donald M. McRae
 Mr. Luis M. Catibayan

1.5 The European Union, Japan, Ch inese Taipei, Turkey, and Viet Nam reserved their rights to
participate in the Panel proceedings as third parties.
1.6 The Panel met with the parties on 1-2 June 2010 and 20-21 July 2010. The Panel met with
the third parties on 2 June 2010. The Panel issued its interim report to the parties on
24 September 2010. The Panel issued its final report to the parties on 8 November 2010.

1 WT/DS399/1.
2 WT/DS399/2.
3 WT/DS399/3.

II. FACTUAL ASPECTS
2.1 This case is about a transitional product-specific safeguard measure under Paragraph 16 of the
Protocol that has been applied on imports of cer tain passenger vehicle and light truck tyres from
China pursuant to Section 421 of the Trade Act of 1974.
2.2 A petition was filed by the USW on 20 April 2009, requesting the USITC to initiate an
investigation under Section 421(b) of the Trade Act of 1974. The USITC instituted the investigation
effective on 24 April 2009. The USITC determined that there was market disruption as a result of
rapidly increasing imports of subject tyres from China that were a significant cause of material injury
to the domestic industry. Following a Presidentia l decision additional duties have been imposed on
imports of subject tyres for a three-year period, in the amount of 35 per cent ad valorem in the first
year, 30 per cent ad valorem in the second year, and 25 per cent ad valorem in the third year. The
Tyres measure took effect on 26 September 2009.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A.
CHINA
3.1 China has seven specific claims in this dispute and requests the Panel to find that:
(i) the United States failed to evaluate properly whether imports from China
were in "such increased quantities" a nd "increasing rapidly" as required by
Paragraphs 16.1 and 16.4 of the Protocol;
(ii) the U.S. statute implementing the causation standard of Paragraph 16 into
U.S. law is inconsistent "as such" wi th Paragraphs 16.1 and 16.4 of the
Protocol;
(iii) the United States failed to evaluate properly whether imports from China
were a "significant cause" as required by Paragraphs 16.1 and 16.4 of the
Protocol;
(iv) the United States has imposed a transitional safeguard measure that goes
beyond the "extent necessary", and thus it is inconsistent with Paragraph 16.3
of the Protocol;
(v) the United States has imposed a trans itional safeguard measure for a three-
year period that is beyond "such period of time" that is "necessary", and thus
it is inconsistent with Paragraph 16.6 of the Protocol.
3.2 China also claims that the transitional safegua rd measure is inconsistent with the GATT 1994
and requests the Panel to find that:
(vi) the transitional safeguard measure is in consistent with Article I:1 of the
GATT 1994 as the United States does not accord the same treatment that it
grants to passenger vehicle and light truc k tyres originating in other countries
to like products originating in China;
(vii) the transitional safeguard measure is in consistent with Article II:1(b) of
GATT 1994 as the tariffs consist of unjustified modifications of U.S.
concessions on passenger vehicle and light truck tyres under the GATT 1994.

3.3 China asks that the Panel find that the United States is not in conformity with Paragraph 16 of
the Protocol and Articles I:1 and II:1(b) of GATT 1994. China asks that the Panel recommend that
the United States promptly comply with its obligations and withdraw the challenged measures.
B.
THE UNITED STATES
3.4 The United States asks the Panel to reject China's claims in their entirety.
IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are set out in their written submissions and oral statements to the
Panel and in their answers to questions. Executiv e summaries of the parties' written submissions, and
executive summaries of their oral statements are a ttached to this report as annexes (see List of
Annexes, pages vi and vii).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The European Union, Japan, Chinese Taipei, Turk ey and Viet Nam reserved their rights to
participate in the Panel proceedings as third parti es. Chinese Taipei, Turkey and Viet Nam did not
submit third party written submissions or make oral statements. The arguments of the
European Union and Japan are set out in their wr itten submissions and oral statements. Executive
summaries of the third parties' written submissions and third party oral statements, or executive
summaries thereof, are attached to this report as annexes (see List of Annexes, pages vi and vii).
VI. INTERIM REVIEW
6.1 On 24 September 2010, the Panel issued its Interim Report to the parties. On 8 October 2010,
both parties submitted requests for the review of precise aspects of the Interim Report. On
25 October 2010, the parties submitted comments on one another's request for review.
6.2 This Interim Review section summarises the parties' requests for review and comments
thereon, as well as our responses. Because the footno te numbering (but not the paragraph numbering)
of our Report has changed due to changes made at th e interim review stage, for the sake of clarity the
footnote references in this section reflect the numbering in the Final Report.
6.3 The Panel is grateful to the parties for their assistance in identifying a number of
typographical errors in the Interim Report.
A. REQUEST FOR REVIEW SUBMITTED BY CHINA
1. Increasing rapidly
(a) Para. 7.83
6.4 China claims that the Panel is going beyond merely presenting the facts in providing the data
for the increases of subject and non-subject imports and recommends that the Panel "simply report the
data for subject and non-subject imports." China continues that if the Panel "wishes to go beyond
merely summarising the data", the Panel should make two changes. First, the Panel should report
parallel figures for subject and non-s ubject imports. Second, China argues that if the Panel includes
percentage increases, it should also include the volu me change from one year to the next for both
subject and non-subject imports. China continues th at percentage increases alone are misleading and
"the Panel should either present no percentage ch anges, or present both percentage changes and
volume changes from year to year."

6.5 The United States claims that, under the standard of re view in Article 11 of the DSU, "the
Panel will necessarily need to 'go beyond' a 'mere pr esentation' of the facts on the record; instead, the
Panel is expected to evaluate whether the ITC's an alysis was 'reasoned and adequate' in light of the
record evidence." The United States does not consid er that parallel data on non-subject imports is
necessary to make the Panel's analysis any clearer. The United States accuses China of attempting to
place weight on the comparative levels of subject and non-subject volumes, an approach it did not
take during the proceedings.
6.6 We do not consider it necessary to include an y further data on non-subject imports. The
obligation in the Protocol is to consider whether subject imports are "increasing rapidly" on an
absolute or relative basis. On China's first poi nt regarding the data for increases in non-subject
imports, we note that we address the role of non-subject imports throughout the report
4 and
specifically in paras. 7.364 to 7.367. Paragraph 7.83 focuses on absolute increases. However, in
order to address China's concerns we have deleted th e third table in paragraph 7.83, with appropriate
adjustments to the text at the beginning of that paragraph, and added a citation in new footnote 176 .
6.7 Regarding China's second point and its desire to include volume changes from year to year,
we note that China argued the relevance of year- on-year increases in annual volumes at para. 120 of
its First Written Submission and in para. 28 of its Oral Statement at the First Panel Meeting. We
consider this to be an argument associated with the rate of increase. As we have noted in para. 7.92
of our Report, under the Protocol the rapid increase need only be on an absolute or relative basis.
China does not contest this. As such, we do not cons ider inclusion of this data adds anything further
to what we have already said about the rate of increase in paras. 7.87 to 7.93.
(b) Para. 7.84
6.8 China argues that the statement by the Panel "that 'the greatest increase o ccurred in the last
two years of the period' ... inappropriately accepts the U.S. efforts to combine the final two years of
the period."
5 China submits that the Panel should delete this statement or "present a more in-depth
explanation" given that the "statement, as writte n, is misleading and masks the actual amount of
increase in 2008, which was the smallest increase of any year of the period." China continues that if
"the Panel is to note that the largest increase in the period occurred in 2007, then the Panel should also
note that the smallest increase of the entire period, in terms of both quantity and percentage increase,
occurred in the last year of the period – 2008."6
6.9 The United States argues that the Panel did not focus only on the increases in import
volumes in 2007 and 2008. Rather, the Panel conducte d a detailed analysis of the increase in subject
imports in 2008. The United States does not thi nk any revision is necessary, but should the Panel
believe further clarification is justified it sugg ests replacing the sentence: "The greatest increase
occurred in the last two years of the period" with "The greatest increases (14.5 million units) occurred
in 2007. This was followed by a further significant increase (4.5 million units) in 2008."
6.10 We note that the jurisprudence states that cons ideration should be given to trends over the
investigation period, as well as to the recent period. 7 In that regard it is entirely appropriate that we
consider what was happening to imports in the final two years of an investigation as well as
considering trends during the course of the period of investigation. China's argument in these
proceedings was to look at the most recent period, which it considered to be 2008. The Panel has

4 See for example paras. 7.95, 7.203-7.204, 7.293, and 7.301.
5 China's comments on the Interim Report, para. 10.
6 China's comments on the Interim Report, para. 11.
7 We refer to para. 7.88 of the Interim Report and footnote 187.

determined that a focus solely on 2008 was not appropriate.
8 In any case, paragraph 7.93 of the
Report recalls that in each year of the period of investigation, there was an increase that was in
addition to the increase in the previous year. However, to address China's request we have added a
footnote to the end of the sentence in paragraph 7.84.
(c) Para. 7.86
6.11 China argues that the Panel "concludes its review of the import data without ever addressing
the quarterly or monthly data for 2007 and 2008 wh ich was presented by China." China continues
that this is "a major omission that should be co rrected." China argues that "[i]mports dropped on a
quarterly basis in three of the four quarters in 2008, and dropped 7.8 per cent in Q3 and Q4 2008
relative to Q2 2008." 9 China claims that this "drop off in s ubject imports at the end of the period is
directly applicable to the ques tion of whether subject imports ar e 'increasing rapidly' under the
Protocol."10
6.12 The United States argues that the Panel did not need to dwell on China's arguments based on
quarterly data as the arguments "were of a subsidiary nature and not persuasive."
6.13 We consider that China's argument regarding the use of quarterly data is connected to China's
argument regarding the rate of increase, which wa s addressed in the Report in paragraphs 7.87 to
7.93. However, to reflect China's concerns we have added a footnote to the end of paragraph 7.86.
(d) Para. 7.87
6.14 China argues that the Panel mischaracterises Chin a's argument regarding the meaning of
"increasing rapidly" when it states that China "argu es that for imports to be 'increasing rapidly' there
must be an increasing rate of increase in 2008, the final year of the period of investigation, compared
to 2007." China claims that it never stated that the rate of increase "must" be higher than that of 2007.
China continues that it stat ed "that such a scenario could be indicative that imports are 'increasing
rapidly' under the Protocol." China claims that its argument regarding the rate of increase "is simply
that the effects of a significant decline in the ra te of increase in 2008 should be taken into account
when assessing the issue of whether or not subject imports are 'increasing rapidly'."
6.15 The United States notes that at footnote 134 in paragr aph 7.87 of the Interim Report (now
see paragraph 7.87 and footnote 182 of the Final Report) "the Panel expressly recognised that China
had outlined two scenarios for the meaning of 'rap idly,' and acknowledged that other scenarios might
be possible". The United States argues that the Pa nel's analysis and focus on the rate of increase
accurately characterised the "thrust of China's argu ments on this issue throughout its submissions and
statements."
6.16 To take into account China's concerns that its arguments be reflected accurately, we have
modified paragraphs 7.87 and 7.92 of our Report.
6.17 China also claims that it has "simply argued that the steep drop-off in 2008 (just a 10.8 per
cent increase as opposed to the 53.7 percent increase in 2007) casts doubt on whether imports can still
be properly found to be 'increasing rapidly'." Ch ina argues that the "mischaracterization of China's

8 Paras. 7.87 to 7.93 of the Interim Report.
9 China's comments on the Interim Report, para. 12. Refers to China's First Written Submission,
paras. 127-128.
10 China's comments on the Interim Report, para. 12 . Refers to China's Second Written Submission,
paras. 119-122.

argument on this issue resulted in the Panel impermi ssibly glossing over the 2008 drop in the rate of
increase, when instead the rate trends should have been examined closely and put into context."
11
China claims that its argument regarding the rate of increase "is simply that the effects of a significant
decline in the rate of increase in 2008 should be taken into account" in determining whether imports
are "increasing rapidly".
6.18 The United States disagrees that the Panel glossed over the drop in the rate of increase in
2008. The United States notes that the Panel consider ed the absolute and relative increases in import
volumes in 2008, and refers to paras 7.87 to 7.93 of the Report to argue that the Panel considered and
rejected China's claim "that the decline in the rate of increase in Chinese import volumes in 2008
meant that imports were not 'increasing rapidly' in 2008".
6.19 We consider there is ample basis in the Re port to negate any accusation that the Panel
"glossed" over the 2008 drop in the rate of increase. On the contrary, given China's focus on the rate
of increase, there was considerable attention given to the data in 2008 in paragraphs. 7.83 to 7.105.
Therefore, on this point we make no further changes to paragraph 7.87.
2. "As such" causation
(a) Paras. 7.138-7.140
6.20 China contends that the Panel sets up a false st raw man by stating that China is arguing
"cause" is capable of "producing or bringing a bout a result on its own" while "contribute" would
require the contribution of other causal factors for an event to occur. China submits that it never
argued that "significant cause" must be the sole cause . China asserts that the Panel's creation of this
straw man led the Panel to sidestep the real issue – that of whether "to contribute" requires less than
"to cause."
6.21 The United States asserts that the Panel accurately re flected China's arguments. The Panel
clearly explained that the focus of China's argument was that "the term 'contribute' is less stringent
than 'cause,'" just as China now asserts. 12 Moreover, after noting that China had relied on specific
dictionary definitions of these terms, the Panel then concluded that, "[l]ooking exclusively at these
terms, one might legitimately conclude that a 'cont ribution' has a lesser causal effect than a 'cause ,"
because "implicit in the definitional differences i nvoked by China is the notion that the term
'contribute' allows for multiple factors to each 'play a part in' bringing about a result, whereas 'cause'
means that the triggering event is in and of itsel f capable of bringing out, or producing that result." 13
The Panel's assertion that the definitions cited by Ch ina could be read to imply that a "cause" be the
"sole" cause of injury were simply its own r easoned way of evaluating the merits of China's
arguments and entirely appropriate.14
6.22 The Panel sees no need to make changes in the light of China's request. The Panel did not
state that China argued that "significant cause" must be the sole cause. It reflected China's argument
accurately in footnote 248 of the Report. The Panel' s analysis of the meaning of the term "cause" in
the context of Paragraph 16.4 of the Protocol and its relationship with the term "contribute" is dealt
with in paragraphs 7.138 – 7.146 of the Final Report.

11 China's comments on the Interim Report, para. 6.
12 Interim Report, para. 7.137.
13 Interim Report, para. 7.138.
14 The United States makes this point, even though it does not fully agree with the Panel's assertion that
"cause" could, in some cases, be read as having a different definition or meaning than the word "contribute" in
situations involving descriptions of causal effect.

(b) Para. 7.158
6.23 China claims that the Panel mischaracterizes China's argument on what "significant cause"
requires. In particular, China denies that it had argued that "significant cause" means that rapidly
increasing imports must be "the most" significant cause of market disruption.
6.24 The United States disagrees with China. The United States asserts that China did argue, as it
now concedes, that the term "significant" necessarily requires a comparison of the effects of Chinese
imports "relative to other matters."
15 Moreover, China also made clear in its submissions that it
believed that the ITC should have weighed the e ffects of Chinese imports against other injury
causes.16 Indeed, China specifically argued that the U.S. statute was inconsistent with the Protocol
because it permitted the ITC to find that Chinese imports were a "significant cause" of injury even if
they were "a less important factor than any other single cause." 17 Given China's arguments, which
were not particularly clear, the Panel reasonably concluded that China was suggesting, among other
things, that the ITC should have determined wh ether Chinese imports were a "more important" cause
of injury to the industry than other causes.
6.25 We have modified para. 7.158 of the Final Report in light of China's request. We have also
included new footnote 268 in our Report.
3. "As applied" causation
(a) Paras. 7.140 and 7.169-7.170
6.26 China requests clarification as to what the Panel has interpreted the term "significant" in
"significant cause" to mean. China asks the Panel to make two changes. First, the Panel should
explain what it interprets "significant" in "signi ficant cause" to mean and distinguish "a significant
cause" from simply "a cause." Second, the Panel shou ld then apply this interpretation of "significant
cause" in each of its findings on causation, noting why certain injury factors indicate that subject
imports are a "significant cause" of material injury, and not simply a "cause."
6.27 The United States asserts that there is no need for the Panel to clarify its findings on the
issue or to change its analysis of the USITC's fi ndings on this score, as the Panel could not have been
clearer on its definition of the term. The United Stat es submits that the Panel properly stated that the
United States, China and the Panel all agreed that the word "significant," as used in the Protocol,
means "important," "notable," or "consequential." Moreover, the Panel also clearly rejected the idea
that the U.S. statute or the Protocol contemplated that a "even a minimal cause" of injury might be a
"significant cause" of injury under the Protocol. Finally, the Panel made clear that it applied this
standard when reviewing the USITC's analysis, stating that it had assessed whether the USITC
reasonably found that Chinese imports were a "s ignificant," i.e., "important," "notable" or
"consequential," cause of material injury to the industry.
6.28 Regarding para. 7.170 of our Report, the phrase "significant cause" is simply a shorthand
reference to the particular causation standard in Pa ragraph 16.4. The point is that the causal element
(as opposed to the "significant" element) of the Pa ragraph 16.4 causation standard could likely not be
established without analysing correlation and the conditions of competition. Since the causation

15 E.g. China's First Written Submission, paras. 204-207; China's Second Written Submission,
para. 155.
16 E.g. China's First Written Submission, paras. 204-205.
17 China's First Written Submission, para. 206.

standard in Paragraph 16.4 is "significant cau se", it would therefore be difficult to establish
"significant cause" without analysing correlation or the conditions of competition.
6.29 We have modified para. 7.159, to state expressly that a "significant" cause is one that is
important or notable.
6.30 Regarding China's second request, we note that the Panel's job is to review the determinations
(including "significant cause") made by the USITC. It is not for the Panel to itself explain "why
certain injury factors indicate that subject imports are a 'significant cause' of material injury". This is
the role of the USITC. Accordingly, we see no need to make the changes requested by China.
(b) Paras. 7.174 – 7.177
6.31 China requests clarification of the Panel's findings on non-attribution. China notes the
Panel's finding that "a finding of causation ... shoul d only be made if it is properly established that
rapidly increasing imports have injurious effects that cannot be explained by the existence of other
causal factors."
18 In China's opinion, the Panel should clarify this "presently-vague" standard, and
specify under what circumstances injurious effects can be explained by the existence of other causal
factors. The Panel should also specif y under what circumstances injurious effects cannot be
explained by the existence of other causal factors. China submits that, in elaborating on this analysis,
the Panel should follow the A ppellate Body jurisprudence from US – Hot-Rolled Steel which states
that investigating authorities must "separate and di stinguish" the injurious effects of imports from the
injurious effects of other factors.
6.32 The United States contends that there is nothing "vague " about the Panel's description of the
standard that it applied to the USITC's analysis. Th e Panel's explanation of the standard is as specific
and clear as statements made by the Appellate Body and WTO panels about the standards to be
applied when reviewing non-attribution analy ses under other WTO Agreements. Moreover, the
Panel's actual review of the USITC's analysis of ot her injury factors, such as the industry's business
strategy and the effects of demand cha nges, was lengthy, detailed and rigorous, 19 despite China's
claims to the contrary. 20 China has provided the Panel with no basis for revisiting or revising its
findings on these issues. The United States contends that the Panel correctly found that the specific
"separate and distinguish" analysis that has been found applicable under the non-attribution language
of these Agreements is not directly applicable to causation analysis under the Protocol, because the
Protocol does not contain the sort of non-attri bution requirement that is set forth in the AD, SCM and
Safeguards Agreements .21 According to the United States, Ch ina itself conceded that, due to the
absence of specific non-attribution language in th e Protocol, it has "never claimed {in this
proceeding} that under Article 16 'the authority mu st perform the same non-attribution analysis for
other factors in the market that it would in a global safeguard proceeding.'"22 Given this, China has no
basis for asking the Panel to now apply the "sep arate and distinguish" standard to the USITC's
analysis of other factors in this proceeding.
6.33 The Panel sees no reason to alter the provisions or paragraphs as requested. The Panel is
required to interpret the provisions of the Prot ocol, and assess the USITC's application of those

19 Interim Report, paras. 7.262-7.3.78.
20 China's Comments, para. 20.
21 Appellate Body Report, US – Upland Cotton , para. 436 (stating that absence of non-attribution
language in serious prejudice provisions of the Subsidie s Agreement indicates that a "panel has a certain degree
of discretion in selecting an appropriate methodology for determining whether the ‘effect of a subsidy is
significant price suppression"); Panel Report, US – Upland Cotton, para. 7.1343.
22 China's Second Written Submission, para. 309.

provisions to the facts at hand. The Panel is not required to explain how those provisions may or may
not be applied in all circumstances. In add ition, the Panel already clearly explained why the US –
Hot-Rolled Steel "separate and distinguish" standard is not applicable in the present case, and China
conceded as much at para. 309 of its Second Written Submission.
(c) Paras. 7.196 – 7.197
6.34 China asks the Panel to correct footnote 305 of the Report, regarding the percentage of tier 1
shipments accounted for by subject imports. In addition, China asks the Panel to explain why
competition still exists even though subject impor ts do not compete with domestic tires for over
50 per cent of all shipments. China also asks the Panel to clarify the exact " variation in the levels of
competition between subject imports and domestic products as between tier 1 and tiers 2 and 3",
23
indicating what the degree of competition was in tier 1, and what the degree of competition was in
tiers 2 and 3.
6.35 The United States agrees that the Panel should correct footnote 305 of its Report. Otherwise,
though, the United States contends that China is doi ng nothing more than re-arguing its theory that
there was minimal competition between Chinese and U.S. tires in the replacement market. The
United States believes there is no need to revise the analysis or conclusions.
6.36 We have corrected footnote 305 of the Report, as requested by both parties. The Panel sees
no need to make any of the additional changes requested by China.
(d) Para. 7.205
6.37 China asks the Panel to clarify what it means by "t here was some variation in the levels of
competition within the OEM market." 24 The Panel should make a finding as to what degree of
competition existed in the OEM market between s ubject imports and domestic products – simply
stating that competition varied is too vague. In stating what degree of competition existed in the
OEM market, the Panel should note which facts it is relying upon in making this finding.
6.38 The United States submits that the Panel conducted a de tailed and fact-specific evaluation of
this issue, correctly finding that China's share of this market grew from a relatively small level of
0.2 per cent in 2004 to a more pronounced 4.9 per cent in 2008, the final year of the period. 25 As the
Panel also correctly pointed out, the record showed that, during the period, the absolute volumes and
market share of the U.S. tires in this sector fell, thus indicating that the "degree of resultant
competition between subject imports and domesti cally-produced tires in the OEM market was
increasing."26 Given the detailed factual nature of th e Panel's assessment on this issue and the
reasonableness and clarity of its conclusions, the United States does not believe that there is a need for
the Panel to revise its findings on the issue, in cluding its correct statement that there was "some
variation in the levels of competition over the period."
6.39 The Panel sees no reason to alter the Report as requested.

24 Interim Report, para. 7.205.
25 Interim Report, para. 7.202.
26 Interim Report, para. 7.204.

(e) Para. 7.229
6.40 China submits that the Panel mischaracterizes China's argument on correlation. China asserts
that it never argued that, for there to be correlati on between imports and injury factors, "a precise
correlation between the degree of change in imports and the degree of change in the injury factors" is
necessary.
27 To the contrary, China argued that simple temporal correlation is insufficient. 28 There
should be a general correlation in degree between th e increases in imports and the decreases in injury
factors – but it need not be precise.29
6.41 In the United States' view, the Panel correctly summarized China's arguments on correlation
in its report by stating, for example, that Chin a argued that "the degree of the respective annual
increases {in Chinese imports} must correspond genera lly with the degree of the respective declines
in injury factors." 30 Given that China itself stated during the proceeding that, when evaluating the
Commission's correlation analysis, the Panel must assess whether the "degree of the respective annual
increases {in imports} ... correspond generally with the degree of the respective declines in injury
factors,"31 China's claim that the Panel mis-characterized or misunderstood its arguments is simply
unfounded.
6.42 The United States further contends that the Pane l does not attribute to China the claim that a
"precise correlation" between import a nd injury factor trends is required. 32 Instead, the Panel was
setting forth its own view that a correlation analysis is not an exact science and that it is therefore
unrealistic to expect or require a precise correlati on between the degree of changes in imports and the
degree of change in the injury factors.
33
6.43 We have amended para. 7.22 9 of our Report to clarify our understanding of China's
arguments.
(f) Paras. 7.307 – 7.312
6.44 China contends that, in addressing the plant closures, the Panel never puts these closures in
proper context and never accounts for the closures as an effect of the globalization of the tyre industry
and not as an effect of a rapid increase in subject imports (as is necessary if the plant closures are to
be attributed to subject imports). The Panel found that all three closures were announced in, and stem
from, 200634 when subject imports were minimal, yet nonetheless found two of the three closures to
be attributable to subject imports. 35 There is a disconnect, however, from the 2006 closures to what
the Panel is fundamentally assessing – whether subject imports are rapidly increasing during the
recent period and causing injury due to this rapid increase. In attributing the closures to subject
imports, the Panel totals data of subject imports for all of 2006, even though the closures were

27 Interim Report, para. 7.229.
28 China's Oral Statement at the Second Panel Hearing, paras. 62-63.
29 China's Oral Statement at the Second Panel Hearing, para. 64 ("The only way for these statements to
be significant in the context of a proper coincidence analysis, however, is for the degree of the respective annual
increases to correspond generally with the degree of the respective declines in injury factors") (emphasis added).
30 Interim Report, para. 7.217.
31 China's Oral Statement at the Seco nd Panel Hearing, para. 64 (emphasis in original). China went on
to point out that "[t]he orders of magnitude [of these changes] are key." Id.
32 Interim Report, para. 7.229. On the contrary, the Pa nel correctly states that China argued that "the
degree of the increases in imports shou ld correspond with the degree of declines in injury factors." Interim
Report, para. 7.228.
33 Interim Report, para. 7.229.
34 Interim Report, para. 7.307.
35 Interim report, para. 7.312.

announced in June and July of 2006 – only halfway through the year.
36 This is therefore an inaccurate
reading of the record. Because the plant closur es were announced only halfway through 2006, these
decisions were based on data from 2005 – not totals for the whole year 2006. Thus, the Panel should
re-assess the closures and do so based off subject import data for 2005 only. Statements based on
full-year 2006 data should be deleted. Finally, the Panel should explain what significance it accords
to the questionnaire data where no U.S. producer r esponded that they were materially injured by
subject imports, four said that they were not, and th e other six either said they were not in a position
to answer or took no position. 37 The Panel notes these facts, but fails to assess them in any way. The
Panel should do so and explain what weight it is giving to this evidence and how it effects the Panel's
assessment of causation.
6.45 The United States asserts that the Panel correctly disag reed with China's claim that there
were only "minimal" increases in the vo lumes of Chinese imports before 2006.
38 In paragraph 7.307,
the Panel noted that the record showed that ther e was a "very substantial increase in the volume of
{Chinese} imports prior to 2006." As the Panel correctly stated, the subject imports from China
increased from 14.6 million tires in 2004 to 20.8 milli on tires in 2005, indicating that Chinese imports
grew by 42.7 per cent between 2004 and 2005. 39 Accordingly, as the Pane l indicated, the significant
increases in subject imports prior in 2005 provided th e USITC with a sufficient basis for concluding
that these increases were a significant contributing f actor for the industry's decision to close certain
production plants in 2006. The United States also co ntends that the Panel co rrectly relied on import
data for 2006 in its analysis. 40 Because the plant closure announcements occurred at least six months
into 2006, the Panel reasonably relied on the fact that Chinese imports continued to increase
significantly over their 2005 levels in 2006, and th at Chinese imports became the second-lowest
priced source of tires in 2006. 41 Given that Chinese imports contin ued their aggressive surge into the
market in 2006 and continued to be increasingly aggressive in their pricing practices in that same
year, the Panel and the ITC both reasonably relie d on these facts when concluding that Chinese
imports were a significant factor in the industry's decision to close these production facilities.
6.46 The United States believes the Panel clearly explai ned what weight it gave to the fact that no
producer specifically reported that it was materially injured by imports, and reasonably concluded that
producers' statements were not dispositive of the question as to whether Chinese imports caused
material injury to the industry. As the Panel reasonably noted, even though some domestic producers
stated that they were not injured by subject imports and even though other producers took no position
on the issue, these facts did not constitute conclusi ve evidence that domestic producers had not been
affected by the subject imports, nor did it indicate that the producers did not choose to close certain
production facilities due to subject import competition.
6.47 In light of China's request, we have include d footnote 440 in our Report, concerning the 2005
subject import data. We see no need to make any of the additional changes requested by China.
(g) Paras. 7.353 – 7.354
6.48 China submits that the Panel offers a wholly inadequate assessment of the causal implications
of the recession. In light of the Panel's c onclusion that "we must assess whether the reasoning
provided by the USITC in its determination seems adequate in light of plausible alternative

36 Interim Report, paras. 7.307-7.308.
37 Interim Report, para. 7.312.
38 Interim Report, para. 7.307.
39 Interim Report, para. 7.307.
40 Interim Report, paras. 7.307 and 7.308.
41 Interim Report, paras. 7.301 and 7.307-308.

explanations of the record evidence or data advanced by China in this proceeding,"
42 the Panel should
have assessed the causal implications of the recession in-depth as it assuredly qualifies as a "plausible
alternative explanation." Additionally, the Panel's decision to dismiss the causal implications of the
recession because the injury to the domestic industry could not be attributed "in whole" to the
recession is inadequate.43 This too easily dismisses a causal fa ctor that was significantly injuring the
U.S. industry simply because it was not responsible fo r the entire injury. The Panel should delete this
statement and engage in a more in-depth assessment of the causal effects of the recession. Particular
factual findings regarding the extent of the effect s of the recession should be made. The Panel quoted
the USITC's finding that U.S. apparent cons umption declined by 20.4 million tires in 2008. 44
Accordingly, the Panel should make a finding that this decline in demand was attributable to the
effects of the recession in 2008 or, if not, the Pane l should note what this decline in demand in 2008
was attributable to.
6.49 The United States asserts that the Panel's analysis of the recession was neither brief nor
inadequate. In its analysis, the Panel addressed at length China's arguments that demand declines
during the period were the primary cause of the industry's troubles over the period of investigation. 45
In the same analysis, the Panel addressed in de tail China's argument that the recession in 2008
accounted for the bulk of the declines in the industry's condition in that year. 46 As the Panel correctly
concluded in its factually-detailed consideration of China's claims, th e record clearly showed that, in
2008, the volume of the Chinese imports increased s ubstantially even as demand fell by 6.9 per cent
and even as the sales volumes of U.S. and non-subject tires fell. 47 As the Panel also correctly
concluded, this continued growth in Chinese imports in 2008 mean t that the U.S. industry was forced
to absorb virtually all of the declines in demand in 2008, thus establishing that the Chinese imports
had a clear and significant adverse impact on the production, sales and market share levels of the
industry in that year.48 The Panel's analysis of this issue w as reasoned, detailed and complete, and no
change to the Panel's analysis is warranted.
6.50 The United States further asserts that China's argument that the Panel should not have
dismissed the recession as a causal factor simply b ecause the recession did not explain the injury to
domestic injury "in whole" China misses the point . As the Panel and the USITC found, the record
evidence showed clearly that increased volumes of s ubject imports were having an adverse impact on
the domestic industry, and that this impact was i ndependent of the effects of the recession on demand
in 2008.49 Accordingly, the Panel agreed that the US ITC reasonably found subject imports to be a
significant cause of material injury to the domestic i ndustry, even in 2008, and that the declines in the
industry's production, sales, market share and profitabilit y levels in that year could not be attributed
wholly or primarily to the recession in 2008, or to any other alleged causal factors, as China claimed.
Again, the Panel's analysis was reasoned and thoughtful, and need not be revised.
6.51 The Panel sees no reason to alter the provisions or paragraphs as requested.

42 Interim Report, para. 7.18.
43 Interim Report, para. 7.354.
44 Interim Report, para. 7.353.
45 Interim Report, paras. 7.323 - 7.352.
46 Interim Report, paras. 7.337 - 7.339, 7.342 - 7.343, and 7.351-7.352.
47 Interim Report, para. 7.203.
48 Interim Report, para. 7.354.
49 Interim Report, paras. 7.337 - 7.339, 7.342 - 7.343, and 7.351-7.352.

B.
REQUEST FOR REVIEW SUBMITTED BY THE UNITED STATES
1. Standard of review
(a) Para. 7.18
6.52 The United States asks that the word "seems" be replaced with the word "is" in the final
sentence of this paragraph.
6.53 China believes the change requested by the United States is unnecessary.
6.54 We agree with China that the change is not strictly necessary.
2. "As such" causation
(a) Para. 7.136
6.55 The United States asks that a cite to Article XVI:4 of the WTO Agreement be included at the
end of the first sentence of this paragraph.
6.56 China opposes the U.S. suggestion to cite Articl e XVI:4 of the WTO Agreement to support
the proposition that the "WTO Agreement does no t prescribe any particular manner in which a
Member's WTO obligations and commitments must be transposed into its domestic law." China
asserts that while it may be true that the WTO Agreement does not prescribe a particular manner of
transposing WTO obligations into domestic law, Article XVI:4 does not say this.
6.57 We see no need to make the change requested by the United States. As noted by China,
Article XVI:4 of the WTO Agreement does not provide that the WTO Agreement does not prescribe
any particular manner in which a Member's WTO ob ligations and commitments must be transposed
into its domestic law.
3. Substantive findings generally
(a) Paras. 7.197, 7.215, 7.216, 7.238, 7.260, 7.322, 7.359, 7.367, and 7.379
6.58 The United States suggests that the findings set forth in these paragraphs be linked back to
the Panel's standard of review through the inserti on of the following sentence: "Therefore, we find
that the USITC's determination was reasoned and ad equate in this respect, consistent with the
standard wet out by the Panel in paragraph 7.18." The United States also proposes a reformulation of
the Panel's findings in certain of these paragraphs.
6.59 China believes these changes are unnecessary. China further contends that the proposed U.S.
language actually goes beyond the language of Para 7.18. Para 7.18 addresses only whether the ITC
reasoning was "adequate" and does not otherwise ma king any statement about the whether the ITC
determination was "reasoned."
6.60 With the exception of a minor change regarding paragraph 7.359, we agree with China that
the changes proposed by the United States are unnecessary.

4. Remedy
(a) Para. 7.397
6.61 The United States suggests that the last sentence of this paragraph is unnecessary.
6.62 China opposes the U.S. suggestion to delete the l ast sentence of this paragraph. The Panel
has correctly noted that there is "no guarantee" that a measure imposed to improve the injurious
condition of the domestic industry caused by increased imports will "not be excessive." The U.S.
attempt to delete this fair, objective statement is constitutes over-reaching.
6.63 We agree with China that there is no need to delete the last sentence of this paragraph.
(b) Para. 7.414
6.64 The United States proposes the insertion of a footnote at the end of the first sentence to refer
the reader back to paragraph 7.20, where the Panel concluded that there is no obligation to explain.
6.65 China does not comment on this request.
6.66 In the absence of any objection by China, we have included the new footnote 555 requested
by the United States.
(c) Para. 7.418, footnote 557
6.67 The United States asks that the Panel explain that it is not addressing the issue raised in this
footnote as a matter of judicial economy.
6.68 China does not comment on this request.
6.69 The Panel has amended footnote 557 to high light its intended purpose, which is to
demonstrate that China's GATT 1994 claims are dependent on its claims under the Protocol.
5. Conclusion
(a) Para. 8.1
6.70 The United States suggests that, for greater clarity, the Panel should include a full conclusion
on each of China's claims. The United States also asks the Panel to include a conclusion regarding the
rejection of China's "as such" claim.
6.71 China does not comment on this request.
6.72 The Panel sees no reason to alter the concluding paragraph.
VII. FINDINGS
A.
GENERAL ISSUES
7.1 We shall begin with some preliminary observations and then address general issues relating to
our standard of review, the burden of proof, and the ru les of treaty interpretation. We also consider
the relationship between sub-paragraphs 1 and 4 of Paragraph 16 of the Protocol.

1. Preliminary observations
7.2 The Panel was aware that there are a number of features of this particular case that provide a
background against which the case has to be considered and constitute a context for dealing with the
matters raised.
7.3 First, this is the first case under the trans itional product-specific safeguard mechanism in
Paragraph 16 of the Protocol. It thus raises ques tions that have not yet been dealt with in WTO
dispute settlement, including the quest ion of the relationship of this particular safeguard measure to
the global safeguards mechanisms under the WT O Agreements: GATT Article XIX and the WTO
Safeguards Agreement. Thus, the case raises important questions of the interpretation of the
transitional product-specific safeguard mechanism th at will obviously be of interest to other WTO
Members even though the mechanism expires in 2013.
7.4 Second, the safeguard measure imposed in th is case under Paragraph 16 of the Protocol of
Accession of China is country specific, but neve rtheless such a measure has effects on non-subject
imports of tyres into the United States with its own systemic implications.
7.5 Third, imposition of a safeguard measure in this case was based on a determination of the
USITC that was not unanimous. Two commissioners dissented on the critical issue of causation.
Such a circumstance warrants the panel in giving very careful consideration in particular to that aspect
of the USITC determination.
7.6 Fourth, the investigation that led to the impositi on of a safeguard measure in this case against
the importation of tyres from China was initiated, unusually, as the result of a petition by a labour
union in the United States and not by the domestic producers of tyres. This, of itself, alerted the Panel
to the possibility that there was something different about this case, particularly where the domestic
producers, the normal petitioners in such cases, had indicated that they would not make any
adjustments notwithstanding that a safeguard remedy was put in place with adjustment purposes.
7.7 Fifth, the issue of "material injury" was not in question before the Panel and, indeed, the
determination of the USITC on this point was una nimous. Thus, a key issue in this case was
causation, a matter that was complicated by the fact that the period of investigation involved in part a
period of massive global economic downturn or recession.
7.8 Sixth, an important allegation in this case relati ng to this key issue of causation was that the
U.S. tyre manufacturing industry had voluntarily redu ced its investment in the United States and had
invested in manufacturing tyres in China instead. Thus, according to this view, the reduction in
domestic manufacturing of tyres and the increase in imports from China were the consequences of
deliberate economic decision-making by the U.S. tyre industry.
7.9 In such circumstances, the argument went, th is case involved the invocation of a mechanism
designed to protect a domestic industry that did not want that protection and by its own actions had
precipitated the events that were now being invoked to justify the application of the transitional
product-specific safeguard mechanism of China's Protocol of Accession. Arguably, it explained too
why the investigation had been initiated by a labour union, a body that was concerned with job losses
resulting from this transfer of manufacturing capac ity to China, and not by the domestic producers
themselves. Thus, the Panel was aware that th is aspect of the case raised the question of the
suitability or relevance of safeguard mechanisms in the context of "outsourcing" and "globalization",
matters of considerable systemic interest to WTO Members.
7.10
Having stated this important contextual backgroun d, the Panel was also aware that the issues
before it involved the interpretation of the provisi ons of the transitional product-specific safeguard

mechanism and that it was the task of the Panel to do that. It was not for the Panel to seek to
recalibrate what the WTO Members had agreed to in the negotiations that led to the accession of
China to the WTO in the light of what the Panel might perceive as changing economic circumstances
that perhaps had not been considered when the Prot ocol was negotiated. That remains the prerogative
of the WTO Members themselves. Nevertheless, the Panel felt that it was important to set this
background out as it informed the understanding of the Panel of the arguments made before it in this
case.
2. Standard of review
7.11 Article 11 of the DSU, and, in particular, its requirement that "… a panel should make an
objective assessment of the matter before it, including an objective assessment of the facts of the case
and the applicability of and conformity with th e relevant covered agreements", sets forth the
appropriate standard of review for WTO Agreemen ts. Since the Protocol is silent as to the
appropriate standard of review, Article 11 of the DSU will be applied by the Panel in examining the
consistency of the U.S. Tyres measure with Paragraph 16 of the Protocol.
7.12 Although there is a disagreement between the par ties regarding certain aspects of the nature
of the "objective assessment" we must undertake in this case, there is much regarding our standard of
review that the parties do agree on.
7.13 The United States submits that:
in order for the Panel to make an "obj ective assessment" of the market disruption
determination by the ITC, it must examine whether the ITC provided a reasoned
explanation as to how the evidence before it (on the record) supported its conclusion
that the requirements set out in paragraph 16.4 of the Protocol were met. The Panel is
not acting as an initial trier of fact, and therefore must not conduct a de novo review.
However, we do not suggest that the Pa nel should grant total deference to the
competent authority. The Panel should review whether the analysis and explanations
provided in the ITC Report reveal how the ITC considered the factors under
paragraph 16.4 and whether the ITC provi ded a reasoned explanation as to how the
facts supported the market disruption determination.
50
7.14 China agreed with this part of the United Stat es' understanding of our sta ndard of review. In
particular:
China agrees the Panel must not conduct de novo review. China agrees the Panel
must not grant total deference to the au thorities. China agrees the "Panel should
review whether the analysis and explanati ons provided in the ITC Report reveal how
the ITC considered the factors under para graph 16.4 and whether the ITC provided a
reasoned explanation as to how the f acts supported the market disruption
determination" – the focus must be on the USITC Determination as it was written,
and that rationale must constitute a "reasoned and adequate explanation."
51
7.15 We agree with this part of the parties' assessment of our standard of review. It is well
established in WTO case law regarding trade re medy cases that a Panel should neither conduct a de
novo review, nor grant total deferenc e to an investigating authority. 52 It is also well established that

50 U.S. Reply to Question 18 from the Panel, para. 47, footnote omitted.
51 China's Second Written Submission, para. 44.
52 See, for example, Appellate Body Report, US – Lamb, para. 106.

the Panel's standard of review "m ust be understood in the light of the obligations of the particular
covered agreement at issue".
53 Taking into account the obligations imposed by Paragraph 16, 54 we
consider that our review of China's claims under Paragraph 16 of the Protoc ol should contain both a
formal and a substantive element. 55 The formal aspect is whether the USITC evaluated "objective
factors", as required by Paragraph 16.4. The substantive element is whether the USITC provided a
reasoned and adequate explana tion of its determination, in line with its obligation under
Paragraph 16.5.
7.16 The main disagreement between the parties concerns the USITC's treatment of alternative
explanations of the evidence and data before it. China relies on the Appellate Body Report in US –
Countervailing Duty Investigation on DRAMS to argue that "the explanation provided by the
investigating authority 'should also address alterna tive explanations that could reasonably be drawn
from the evidence, as well as the reasons why the agency chose to discount such alternatives in
coming to its conclusions'". 56 The United States denies that the USITC was required to address any
alternative explanations in its determinat ion. The United States claims that, in US – Countervailing
Duty Investigation on DRAMS , "this level of detail [of requiring an assessment of alternative
explanations] is derived from the requireme nts found in Articles 22.3 and 22.5 of the SCM
Agreement, and particularly the requirement in Article 22.5 for the notice or report to contain "the
reasons for acceptance or rejection of relevant argum ents or claims made by interested Members and
by the exporters and importers". 57 The United States notes that no such provision is contained in
Paragraph 16 of the Protocol.
7.17 In making the abovementioned finding in US – Countervailing Duty Investigation on
DRAMS, the Appellate Body referred in a f ootnote to para. 106 of its Report in US – Lamb , which
reads in relevant part:
A panel must find, in particular, that an explanation is not reasoned, or is not
adequate, if some alternative explanation of the facts is plausible, and if the
competent authorities' explanation does not seem adequate in the light of that
alternative explanation. Thus, in making an "objective assessment" of a claim under
Article 4.2(a), panels must be open to the possibility that the explanation given by the
competent authorities is not reasoned or adequate.58
7.18 We note that there is no obligation in Paragra ph 16 of the Protocol requiring the USITC to
address, in its determination, alternative explan ations that could reasonably be drawn from the
evidence or data before it. 59 Nor is there any provision equivalent to Article 22.5 of the SCM
Agreement. Since a panel's standard of review is necessarily distinct from the substantive and
procedural obligations of the investigating authorit y, our standard of review cannot impose any such

53 See, for example, Appellate Body Report, US – Countervailing Duty Investigation on DRAMS ,
para. 184.
54 We note in particular that, under Paragraph 16.4 of the Protocol, an investigating authority is
required to "consider objective factors" in determini ng if market disruption exists. Furthermore, under
Paragraph 16.5, the importing Member "shall provide written notice of the decision to apply a measure,
including the reasons for such measure...".
55 Appellate Body Report, US – Lamb, paras. 103-104.
56 China's Second Written Submission, para. 46, citing Appellate Body Report, US – Countervailing
57 U.S. Reply to Question 18 from the Panel, para. 47 n. 52.
58 Appellate Body Report, US – Lamb, para. 106 (emphasis in original).
59 This issue concerns alternative explanations gene rally. It does not concern the issue of whether the
USITC should have considered alternative causes of injury, or conducted a non-attribution analysis in respect of
any such alternative causes of injury.

obligation on the USITC.
60 For this reason, and guided by the abovementioned finding of the
Appellate Body in US – Lamb , we consider that, in order to review whether the reasoning of the
USITC was reasoned and adequate, we must assess whether the reasoning provided by the USITC in
its determination seems adequate in light of plausi ble alternative explanations of the record evidence
or data advanced by China in this proceeding.
7.19 The other disagreement between the parties c oncerns our review of the U.S. remedy
determination. China contends th at our review of remedy should take account of the fact that the
"United States must ... provide a 'reasoned explana tion' for the remedy being imposed – both the level
of the tariffs, and the decision to c ontinue the tariffs for three years". 61 According to the
United States, our review should take account of the fact that "the Protocol does not contain an
obligation for a Member to consider particular fact ors or to demonstrate at the time of the imposition
of the measure how the measure meets the requirement of Paragraphs 16.3 and 16.6".62
7.20 We recall that our standard of review "must be understood in the light of the obligations of
the particular covered agreement at issue". 63 In this regard, we note that the last sentence of
Paragraph 16.5 of the Protocol requires a Member to "provide written notice of the decision to apply a
measure, including the reasons for such measure and its scope and duration". This provision refers to
the need to provide a statement of the "reasons for such measure". It does not refer to the need to
provide a statement of the "reasons for the scope and duration of such measure". In our view,
therefore, a Member need only provide written noti ce of the scope and duration of the measure. It
need not provide written notice of the reasons for the scope and duration of that measure.
7.21 Our interpretation of the last sentence of Pa ragraph 16.5 is consiste nt with the Appellate
Body's finding64 in US – Line Pipe that Article 5.1 generally does not require a Member to justify, at
the time of application, that the safeguard measure at issue is applied "only to the extent necessary".
The burden, therefore, is on China to establish that the Tyres measure is excessive. China cannot
simply point to any failure on the part of the Unite d States to explain, in a published determination,
that the measure is not excessive. Instead, we consid er that our review of the U.S. remedy should be
based on the arguments and evidence put forward by the parties during the present WTO dispute
settlement proceeding.65
3. Burden of proof
7.22 We recall the general principles applicable to burden of proof in WTO dispute settlement,
which require that a party claiming a violation of a provision of a covered agreement by another
Member must assert and prove its claim. 66 In this dispute, China, which has claimed that the
United States acted inconsistently with Paragraph 16 of the Protocol, and Articles I:1 and II:1 of the
GATT 1994, thus bears the burden of demonstrating th at the United States acted inconsistently with
those provisions. In addition, it is generally for each party asserting a fact to provide proof thereof. 67
We note in addition that a prima facie case is one wh ich, in the absence of effective refutation by the

60 However, if the USITC failed to consider plausi ble alternative explanations, there may be a greater
risk that we, under our standard of review, would find that the USITC's r easoning does not seem adequate in
light of those plausible alternative explanations.
61 China's Second Written Submission, para. 45.
62 U.S. Reply to Question 18 from the Panel, para. 48.
63 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 184.
64 Appellate Body Report, US – Line Pipe, para. 233.
65 This reflects the approach adopted by the panel in US – Steel Safeguards, paras. 10.25–10.27.
66 Appellate Body Report, US – Wool Shirts and Blouses, page 16.
67 Ibid.

other party, requires a panel, as a matter of law, to rule in favour of the party presenting the prima
facie case.
68
4. Treaty interpretation
7.23 Article 3.2 of the DSU directs panels to cl arify the existing provisions of the covered
agreements "in accordance with customary rules of in terpretation of public international law". It is
well settled that the principles codified in Articles 31 and 32 of the Vienna Convention are such
customary rules. Equally, in WTO case law Article 33 is so applied. 69 These provisions read as
follows:
Article 31: General rule of interpretation
1. A treaty shall be interpreted in goo d faith in accordance with the ordinary
meaning to be given to the terms of the trea ty in their context and in the light of its
object and purpose.
2. The context for the purpose of the interpretation of a treaty shall comprise, in
addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the parties
in connection with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in connection with
the conclusion of the treaty and accepted by the other parties as an instrument related
to the treaty.
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between th e parties regarding the interpretation of
the treaty or the application of its provisions;
(b) any subsequent practice in the appli cation of the treaty which establishes the
agreement of the parties regarding its interpretation;
(c) any relevant rules of international la w applicable in the relations between the
parties.
4. A special meaning shall be given to a term if it is established that the parties
so intended.
Article 32: Supplementary means of interpretation
Recourse may be had to supplementary me ans of interpretation, including the
preparatory work of the treaty and the circumstances of its conclusion, in order to
confirm the meaning resulting from the application of article 31, or to determine the
meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or

68 Appellate Body Report, EC-Hormones, para. 104.
69 See, for example, Panel Report, Japan – DRAMS (Korea), para. 7.45.

(b) leads to a result which is ma nifestly absurd or unreasonable.
Article 33: Interpretation of treaties authenticated in two or more languages
1. When a treaty has been authenticated in two or more languages, the text is
equally authoritative in each language, unless the treaty provides or the parties agree
that, in case of divergence, a particular text shall prevail.
2. A version of the treaty in a language other than one of those in which the text
was authenticated shall be considered an au thentic text only if the treaty so provides
or the parties so agree.
3. The terms of the treaty are presumed to have the same meaning in each
authentic text.
4. Except where a particular text preva ils in accordance with paragraph 1, when
a comparison of the authentic texts discloses a difference of meaning which the
application of articles 31 and 32 does not remove, the meaning which best reconciles
the texts, having regard to the object and purpose of the treaty, shall be adopted.
7.24 We shall apply these principles in this case.
5. Relationship between Paragraph 16.1 and Paragraph 16.4 of the Protocol
7.25 In order to properly assess the conformity of th e United States' measure with Paragraph 16 of
the Protocol, we must establish the conditions und er which the provisions would apply. This is
particularly important regarding China's claims on increased imports and causation, in respect of
which the parties have developed significantly diverse positions on the in teraction between sub-
paragraphs 1 and 4 of Paragraph 16.
7.26 Paragraph 16.1 of the Protocol provides:
In cases where products of Chinese origin are being imported into the territory of any
WTO Member in such increased quantities or under such conditions as to cause or
threaten to cause market disruption to th e domestic producers of like or directly
competitive products, the WTO Member so affected may request consultations with
China with a view to seeking a mutually sa tisfactory solution, including whether the
affected WTO Member should pursue app lication of a measure under the Agreement
on Safeguards. Any such request shall be notified immediately to the Committee on
Safeguards.
7.27 Paragraph 16.4 of the Protocol provides:
Market disruption shall exist whenever imports of an article, like or directly
competitive with an article produced by the domestic industry, are increasing rapidly,
either absolutely or relatively, so as to be a significant cause of material injury, or
threat of material injury to the domestic i ndustry. In determining if market disruption
exists, the affected WTO Member shall c onsider objective factors, including the
volume of imports, the effect of imports on prices for like or directly competitive
articles, and the effect of such imports on the domestic industry producing like or
directly competitive products.

(a) Arguments of the parties
7.28 According to China, Paragraphs 16.1 and 16.4 are inte rrelated. China contends that
Paragraph 16.1 functions as a chapeau for Paragraph 16, providing the basic conditions for any action
under Paragraph 16.
70 China submits that Paragraph 16.1 also provides "important context" for
understanding the obligations of Paragraph 16.4 (and vice versa), such that "[t]he two provisions must
be read together".71 In reading the two provisions together , China understands Paragraph 16.4 to add
to the basic conditions set forth in Paragraph 16.1.
7.29 Thus, in respect of the issue of increased imports, China asserts that "the first requirement of
[Paragraph] 16.1 sets a base level requirement of 'in such increased quantities'". 72 Referring to the
case law of the Appellate Body regarding the interpre tation of the same phrase in Article 2.1 of the
Safeguards Agreement, China contends that imports will only be "in such increased quantities" if they
are sudden enough, sharp enough, and significant enough , to cause injury. China continues, though,
that "even if the increase in imports is sudden enoug h, sharp enough, or significant enough to satisfy
the [Paragraph 16.1] requirement of 'in such incr eased quantities', they still must meet the additional
[Paragraph 16.4] standard of 'increasing rapidly'".73
7.30 China adopts the same approach to the Paragr aph 16 causation standard. Thus, China asserts
that the word "cause" in Paragra ph 16.1 constitutes the "base requirement". 74 China asserts that the
Appellate Body has confirmed, in case law regarding the Safeguards Agreement , that a "'cause'
requires 'a genuine and substan tial relationship of cause and eff ect' between the imports and the
alleged injury". 75 China contends that "Article 16.4 furt her strengthens this basic requirement, by
modifying the term 'cause' with 'significant'". 76 China contends that s ub-paragraphs 1 and 4 of
Paragraph 16 therefore require that increased imports under the Protocol must have "a significant,
important, genuine and substantial causal relationship with material injury being suffered by the U.S.
domestic industry".77
7.31 The upshot of China's interpretative analysis is that the increased imports and causation
standards of Paragraph 16 are more stringent than those of the Safeguards Agreement , since they
incorporate both the disciplines of the Safeguards Agreement (as embodied in Paragraph 16.1), plus
the additional requirements of Paragraph 16.4.
7.32 The United States submits that Paragraph 16.1 does not impose any obligations regarding the
existence of market disruption, but merely sets fo rth the general conditions under which a Member is
authorized to seek consultations with China. Th e United States asserts that, while Paragraph 16.1
provides context for the interpretation of Paragraph 16.4, it does not set out a general obligation with
respect to the market disruption determination. 78 According to the United States, it is Paragraph 16.4
that sets the standards that a Memb er has to meet in order to make an affirmative market disruption
determination.79 The United States contends that, consiste nt with Paragraph 16.4, a Member must
find that imports are (1) "increasing rapidly" so as to be (2) a "significant cause" of (3) material injury

70 China's Second Written Submission, para. 176, and China's Reply to Question 35 from the Panel.
71 China's Second Written Submission, para. 176.
72 China's Reply to Question 15 from the Panel, para. 60 (emphasis in original).
73 China's Reply to Question 15 from the Panel, para. 60.
74 China's First Written Submission, para. 185.
75 China's First Written Submission, para. 182.
76 China's First Written Submission, para. 187.
77 China's First Written Submission, para. 204.
78 See Oral Statement by the U.S. at the Second Meeting, para. 19.
79 See U.S. Reply to Question 19 from the Panel.

or threat thereof.
80 The United States contends that these are the standards against which its measure
should be assessed. The United States contends that the transitional safegua rd mechanism exists
outside and apart from the global safeguard disci plines embodied in Article XIX of the GATT 1994,
and the Safeguards Agreement.
(b) Evaluation by the Panel
7.33 In our view, Paragraph 16.1 is c oncerned with more than the mere right of Members to seek
consultations. Paragraph 16.1 provides the very basis for action under the Paragraph 16 transitional
product-specific safeguard mechanism, as Paragr aph 16.1 consultations are the trigger for any
subsequent action to address the "market disrupti on" in question. Indeed, it is only if such
consultations fail that transitional product-specific measures may be imposed (under Paragraph 16.3).
7.34 In accordance with Paragraph 16.1, action unde r Paragraph 16 is triggered when Chinese
imports are being imported "in such incr eased quantities or under such conditions" 81 "as to cause"
"market disruption". But what do these terms mean substantively? How does a Member know when
imports are in sufficiently "increased quantities" to justify action? What is the degree of harm that the
domestic industry must suffer? And what is the degree of causal relationshi p required between those
imports and that harm?
7.35 Similar questions regarding "increased quantiti es" and causation arose in the context of
disputes concerning Article 2.1 of the Safeguards Agreement . In that context, the answers were
provided by the Appellate Body, based on its inte rpretation of the relevant provisions of that
Agreement. In the context of Paragraph 16, the answers are provided in Paragraph 16.4, which sets
forth a definition of "market disruption" that enco mpasses the nature of the increase in imports, the
nature of the harm to be suffered by the domestic industry, and the degree of causal nexus that must
exist between those imports and that harm. In par ticular, Paragraph 16.4 provides that the increase in
imports must be rapid, that the harm to the domestic industry must amount to material injury, and that
the rapidly increasing imports must be a significant cau se of that material injury. Thus, imports from
China will be "in such increased quantities ... as to cause ... market disruption" when those imports are
"increasing rapidly ... so as to be a significant cause of material injury."
7.36 Thus, Paragraphs 16.1 and 16.4 ar e interrelated. They should be read together, and each
provision provides important context for interp reting the other. The interrelation between
Paragraphs 16.1 and 16.4, the jo int reading of these provisions, and the definitional nature of
Paragraph 16.4, suggest that Paragraph 16.4 clarifi es the substance of the trigger conditions provided
for in Paragraph 16.1.82
7.37 Since Paragraph 16.4 clarifies the substance of the conditions for taking action under
Paragraph 16, it is in light of the "increasing rapidly" and "significant cause" standards of
Paragraph 16.4 that the conformity of the U.S. Tyres measure should be assessed. 83 As indicated

80 Oral Statement by the U.S. at the Second Meeting, para. 21.
81 In the light of the French and Spanish texts and in accordance with Article 33(4) of the Vienna
Convention, the word "or" is to be taken to include "and".
82 Indeed, the clarificatory role of Paragraph 16.4 has been acknowledg ed by China which, after itself
noting the interrelationship between Paragraphs 16.1 and 16.4, asserted that:
Article 16.4, in turn, defines the specific circumstances in which "market disruption" is
deemed to exist, thus clarifyi ng the applicable requirements – in particular, that imports be
"increasing rapidly" and constitute a "significant cause" of material injury. (China's Reply to
83 We note that China itself has asserted that:

above, we shall interpret the phrases "increasing rapidly" and "significant cause" in the manner
prescribed by Articles 31 and 32 of the Vienna Convention . To the extent that the provisions of
Article XIX of the GATT 1994 or the Safeguards Agreement, as interpreted by the Appellate Body,
are relevant they will be taken into account.
B.
WAS THE USITC ENTITLED TO FIND THAT IMPORTS WERE "INCREASING RAPIDLY " IN
ACCORDANCE WITH PARAGRAPH 16 OF THE PROTOCOL?
1. Introduction
7.38 China claims that the United States failed to evaluate properly whether imports from China
were "increasing rapidly" in accordance with Paragr aph 16.4 of the Protocol. The thrust of China's
argument is that a decline in the rate of increase in 2008, the most recent period in China's view,
means that imports were no longer "increasing rapidly".
2. Arguments of the Parties
7.39 China argues that the term "increasing" means imports must be increasing in the most recent
past. China claims that Paragraph 16.1 and Paragr aph 16.4 both use the present continuous tense in
detailing the increased imports standard under the Protocol. 84 China submits that Paragraph 16.1 is in
the present continuous tense as the phrase "are being" modifies "imported". China contends that in
Paragraph 16.4 the phrase "are increasing rapidly" is a construction in the present continuous tense. 85
China argues that, therefore, there is consistency in the tenses between the two paragraphs, and it is
this present continuous tense that requires the investigating authority to focus on the most recent
period of time.86
7.40 China provides two reasons for this. First, as a matter of grammar, the present continuous
tense requires the activity to be ha ppening either now, or in the n ear future or very recent past. 87 In
China's view that distinguishes imports that are "increasing rapidly" from imports that have "increased
rapidly". In this case, China argues that the most recent period of time is the most recently completed
year and any other period for which data is available. 88 Second, China argues that this approach is
consistent with the way the Appellate Body has interpreted the textual distinction between "increased"
and "increasing" when considering Article 4.2 in the Safeguards Agreement. 89 China also believes
that the use of the term "increasing" requires the an alysis under Paragraph 16 of the Protocol to focus

When evaluating whether China-specific safeguards under Article 16 are WTO-consistent, a panel
must determine whether the national authorities have properly found that imports are "increasing rapidly" and
that they are a "significant cause" of any injury. (China's Reply to Question 9b from the Panel, para. 35.)
84 China's Second Written Submission, para. 70.
85 China's Reply to Question 12 from the Panel, para. 46 and footnote 37 noting that the grammatical
point does not arise in the French and Spanish texts as the present tense captures the English equivalent of both
the simple present tense and the present continuous tense.
86 China's Second Written Submission, para. 70.
87 China's Reply to Question 12 from the Panel, para. 46.
88 China's Reply to Question 14 from the Panel, para. 53. China's Second Written Submission,
para. 84.
89 China's Reply Question 12 from the Panel, para. 47. Appellate Body Report, US – Steel Safeguards,
para. 367. Oral Statement by China at the First Meeting, para. 22. China's Reply to Question 36 from the Panel,
para. 40.

on an even more recent period of time compared to the Safeguards Agreement to determine whether
imports are increasing.
 90
7.41 China notes that when describing an increase, "rapidly" indicates "a significant or steep
increase"91 or a recent surge. 92 China continues that the way to make the distinction between imports
that are "increasing rapidly" compared to imports that are merely increasing is to consider the rate at
which the increase is occurring. 93 China contends that a trend line over time that is "progressing
quickly" must either have a steep slope (a "rapid " change over time, as opposed to a gradual change
over time) or must have an accelerating slope (a "rapid" change over time, since the change is
"progressing quickly" by progressing at an increasingly faster rate). 94 China argues that "[t]he
ordinary meaning of 'rapidly' can best be unders tood in this context as imports increasing more
'rapidly' than they have been increasing previously". 95 In other words, China argues "increasing
rapidly" does not contemplate the present increase being modest and the past increase being rapid. 96
Rather, imports must be accelerating or continuing at a high rate in light of the preceding period.97
7.42 China points to the drop in the rate of in crease in 2006/2007 (53.7 per cent) compared to
2007/2008 (10.8 per cent) to argue that imports were no longer "increasing rapidly" in the most recent
past. China responds to a question from the Panel to say that imports were "increasing rapidly" in
2007, but that "such a finding would be premised primarily on the dramatic changes in rate of
increase, not simply an increase in absolute quantity". 98 China claims that the USITC failed to
address the fact that the majority of the increase in volume of imports, approximately 86 per cent,
occurred between 2004 and 2007. 99 China also claims that the U.S. blurred the last two years of the
investigation, which obscures the fact that 46 per cent of the growth in absolute volume occurred from
2006 to 2007.100 Between 2007 and 2008 the growth in absolute volume was only 14 per cent.101
7.43 China provides the following table to argue furt her that imports were no longer "increasing
rapidly" in 2008:102

90 Oral Statement by China at the First Meeting, para. 22. China's Second Written Submission,
91 China's First Written Submission, para. 79.
92 China's First Written Submission, para. 85.
93 China's Second Written Submission, para. 77. We note that China develops a 3 prong qualitative test
to determine whether imports are "increasing rapidly" that requires (1) consideration of data in the most recent
period; (2) the most weight to be given to the most recent trends; and (3) an analysis of the most recent year in
more detail when the initial analysis shows imports are slowing.
94 China's Second Written Submission, para. 77.
95 China's Reply to Question 14 from the Panel, para. 54. China's Second Written Submission,
para. 85.
96 China's First Written Submission, para. 83.
97 China's First Written Submission, para. 85. China considers that there may be other scenarios where
imports can be "increasing rapidly". China's First Written Submission, para. 81.
98 China's Reply to Question 13 from the Panel, para. 49.
99 China's First Written Submission, para. 133, quoting the USITC report, page V-1.
100 14,498/31400*100 = 46%.
101 China's Second Written Submission, para. 116.
102 China's Second Written Submission, para. 114. China's First Oral Statement, para. 28.

Average Annual
Increase over 2004-
2007 Period
Annual Increase in
2007 Compared to
2006
Annual Increase in
2008 Compared to
2007
Quantity of Tires
(million tires) 9.0 M 14.5 M 4.5 M
Rate of Absolute
Increase (%) 42.1% 53.7% 10.8%
Increase in Market
Share (% pts) 3.1 % pt 4.7 % pt 2.7 % pt

7.44 China challenges the 10.8 per cent increase in 2008 as not being in and of itself rapid. China
argues that the Panel in US – Steel Safeguards found an increase of 11.9 per cent during the most
recent full year of data not to be su fficient to constitute "increased imports". 103 China contends that a
10.8 per cent increase cannot, therefore, be sufficien t to comply with the higher standard under the
Protocol for imports to be "increasing rapidly".104
7.45 China provides the following table regarding relative data of subject imports:105
Year
Per cent of
Domestic
Production
(percentage)
Change in Share
of Production
(percentage
points)
Per cent of Total
Consumption
(percentage)
Change in Share
of Consumption
(percentage
points)
2004 6.7 -- 4.7 --
2005 10.0 3.3 6.8 2.1
2006 14.6 4.6 9.3 2.5
2007 23.0 8.4 14.0 4.7
2008 28.7 5.7 16.7 2.7

7.46 China argues that the USITC's treatment of relative import data is cursory and misleading as
the USITC did not pay enough attention to the cha nges in 2008, but, rather, stressed changes over the
full period. China argues that the trends in share of consumption (i.e. market share), suggest a stable
trend given that the change in share of consump tion was consistently in the 2-3 percentage points
range, apart from 2007.106
7.47 China considers that relative data under the Protocol refers to mark et share, that is, imports as
a percentage of total consumption rather than imports relative to domestic production. 107 China
submits that while consideration of imports re lative to domestic production makes sense for global
safeguards due to Article 2.1 ("absolute or relativ e to domestic production") and Article 4.2(a) ("the
share of the domestic market taken by increased im ports, changes in the level of sales, production,

103 China's Reply to Question 36 from the Panel, para. 43.
104 We note that China makes similar claims regarding the comparable numbers in relative data. See
China's Reply to Question 36 from the Panel, para. 43.
105 China's First Written Submission, para. 158. USITC Report, Table II-2.
106 China's First Written Submission, para. 132.
107 China's Reply to Question 38 from the Panel, para. 48. China's Second Written Submission,
para. 117.

productivity, capacity utilization, profits and losses and employment") of the Safeguards Agreement,
under the Protocol there is no elaboration of the mean ing to be given to "relative" data. China argues
that the USITC relied on imports relative to dom estic production when Paragraph 16 seems to place
the focus on market share.
108 China argues that a focus on domestic production is misleading when
non-subject imports were such an important factor in the market and the "domestic industry is
engaging in a conscious strategy of shifting some of its production offshore".109
7.48 China also claims that the blurring of the last two years of the investigation obscures the fact
that 39 per cent of the growth in market share occurred from 2006 to 2007. Between 2007 and 2008
the growth of market share was only 22 per cent.
110
7.49 China argues that the U.S. relies too heavily on an end-point-to-end-point analysis given that
the Appellate Body has found such an approach to be inadequate for assessing properly whether
imports have "increased" under the Safeguards Agreement.111 China claims that an end-point-to-end-
point analysis is particularly inappropr iate under Paragraph 16 of the Protocol. 112 C h i n a
acknowledges that a longer period of time may be n ecessary to provide context for what is happening
in the most recent period, but claims that an end- point-to-end-point analysis "misapplies the relevance
of this longer period of time and … can obscure the more relevant analysis of what is happening over
the more recent period".113
7.50 China recalls that in Argentina – Footwear (EC) , even though imports almost doubled over a
five year period, due to a decline in imports at the end of the period neither the Panel nor the
Appellate Body found "increased imports" in accordance with the Safeguards Agreement . China
argues that the essential lesson from Argentina – Footwear (EC) is that any year, and particularly the
recent period, must be put in context and not considered in isolation. 114 China submits that the U.S.
argument in the case before us, stressing increases over the period of investigation, is similar to that
argument rejected in Argentina – Footwear (EC).
7.51 Regarding trends in value, China argues that the USITC erroneously relied on trends in value
when the "text of Paragraph 16 requires a focus on the 'quantity' of imports".115
7.52 China argues that the USITC ne ver discussed the implications of the low base level at the
beginning of the period. 116 China continues that when impor ts begin at a low base level it is
"inevitable that the subsequent increases will seem large". 117 China argues that these increases were
never placed in their proper context.118
7.53 China argues that the USITC should have included data for the first quarter of 2009 in its
period of investigation, which would have been in keeping with USITC established practice. China

108 China's Second Written Submission, para. 117.
109 China's Reply to Question 38 from the Panel, para. 51.
110 China's Second Written Submission, para. 116.
111 Appellate Body Report, US – Steel Safeguards, paras. 354-355.
112 China's Second Written Submission, para. 85. China's Reply to Question 36 from the Panel,
para. 41.
113 China's Second Written Submission, para. 105.
114 China's Second Written Submission, para. 108.
115 China's First Written Submission, para. 116.
116 China's First Written Submission, para. 117.
117 China's First Written Submission, para. 117.
118 China's First Written Submission, para. 117.

contends that had the data from the first quarter of 2009 been included, it would have shown a sharp
decline in subject imports from China.
119
7.54 China argues that the USITC's refu sal to collect or consider available interim data "stands in
stark contrast to its well-estab lished and consistent practice of collecting interim data in other
cases".120 China notes that the petition in this case was not filed until 20 April 2009. However, the
USITC decided not to collect interim data ev en though it had "collected interim data in every single
other Section 421 safeguard investigation in which an interim period was completed prior to the filing
of the petition". 121 China considers the USITC refusal to co llect interim data for the completed first
quarter of 2009 is "wholly inconsistent" with the USITC's practice in other Section 421 cases.122
7.55 Noting the U.S. argument that the USITC does not have an established practice of collecting
interim data as outlined by China, and that it deci des whether to collect interim data on a case by case
basis, China accuses the United States of being "ove rboard and quite dangerous" in its case by case
approach. China believes the United States overstates the burden of collecting such data and that the
desire to avoid the imposition of a slight reporting burden on domestic producers is not a sufficient
explanation.123 China claims that when the staff report was completed on 12 June 2009, import data
was available for the first quarter of 2009 ("Q1 2009").124
7.56 China asserts that the Unit ed States collects interim data in antidumping and countervailing
investigations whenever such data is available. China claims that in 2009 the USITC collected
interim data in all such investigations as long as one quarter in 2009 had been completed prior to the
petition being filed.125 As one example, China notes that in Oil Country Tubular Goods from China, a
case that began 11 days before the initiation of the Tyres investigation, the USITC collected interim
data for Q1 2009.126
7.57 China argues that in the only Section 421 trans itional safeguard investigation to be initiated
prior to the completion of an interim period, Uncovered Innerspring Units from China, the USITC
collected information for the entire previous year even though the investigation started just 6 days
after the completion of the prior year.127
7.58 China dismisses the contention by the USITC that the first quarter 2009 data would have been
of limited use given the lack of information on th e relative share of imports from China and claims
that the "record was incomplete only because th e USITC chose to leave the record incomplete". 128
China argues that the USITC reason for not using Q1 2009 data (i.e. that it would add no probative
value in the absence of relative data) "overlooks the f act that the absolute level of imports was still a

119 China's First Written Submission, paras. 136-137. China's Sec ond Written Submission, paras. 123-
126.
120 China's First Written Submission, para. 139.
121 China's First Written Submission, para. 139.
122 China's First Written Submission, para. 139. We note that China also argues the USITC should
have issued supplemental questionnaire s to collect the data. The United States questions the burden on the
recipients and the likelihood of getting a relatively complete data series at a late stage in the investigation. See
China's First Written Submission, paras. 142-144. United States' First Written Submission, paras. 139-140.
123 China's Second Written Submission, para. 124.
124 China's First Written Submission, para. 146.
125 China's First Written Submission, para. 140.
126 China's First Written Submission, para. 140.
127 China's First Written Submission, para. 139.
128 China's First Written Submission, paras. 147-148.

key issue to be considered ...".
129 China claims that the "inabilit y to address one issue completely
does not justify ignoring probative data on another issue".130
7.59 The United States argues that China seeks to have the Panel impose an overly restrictive
view of how recent increases in imports should be in order to comply with the Protocol. 131 T h e
United States continues that there is no support in th e text of the Protocol for investigating authorities
to consider only very recent increases in imports. The United States contends that there is no
meaningful distinction between the language in the Protocol and the language in the Safeguards
Agreement to indicate an investigating authority must focus its analysis on a more recent period of
time under the Protocol compared to the Safeguards Agreement . The United States notes that the
USITC has consistently explained that it must "focus on recent increases in imports " under the
Protocol.132
7.60 The United States submits that the ordinary meaning of "rapid" means "progressing quickly,
developed or completed within a short time".133 The United States contends that, in light of this, when
the Panel is examining the USITC's analysis re garding imports it should assess whether the USITC
"reasonably concluded that the growth in Chinese imports had 'progressed quickly' over the period of
investigation or had been 'developed or completed within a short period of time'".134
7.61 The United States notes that Paragraph 16 of the Protocol does not define the nature of the
rapid increase that is sufficient to meet the requirements of Paragraph 16. The United States
challenges China's view that imports must be "steep " or "surging", arguing that China is imposing a
higher standard to find that imports are "increasing rapidly" than is warranted by the text.135
7.62 The United States argues that the Protocol does not preclude a competent authority from
finding imports to be "increasing rapidly" over the period examined simply because the rate of
increase of imports lessens at the end of the period. Nor does the Protocol "suggest that imports must
be growing at their most rapid pace at the end of the period examined by a competent authority". 136
The United States contends that, instead, the Protoc ol only requires that the competent authority find
that there was a rapid increase in imports on an abso lute or relative basis, during the period, and that
these imports were a significant cause of material injury or threat of material injury to the industry.137
7.63 The United States claims that China continues to make the factually mistaken assertion that
imports from China were "declining in 2008" , the end of the period of investigation. 138 T h e
United States notes that the subject imports were at their highest levels in absolute terms in 2008. 139
The United States contends that the record shows "clearly and unequivocally" that there was a rapid
and recent increase in the volumes of Chinese imports.140

129 China's First Written Submission, para 148.
130 China's First Written Submission, para. 148.
131 United States' First Written Submission, para. 100.
132 United States' First Written Submission, para. 89 and USITC Report page 11.
133 United States' First Written Submission, para. 87. New Shorter Oxford English Dictionary (2007)
at 2463.
134 United States' First Written Submission, para. 87.
135 United States' First Written Submission, para. 95.
136 United States' First Written Submission, para. 91
137 United States' First Written Submission, para. 91.
138 Oral Statement by China at the First Meeting, para. 7.
139 United States' First Written Submission, para. 122.
140 United States' Second Written Submission, para. 20.

7.64 The United States criticises the focus by China on the rate
 of increase in volumes of Chinese
imports rather than actual volumes or market shares of subject imports. The United States submits
that the use of a change in the rate of increase is the only way China can provide support for its claim
that there was a declining or lessening trend in imports in 2008.
141 The United States submits that
even if the rate of growth in absolute terms had lessened in 2008 when co mpared to the extremely
rapid rate of growth seen in 2007, the quantities of Chinese imports in 2008 continued to grow in a
rapid manner.142 The United States contends that it does not matter that subject imports may have
increased at a lower rate in 2008 than they did in 2007.
7.65 The United States continues that in 2008 the absolute volume of imports was 10.8 per cent
higher than 2007; 70 per cent higher than in 2006; 121 per cent higher than in 2005; and 215.5 per
cent higher than in 2004. 143 The United States argues that it should be clear that in 2008 Chinese
imports of subject tyres continued to increase in a rapid manner, just as they had throughout the
period of investigation.144
7.66 The United States argues that China's discussion of the US – Steel Safeguards case is
misleading. The United States argues that the pane l's decision in that case was based on a sharp
decline in absolute and relative terms at the end of the period and trends in absolute imports that differ
significantly from this case, i.e., "an alternation of increases and decreases from year to year" 145 rather
than the upwards trend from year to year in the current case.
7.67 The United States notes that both the market share of the subject imports and the ratio of
subject imports to U.S. production rose considerab ly throughout the period examined, with the
two largest year to year increases, in bot h sets of data, occurring in 2007 and 2008. 146 T h e
United States submits, therefore, that the USITC had a reasonable basis for finding that the increase in
2008 continued to be "large", "rapid" and "significant".147
7.68 The United States notes that in 2007 and 2008 ther e was a 62 per cent growth in the market
share of subject imports. 148 Overall, the market share of subject imports increased by 12 percentage
points between 2004 and 2008. The market shar e in 2008 was 2.7 percentage points higher
than 2007; 7.4 percentage points higher than in 2006; 9.9 percentage points higher than in 2005; and
12.0 percentage points higher than in 2004.149
7.69 The United States provides the following graph to illustrate the increases in market share:150

141 United States' Second Written Submission, para. 23.
142 United States' Second Written Submission, para. 25.
143 United States' Second Written Submission para. 20, and USITC Report pages 11-12 and Table C-1.
144 United States' Second Written Submission, para. 20.
145 U.S. comment on China's Reply to Question 36 from the Panel, paras. 20-22. Panel Report, US –
Steel Safeguards, para. 10.206.
146 United States' First Written Submission, para. 111.
147 United States' First Written Submission, para. 120 - 122.
148 United States' First Written Submission, para. 122.
149 USITC Report, pages 11-12 and Table C-1.
150 United States' First Written Submission, para. 21; USITC Report Table C-1.

7.70 The ratio of subject imports to U.S. production increased by 22 percentage points
between 2004 and 2008
151 with the highest annual increase in 2007 and the second highest annual
increase in 2008.152
7.71 The United States argues that the USITC did not merely recite that there was a growth in
imports between the first and last years of the period. Rather, the United States argues that the USITC
specifically considered the growth in absolute and relative quantities for the subject imports during
each year of the period of investigation, and in particular for 2007 and 2008 and concluded that the
subject imports increased throughout the period and by significant amounts in each year.153
7.72 The United States notes that an investigating authority is not forbidden from examining trends
in imports between the end points of an investig ation and acknowledges that it should also be looking
at trends over the entire period. 154 The United States recalls that the Appellate Body has explained
that, in the context of the Safeguards Agreement, the "competent authorities should not consider such
data [from the most recent past] in isolation from the data pertaining to the entire period of
investigation".155 The United States contends th at the increase in imports in the Argentina –
Footwear (EC) case, and specifically the drop in the final two years motivated the comments about an
end-point-to-end-point analysis by the Appellate Body . The United States argu es that the facts of the
present case are very different and that the USITC correctly concluded that the increases in subject
imports were "large, rapid and c ontinuing" throughout the period, including the final years of the
period examined by the USITC.156
7.73 The United States claims that the Protocol does not prohibit a competent authority from
considering trends in the value of subject imports . The United States notes that the value of subject

151 United States' First Written Submission, para. 111.
152 United States' First Written Submission, para. 122.
153 United States' First Written Submission, para. 114 quoting USITC Report page 12.
154 United States' First Written Submission, para. 116, quoting Appellate Body Report, Argentina –
Footwear (EC), para.129 and Appellate Body Report, US – Lamb paras. 137-138.
155 Appellate Body Report, US – Lamb, paras. 137-138.
156 United States' First Written Submission, para. 118, quoting USITC Report at page 12.

Market Share (In Percent)
Market Share of Chinese Imports

imports increased by 294.5 per cent between 2004 and 2008 and provides the following graph to
illustrate the changes in value over the period of investigation:
157
Chart 2: Absolute Value of Tires
Value (million dollars)
Dollars

 1.49 3
453
692
932
1,493
1,788
2004 2005 2006 2007 2008
2,000

1,500
1,000
500
0

7.74 The U.S. claims that imports of subject tyres from China at the beginning of the period were
not small. In 2004 imports from China were five pe r cent of the market and the fourth largest import
source.158 The United States argues that whether or not subject imports were small at the beginning of
the period, they had become a large presence in the market at the end of the period.159
7.75 The United States argues that the Protocol does not require the inclusion of the most recently
concluded quarterly data. The U.S. contends th at the USITC's choice of a five year period of
investigation that ended less than four months befo re the beginning of the investigation satisfies the
standard under the Protocol.
7.76 The United States explains that:
... the ITC has an established practice in investigations under Section 421 of
collecting, at a minimum, five full years of data, plus for any interim period that can
reasonably be collected, when conducting its investigations. The ITC decides on a
case-by-case basis, whether to attempt to collect data for the 'interim period,' which is
the most recently completed period of less than a full calendar year.
160 (footnotes
omitted)
7.77 The United States continues that the USITC c onsiders a number of factors in deciding
whether to use interim data incl uding: the likelihood of obtaining full information; the amount of
time elapsed between the end of the most recent qua rter and the issuance of questionnaires; and the
number of parties.161 The United States notes that the USITC is less likely to seek data for a particular

157 United States' First Written Submission, paras. 108-109. USITC Report, pages 11-12 and 22.
158 United States' First Written Submission, para. 129.
159 United States' First Written Submission, para. 129.
160 United States' First Written Submission, para. 132.
161 United States' First Written Submission, para. 132.

quarter if a relatively small amount of time has elapsed between the end of the quarter and the
beginning of the investigation, if participants in the market are unlikel y to provide meaningful
information, or if the number of participants is large so that the USITC is unlikely to obtain
reasonably complete data in the time allocated.
162
7.78 The United States argues that in the Tyres case, data was needed from 10 U.S. producers,
35 importers and 36 foreign producers. The USITC believed that "a relatively complete data series
for that period would not have been availabl e in time for use in this investigation". 163 T h e
United States continues that China fails to mention that in the five Section 421 cases it argues interim
data was used, the period of time that had elapsed between the end of the most recent quarter and the
filing of the petition ranged from 33 to 67 days. 164 In the Tyres case just 20 days had elapsed between
the end of the quarter and when the petition was filed and the staff began preparing questionnaires.165
7.79 The United States submits that the USITC ta kes a case by case approach regarding the
availability and usefulness of interim data. 166 The United States argues that the antidumping and
countervailing investigations referred to by China are not analogous to the Tyres case. For 10 of
the 11 preliminary-phase investigations that occurred in 2009, the period of time that elapsed between
the end of the quarter and the filing of the petiti ons ranged between 29 and 100 days, "considerably
longer than the 20 days between the end of the quarter and the filing of the petition in the Tires
case".167 The United States continues that there have been occasions where a petition has been filed
more than 20 days after the end of a quarter where the USITC has not collected interim data. The
United States argues this demonstrates further that the decision to collect interim data "depends on the
nature and complexities of the relevant investigation".
168
7.80 The United States explains that in the case of Uncovered Innerspring Units from China ,
China does not recognise that the USITC reasonably c oncluded that asking parties to provide a set of
data for one full year as opposed to data for a full year plus two interim periods was likely to place a
significantly lower reporting burden on participants. The United States explains:
In the Innersprings investigation, the IT C collected data for five full years, 1999,
2000, 2001, 2002, and 2003. Uncovered Innerspring Units from China, Inv. No. TA-
421-5, USITC Pub. 3676 at I-12, III-7-8 (March 2004). If the ITC had chosen to
collect data only through the third quarter of 2003, then it would have had to collect
data for seven
, rather than five reporting periods: 1998, 1999, 2000, 2001, and 2002,
plus interim data for the first three quarters of 2003 and the first three quarters of
2002. This would obviously have in creased the burden considerably on all
respondents.
169
7.81 The United States argues that absent data to assess whether imports were increasing on a
relative basis, it would not have been possibl e for the USITC to assess whether imports were
"increasing rapidly".170 The United States continues that the USITC's ability "to determine whether
imports were increasing on a relative basis was a necessary component of its 'increasing imports'
analysis. Even if the available data showed that imports were declining on an absolute level during

162 United States' First Written Submission, para. 132.
163 USITC Report, page 12 footnote 55.
164 United States' First Written Submission, para. 135.
165 United States' First Written Submission, para. 133.
166 United States' First Written Submission, para. 137.
167 United States' First Written Submission, para. 137.
168 United States' First Written Submission, para. 138.
169 United States' First Written Submission, para 136, footnote 265. Emphasis in original.
170 United States' First Written Submission, para. 141.

the first quarter of 2009, the USITC would still not have been able to conclude that imports were not
increasing rapidly overall because it could not assess whether they were increasing rapidly on a
relative basis
".171
3. Evaluation by the Panel
7.82 The Panel begins by reviewing various data concerning the volume of subject and non-subject
imports in absolute terms. We then consider Ch ina's arguments regarding the interpretation of the
phrase "increasing rapidly". Thereafter, we consider issues regarding: the USITC's determination
that imports were increasing rapidly in relative te rms; China's argument that the USITC improperly
relied on an end-point-to-end-point analysis of imports; China's argument that the USITC improperly
relied on increases in value rather than increases in volume; China's argument that the USITC should
have taken account of the fact that subject imports began from a low base; and China's argument that
the USITC should have collected data for the first quarter of 2009.
(i) Review of import data
7.83 We summarise below the import data on the ab solute increase in the volume of subject
imports in each year of the period of investigation
172; and the percentage increase in subject imports
year on year between 2005 and 2008.173
Year 2004 2005 2006 2007 2008
Quantity of
subject
imports
(1,000 tyres)
14,575 20,790 27,005 41,503 45,975

Year 2004 2005 2006 2007 2008
Increase in
subject
imports
(percentage
points)
- 42.7 29.9 53.7 10.8

7.84 There were absolute increases in subject imports in each year of the period of investigation.
This resulted in an overall increase of 31 million units, or 215.5 per cent, in subject imports from
China by the end of the period.
174 The greatest increase occurred in the last two years of the period. 175
Regarding non-subject imports, the next largest increase in imports between 2004 and 2008 was from
Indonesia, representing an increase of just 3.9 million units. 176 The absolute increases in volume of

171 United States' First Written Submission, para. 141. USITC Report, page 12, footnote 55.
172 Data referred to comes from the USITC Report, Table C-1.
173 Data referred to comes from the USITC Report, Table C-1.
174 USITC Report, pages 11-12, and Table II-1.
175 We note that there was a 14.5 million unit increase in subject imports in 2007 compared to 2006,
representing a 53.7 per cent increase; and a 4.5 million un it increase in 2008 compared to 2007, representing a
10.8 per cent increase. The increase in 2008 was in addition to the large increase in 2007.
176 USITC Report, Table II-1.

subject imports from China over the period of inv estigation are clearly depicted in the following
graph:
177

7.85 On the basis of this data, the USITC concluded:
In absolute terms, imports of subject tires from China increased throughout the period
of investigation and were the highest, in te rms of both quantity and value, in 2008, at
the end of the period. The quantity of s ubject imports rose by 215.5 percent between
2004 and 2008, by 53.7 percent between 2006 and 2007, and by 10.8 percent between
2007 and 2008." The value of subject imports rose even more rapidly, increasing by
294.5 percent between 2004 and 2008, by 60.2 percent between 2006 and 2007, and
by 19.8 percent between 2007 and 2008.
...we find that the subject imports increased, both absolutely and relatively throughout
the period by significant amounts in each year and, as stated above, were at their
highest levels at the end of the period in 2008. Whether viewed in absolute or
relative terms, and whether viewed in terms of the increase from 2007 to 2008 alone
or the increase in the last two full years (o r even the last three years), the increases
were large, rapid, and continuing at th e end of the period – and from an increasingly
large base.
178
7.86 At first glance, taking into account the absolute import data outlined above, we see no error in
the USITC's conclusion that there was a rapid incr ease in subject imports from China in absolute
terms.179

177 United States' Second Written Submission, para. 20. USITC Report, pages.11-12 and Table C-1.
178 USITC Report, pages 11-12. Footnotes omitted. We consider relative data and data based on value
in paras. 7.94-7.99 and 7.104 below.
179 China also argues, as part of a 3 prong test, that there should be an analysis of the most recent year
in more detail when the initial analysis shows imports are slowing. In this case, China argues that quarterly
data for the final two years of the period of investigation should have been analysed. See China's Second
Written Submission, para. 87 and China's Reply to Question 14, para. 56. We do not agree that subject imports
were slowing in 2008. Indeed, in 2008 subject imports were at their highest levels in absolute terms. We note
that China provides quarterly data for 2007 and 2008 in para. 127 of its First Written Submission and at Exhibit
China-26. This data reveals that the two highest abso lute quarterly quantities were Q2 and Q3 2008, and apart

(ii) The meaning of the phrase "increasing rapidly"
7.87 Despite these absolute increases, China argues that imports were not "increasing rapidly" in
accordance with the Protocol. According to China, the use of the present continuous tense in the
phrases "are being imported" (Paragraph 16.1) and "are increasing" (Paragraph 16.4) requires the
investigating authority to focus on the most recent past, in this case 2008.
180 China asserts that this
requirement for the most recent past is reinfor ced by the use of the term "increasing" in
Paragraph 16.4, rather than the term "increased". 181 China also submits that the increase in imports
must be "rapid", which China understands as requiri ng a quick progression in the rate of increase in
the volume of imports.182 We note that China outlines two scenar ios for the meaning of "rapidly" and
acknowledges that other scenarios might be possible. 183 The first scenario is that imports must be
increasing at a consistently very high rate. The second scenario is that imports must be increasing at a
higher rate in each successive year.184 China argues that, regardless of the scenario, the rate cannot be
declining rapidly and that it is "fatal" that the rate of increase from 2007 to 2008 was "a fraction of
any of the prior years."185
7.88 We note China's argument that the use of the present continuous tense in the phrases "are
being imported" (Paragraph 16.1) and "increasing" (Paragraph 16.4) require a focus on the most
recent past. However, we recall that the Appellate Body has found the grammatical construction of
the phrase "is being imported" in Article 2.1 of the Safeguards Agreement to mean that "the increase
in imports must have been sudden and recent". 186 The Appellate Body did not find that the increase
must have occurred in the most recent past.187

from the final quarter, on a comparative basis subject imports were higher in 2008 than 2007. See U.S. First
Written Submission para. 28. In our view, the legal standard for finding imports to be "increasing rapidly" does
not hinge on the final quarter comparison between 2007 and 2008.
180 We note that China considers the most recent past will include the most recently completed year and
any more recent period for which data is available. See China's Reply to Question 14 from the Panel, para. 53.
China's Second Written Submission, para. 84. We addres s China's arguments regarding the need to include the
first quarter 2009 data in paras. 7.106 to 7.109. We note that the situation during the period of investigation is
used as a proxy for the situation pertaining currently at the time of imposition. Panel Report, Japan – DRAMS
(Korea), para. 7.357. See also Panel Report, Mexico – Anti-Dumping Measures on Rice, para. 7.58.
181 China's Second Written Submission, para. 71.
182 We also note that China cons iders a "rapid" increase is an additional requirement to the
requirements in the Safeguards Agreement , thus setting forth a standard even more demanding under the
Protocol. See China's First Written Submission, para. 67. We do not agree that it is useful to compare the
Safeguards Agreement and the Protocol in this way. The obligations under the Protocol must be interpreted
according to the Vienna Convention.
183 China's Second Written Submission, para 77. China's First Written Submission, para. 81.
184 We note that China focuses on the second of these scenarios, as do we in our analysis. See, for
example China's First Written Submission, paras. 115, 120-126, and 131-135; Oral Statement by China at the
First Panel Meeting, paras. 26-31; China's Reply to Qu estions 13 and 14, paras. 49-55; China's Second Written
Submission, paras. 110-117.
185 China's Second Written Submission, para. 112.
186 Appellate Body Report, Argentina – Footwear (EC), para. 130. We do not consider the term
"sudden" applies here given Paragraph 16.4 of the Protocol includes the term "rapidly". Since Article 2.1 of the
Safeguards Agreement does not refer to the term "increasing rapidly", case law interpreting what is happening to
imports under Article 2.1 of the Safeguards Agreement is of limited contextual relevance.
187 We note that the period of investigation needs to be recent in order to be relevant, but still long
enough to ensure a proper analysis of what is happening to imports over the period, with a focus on the latter
part of the investigation. Appellate Body Report, US – Steel Safeguards, para. 374.

7.89 According to the panel in US – Line Pipe:
The word 'recent' – which was used by the Appellate Body in interpreting the phrase
'is being imported' – is defined as 'not l ong past; that happened, appeared, began to
exist or existed lately'.
188 In other words, the word 'recent' implies some form of
retrospective analysis. It does not imply an analysis of the conditions immediately
preceding the authority's decision. Nor do es it imply that the analysis must focus
exclusively on conditions at the very end of the period of investigation.189
7.90 The findings of the Appellate Body in Argentina – Footwear (EC) and the Panel in US – Line
Pipe are applicable here. We consider that the phr ase in Paragraph 16.1 of the Protocol, "are being
imported" is essentially the same as the phrase "is being imported" in Article 2.1 of the Safeguards
Agreement. As such, we consider that the Appella te Body's interpretation of the temporal
implications of the phrase "is being imported" provid es useful guidance in this case. We are also
guided by the finding of the panel in US – Line Pipe that, although "the word 'recent' implies some
form of retrospective analysis... [i]t does not im ply an analysis of the conditions immediately
preceding the authority's decision". These findings suggest that there is nothing in the use of the
present continuous tense in Paragraphs 16.1 and 16.4 of the Protocol that would require an
investigating authority to focus on the movements in imports during the most recent past, or during
the period immediately preceding the authority's decision.
7.91 We recall China's focus on the fact that Para graph 16.4 uses the term "increasing", in the
present continuous tense, rather than the past te nse "increased". China argues that the difference
between imports that have "increased rapidly" and imports that are "increasing rapidly" means that an
investigating authority must find that imports ar e still "increasing" rapidly during the most recent
period. We agree there is a temporal difference between imports that have increased rapidly and those
that are increasing rapidly. However, the text of Paragraph 16.1 does not say "increased rapidly".
The text says "are being imported … in such in creased quantities" and, as acknowledged by China,
this phrase uses the same grammatical tense as the phrase "increasing rapidly" in Paragraph 16.4.
Reading the terms "increased" and "increasing" in th eir proper context, we do not consider that the
use of the term "increasing" in Paragraph 16.4 requi res a focus on a more recent period than the term
"increased" in Paragraph 16.1.190
7.92 We note that the ordinary meaning of rapid means "progressing quickly; developed or
completed within a short time". 191 The adverb "rapidly" is defined as "… with great speed,
swiftly".192 There is no reference to the rate of increase in the dictionary meaning of "rapidly", nor
any suggestion that imports can only increase rapidly if there is an increase in the rate of increase in
those imports. Accordingly, in order for imports to be "increasing rapidl y", they need only be
increasing "with great speed", or "swiftly". Th ere is no need for any swift progression in the rate of
increase in those imports. Nor does a decline in the rate of increase necessarily preclude a finding that
imports are "increasing rapidly". Under the Protocol the rapid increase need only be on an absolute or
relative basis.

188 The Compact Edition of the Oxford English Dictionary, Volume 1 (Oxford University Press, 1971).
189 Panel Report, US – Line Pipe, para. 7.204.
190 China also relies on its understanding of the object and purpose of Paragraph 16 of the Protocol to
support its call for a narrow interpretation of the phrase "increasing rapidly". We address China's arguments
regarding the object and purpose of Paragraph 16 of the Protocol at paras. 7.147-7.149.
191 Shorter Oxford English Dictionary, Vol.2, page 2463. Both China and the United States
acknowledge this dictionary definition. See China's First Written Submission, para. 79. United States' First
Written Submission, para. 87.
192 Shorter Oxford English Dictionary, Vol. 2, page 2465.

7.93 Furthermore, even if the USITC had been required to focus on imports during the last year of
the period, the fact that the 10.8 per cent increase in 2008 was lower than the increase in the preceding
year does not mean that imports were not "increasing rapidly" in 2008. An increase of 10.8 per cent
in 2008 by no means precludes a finding that imports are "increasing rapidly", especially when that
increase is assessed in context.
193 Nor is it a "modest" increase. 194 In this regard, we recall that the
10.8 per cent increase in absolute volumes between 2007 and 2008 was in addition to an increase of
53.7 per cent between 2006 and 2007, which was in addition to an increase of 29.9 per cent between
2005 and 2006, which was in addition to an increase of 42.7 per cent between 2004 and 2005. In our
view, the 10.8 per cent increase in absolute volumes from 2007 to 2008 reinforces the USITC's
conclusion that imports were "incre asing rapidly" during the period, and continued to be "increasing
rapidly" at the end of the period.
(iii) Relative increase in imports
7.94 We note that there is no definition in the Protoc ol for imports that are "increasing rapidly...
relatively". Therefore, in our view, any reasonable form of a relative assessment is acceptable. As
such, the interpretation of this factor is not necessar ily limited to a consideration of the market share
of Chinese imports, i.e., imports from China as a per centage of total consumption. We see no reason
why imports relative to domestic pr oduction cannot also be considered . We note that in this case the
USITC considered both imports relative to market share and imports relative to domestic
production.
195 Specifically, the USITC found that:
Both the ratio of subject imports to U.S. production and the ratio of subject imports to
U.S. apparent consumption rose throughout the period examined, and both ratios
were at their highest levels of the period in 2008. The ratio of subject imports to U.S.
production increased by 22.0 percentage poi nts between 2004 and 2008, with the two
largest year-to-year increases occurring at the end of the period in 2007 and 2008.
The ratio of subject imports to U.S. apparent consumption increased by 12.0
percentage points during the period examin ed, with the two largest year-to-year
increases also occurring at the end of the period in 2007 and 2008.
196
7.95 We summarise below the data regarding the market share of China's imports compared to the
market share of non-subject imports:197
U.S. imports
from:
2004 2005 2006 2007 2008
China (%) 4.7 6.8 9.3 14.0 16.7
All other
sources (%) 31.9 33.6 34.5 33.4 33.7

7.96 There was an increase in the market share of subject imports from China in every year,
leading to a 12 percentage point increase over the peri od of investigation. In comparison, the market
share of non-subject imports was more or less stable.198

193 And we note that in making its finding the USITC considered the "increase and rate of increase in
subject imports". USITC Report, page 11.
194 China's First Written Submission, para. 125.
195 USITC Report, page 12.
196 USITC Report, page 12. See also Table II-2 and Table V-1.
197 USITC Report, Table C-1.

7.97 We summarise below the data for subject imports as a percentage of domestic production.
Year 2004 2005 2006 2007 2008
Subject imports as
% of domestic
production
6.7 10.0 14.6 23.0 28.7

7.98 We note that there were increases in subject imports relative to domestic production year after
year, as demonstrated in the above table. 199 There was a 22 percentage point increase in subject
imports relative to domestic produc tion over the period of investigation. Thus, regardless of a focus
on imports relative to market share or relative to domestic production there were increases from year
to year and significant increases over the period of investigation.
7.99 China argues that "stable" changes in market share reveal that imports are not increasing
rapidly on a relative basis (See table in para. 7.45 , above: the change in the market share between
2004 and 2005 was 2.1 percentage points; betw een 2005 and 2006 was 2.5 percentage points;
between 2006 and 2007 was 4.7 percentage points; and between 2007 and 2008 was 2.7 percentage
points). While we consider comparing rates of increase from year to year might be useful, we have
already explained its limitations. The change in the market share seems to us a step further away
again from the text of the Protocol where the obligati on is to find rapid increases "either absolutely or
relatively".
7.100 In any event we have, up to this point, dete rmined that the USITC gave a reasonable and
adequate explanation for concluding that the abso lute data indicates that imports are "increasing
rapidly". That is sufficient under the Protocol and it is not necessary to consider the situation in
relation to relative data. However, for the sake of completeness we have done so, and find that given
rapidly increasing subject imports from China relative to domestic production and relative to market
share, imports are "increasing rapidly" in relative terms.
(iv) End-point-to-end-point analysis
7.101 The Panel next considers China's arguments rega rding the utility of an end-point-to-end-point
analysis by recalling what the Appellate Body said in Argentina – Footwear (EC):
We agree with the Panel that Articles 2.1 and 4.2(a) of the Agreement on Safeguards
require a demonstration not merely of any increase in imports, but, instead, of imports
'in such increased quantities ... and under such conditions as to cause or threaten to
cause serious injury.' In addition, we agr ee with the panel that the specific provisions
of Article 4.2(a) require that 'the rate and amount of the increase in imports...in
absolute and relative terms'(emphasis added) must be evaluated. Thus, we do not
dispute the Panel's view and ultimate conc lusion that the competent authorities are
required to consider the trends in imports over the period of investigation (rather than
just comparing the end points) under Article 4.2(a). As a result, we agree with the
Panel's conclusion that 'Argentina did not ad equately consider the intervening trends
in imports, in particular the steady and significant declines in imports beginning in

198 Non-subject imports are discussed in more detail in the discussion on other causes of injury at
paras. 7.364 to 7.367.
199 China argues that the domestic production factor is unreliable given that the "domestic industry is
engaging in a conscious strategy of shifting some of its production offshore …". China's Reply to Question 38
from the Panel, para. 51. We address the business strategy issue in paras. 7.285-7.322.

1994, as well as the sensitivity of the analysis to the particular end points of the
investigation period used.
200
7.102 As we understand it the Appellate Body is not say ing that an end-point-to-end-point analysis
is prohibited in all circumstances. But, rather, that the investigating authority in Argentina –
Footwear (EC) did not assess the trends in imports during the period of investigation adequately, and
did not take into account the particular sensitivity of the analysis to the end points selected given
intervening trends. That is, the investigating auth ority in that case did not adequately consider the
declines in absolute and relative imports in the final two years of the investigation. 201 Such was the
significance of the decreases in that case that a one-y ear change in the base year "transformed the
increase relied upon by Argentina into a decline". 202 We note that in the case before us the facts are
very different. The USITC did not rely exclusively on an end-point-to-end-po int analysis, but rather
engaged in various temporal comparisons.203 Furthermore, there was not even a predominant reliance
on an end-point-to-end-point analysis, as the USITC re lied on the fact that there was an absolute and
relative increase in subject imports in every year of the investigation.204
7.103 China claims that an end-point-to-end-point-analy sis "can obscure the more relevant analysis
of what is happening over the more recent period". 205 We note that the Appellate Body in US – Steel
Safeguards was concerned that a "simple end-point-t o-end-point analysis could easily be
manipulated" in cases where there is no "clear and uninterrupted upward trend in import volumes".206
In this case, however, there was "a clear and unint errupted upward trend in import volumes". As
such, the results could not be manipulated by the selection of end points.207
(v) Value / volume
7.104 The Panel next considers China's argument that the USITC relied on increases in value rather
than increases in volumes. The Panel begins by noting that even though the text of the Protocol refers
to quantities, it does not prohibit an analysis that look s at the value of imports. We note that in this
case the USITC assessed both the quantity and value of imports. 208 The value of subject imports rose
by 294.5 per cent between 2004 and 2008; 52.6 per cent between 2004 and 2005; 34.7 per cent
between 2005 and 2006; by 60.2 per cent between 2006 and 2007, and by 19.8 per cent between 2007
and 2008.209 If an assessment of the quantity of imports tells a starkly different st ory to that of value
due to factors influencing value being somethi ng other than volumes of imports, then a more
searching analysis might discount an assessment b ased on value. However, China has not presented
any arguments to suggest that the increase in valu e in this case could be explained by factors other
than an increase in subject imports.210

200 Appellate Body Report, Argentina – Footwear (EC), para. 129. (Footnotes omitted).
201 Panel Report, Argentina – Footwear (EC), paras. 8.153 – 8.164.
202 Panel Report, Argentina – Footwear (EC), para. 8.164.
203 See para. 7.85.
204 See paras. 7.83-7.86 and 7.94-7.100 on absolute and relative data.
205 China's Second Written Submission, para. 105.
206 Appellate Body, US – Steel Safeguards, para 354.
207 We note that China also argues that the USITC n eeded to focus on the most recent period and look
at increases in 2008 relative to the entire period. Chin a considers the failure by the USITC to focus on 2008 in
this way was "in "large part [due] to its over reliance on an 'end-point-to-end-point' analysis". We have
considered the relevance of the most recent period in paras. 7.87-7.93.
208 USITC Report, pages 11-12.
209 See USITC Report, Table C-1.
210 We note that Table II-I in the USITC Report prov ides information regarding the per unit price of
subject imports. It shows that the increase in price over the period (from 31.10 per unit in 2004 to 38.90 per unit

(vi) Low base
7.105 China also argues that there wa s a "low" base at the beginning of the investigation period and
this was never put into context by the USITC. In our view subject imports were not "low" at the
beginning of the period. Having five per cent of the market at a value of 450 million dollars, and
being the fourth largest import source are far from humble beginnings. Furthermore, gaining
12 percentage points in market share at a value of 1.7 billion dollars, and becoming the largest import
source over the period of investigation means subjec t imports were a large and significant presence in
the market at the end of the period.211
(vii) Interim data for the first quarter of 2009
7.106 Finally, the Panel addresses China's argument that data from the first quarter of 2009 should
have been included in the period of investigation. The Panel begins its analysis by recalling
footnote 55 on page 12 of the USITC Report which explains why the USITC did not collect or
analyse Q1 2009 data.
... The data the Commission compiled and relie d upon in this inves tigation, however,
did not include first quarter 2009 data because a relatively complete data series for
that period would not have been available in time for use in this investigation. The
first quarter 2009 import data also are of no probative value in determining whether
subject imports are increasing rapidly in rela tive terms in the absence of a data series
that includes first quarter 2009 data on U.S. production and U.S. apparent
consumption. Thus consideration of firs t quarter 2009 import data alone would not
change our finding that imports of the subject imports from China are increasing
rapidly, both absolutely and relatively."
212
7.107 Regarding the selection of an investigation pe riod, we recall that WTO jurisprudence in
relation to the Safeguards Agreement says that where there are no specifi c rules as to the length of the
period of investigation, the period selected must be sufficiently long to allow conclusions to be drawn
regarding increased imports, and the period must allo w an investigating authority to focus on recent
imports.213 We consider that the same logic applies in the context of the Protocol. In our view, given
that there are no precise guidelines in the Protocol, th e selection of a five year period of investigation
that ended less than four months before the begi nning of the investigation provides recent data and
satisfies the standard under the Protocol.
7.108 We note that the Parties do not agree on what the USITC standard practice is regarding
interim data. China argues that the USITC has a "well-established and consistent practice of
collecting interim data in other cases". 214 The United States says that the USITC has an established
practice in investigations under Section 421 "of collecti ng, at a minimum, five full years of data, plus
any interim period that can reasonably be collected" 215 but that the USITC decides on a case-by-case
basis whether to attempt to collect data for the interim period. 216 For the purposes of our analysis we

in 2008, or a 25 per cent increase) was substantially le ss that the overall increase in value (294.5 per cent
between 2004 and 2008).
211 USITC Report, Table C-1.
212 USITC Report, page 12, footnote 55.
213 Panel Report, US – Line Pipe, para. 7.201.
214 China's First Written Submission, para. 139.
215 United States' First Written Submission, para. 132.
216 United States' First Written Submission, para. 132. Regarding the United States argument drawing
on US – Lamb to support its view of a recent period of time, we note that the comments by the Appellate Body
in that case were in relation to the evaluation of the state of the domestic industry when making a threat

do not consider it relevant whether the USITC devi ated from its standard practice, only whether the
choice of an investigation period was reasonable and adequate, and we have concluded that it was.
217
7.109 We note that the USITC was concerned at not having relative data for the first quarter of 2009
and considered that even if it had collected absolute data for the first quarter of 2009, it would have
served no probative value as it could not have completed the analys is regarding rapidly increasing
imports without relative data. We note also that in the other Section 421 investigations both absolute
and relative data were included. 218 Given the requirement to consider imports that are "increasing
rapidly, either absolutely or relatively" it seems onl y practical that all data be available for any period
selected as part of the investigation period in or der to be able to determine whether imports are
"increasing rapidly". In any event, we do not consider the USITC was obliged to collect and
incorporate absolute and relative data for the first quarter of 2009 into its period of investigation.
4. Conclusion
7.110 For all of the above reasons, we conclude that the USITC did not fail to evaluate properly
whether imports from China met the specific threshold under Paragraph 16.4 of the Protocol of
"increasing rapidly".
C.
IS THE U .S. IMPLEMENTING STATUTE 'S CAUSATION STANDARD INCONSISTENT AS SUCH WITH
PARAGRAPH 16.1 AND PARAGRAPH 16.4 OF THE PROTOCOL?
7.111 China claims that Section 421 is "as such" in consistent with Paragr aph 16 of the Protocol
(irrespective of the way in which the USITC applied that standard in the Tyres investigation), because
it fails to fully implement the "significant cause" sta ndard set forth in Paragraph 16.4 of the Protocol.
China asserts that the U.S. implementing statute pr operly cites the appropriate causation standard as
"significant cause", but then improperly defines "significant cause" as:
a cause which contributes significantly to the material injury of the domestic industry,
but need not be equal to or greater than any other cause.219
7.112 China's claim focuses on two elements of the defi nition set forth in the statute. First, China
asserts that the statute lowers the Paragraph 16.4 causation standard by rede fining "significant cause"
as "contributes significantly". Second, China contends that the statute further lowers the causation
standard by allowing imports to be a less importa nt factor than any other single cause, no matter how
minor that other cause might be.
7.113 The United States contends that the causation standard of the U.S. implementing statute is
fully consistent with the provisions of the Protocol.

determination. The comments were not in relation to increased imports. Theref ore we do not consider it
relevant context for the purposes of this case. In any event we have already given our views on the temporal
element to be considered under the Protocol in interpreti ng "increasing rapidly" - i.e. that it is the recent period
of time that needs to be considered, while also considering trends over the period of investigation with particular
attention on what is happening to imports in the latter part of the period.
217 We note that, in the Section 421 investigations mentioned by China, the amount of time that had
elapsed between the end of the most recent quarter an d the filing of the petition ranged from 33 to 67 days,
compared to the 20 days in this case. We consider this difference notable. We also note that responses to
questionnaires were due on 7 May 2009, and it is arguably not reasonable to expect exporters, importers and
producers to supply first quarter absolute and relative data by 7 May.
218 China's Reply to Question 37 from the Panel, paras. 44-47.
219 19 U.S.C. § 2451(c)(1). (emphasis supplied)

7.114 Before turning to the substance of the parties' arguments, we first examine a threshold issue
regarding the application of the mandatory/discretionary distinction.
1. Threshold issue regarding the application of the mandatory/discretionary distinction
7.115 We note the U.S. argument that, consistent with a long-standing distinction in GATT and
WTO case law between mandatory and discretionary legislation, China must demonstrate that
Section 421 mandates, or requires, the USITC to appl y a causation standard that is inconsistent with
the Protocol. The United States submits that there is nothing in the U.S. statute that mandates action
that is inconsistent with the United States' obligations under the Protocol.
7.116 China contends that "the Appellate Body has explained that panels are not obliged, as a
preliminary jurisdictional matter, to examine whether the challenged measure is mandatory".
220 China
further contends that the general status of the ma ndatory/discretionary dis tinction is unsettled, and
accordingly the Appellate Body has urged "caution against the applica tion of this distinction in a
mechanistic fashion". 221 China submits that, in any event, Section 421 does require the USITC to
apply a fundamentally flawed definition. China ass erts that the United States has not argued, and
indeed cannot argue, that the USITC was free to di sregard the statutory definition at its discretion. 222
China asserts that whenever the US ITC makes the legal finding that imports are "a significant cause"
of material injury, this finding is necessarily defined to be something different from (and lower in
standard than) a finding of "significant cause" in accordance with the corre ct standard under the
Protocol.
7.117 While we acknowledge that the Appellate Body has cautioned against the application of this
distinction "in a mechanistic fashion", the Appellate Body has not expressly ruled out the applicability
of the mandatory/discretionary distinction in the context of assessing the WTO-consistency of a
legislative measure. Rather, the Appellate Body has it self implicitly applied the distinction. Thus, in
US – Carbon Steel , the Appellate Body upheld the panel's ruling on the basis that "the
European Communities did not satisfy its burde n of proving either that United States law mandates
USDOC to act inconsistently with Article 21.3 of the SCM Agreement, or that such law restricts in a
material way USDOC's discretion to make a determination consiste nt with Article 21.3 in a sunset
review".
223 The Appellate Body also did not rule out the application of the mandatory/discretionary
distinction when the occasion to do so presented itself in US – Zeroing (EC) (Article 21.5 – EC)
Instead, the Appellate Body repeated an earlier finding that "the import of the
'mandatory/discretionary distinction' may vary from case to case".
224
7.118 In practice, the import of the mandatory/discre tionary distinction is most pronounced in cases
where, although a Member's law appears to be WT O-inconsistent on its face, there is sufficient
discretion to allow national authorities to apply the law in a WTO-consistent manner. In such cases,
the discretion reserved to national authorities "saves" the statute. For the reasons set forth below, we
do not consider that Section 421 app ears inconsistent on its face. In this case, therefore, the potential
import of the mandatory/discretionary distinction is limited. That being said, we consider that we
should approach China's "as such" claim agains t Section 421 by evaluating whether or not

220 Panel Report, US – Customs Bond Directive, para. 7.209 (emphasis in original).
221 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 93.
222 The United States has admitted the definition is binding on the USITC. U.S. Reply to Question 20
from the Panel, para. 58.
223 Appellate Body Report, US – Carbon Steel, para. 162 (emphasis supplied).
224 Appellate Body Report, US – Zeroing (EC) (Article 21.5-EC) , para. 214, citing Appellate Body
Report, US – Corrosion-Resistant Steel Sunset Review, para. 93.

Section 421 requires the United States to estab lish causation in a manner inconsistent with
Paragraph 16 of the Protocol.
225
2. Whether the statute lowers the Paragraph 16.4 causation standard by redefining
"significant cause" as "contributes significantly"
(a) Arguments of the parties
7.119 China asserts that the U.S. "contributes significantly" definition is at odds with the ordinary
meaning of the Paragraph 16.4 "significant cause" sta ndard, interpreted in context and in light of the
object and purpose of the Protocol.
7.120 In respect of the ordinary meaning of the term s, China contends that the statute improperly
equates the word "cause" with "contribute", wher eas these two words in fact have very different
meanings. China asserts that the ordinary meaning of "cause" is "that which produces an effect or
consequence"226 or "something that brings about an effect or a result". 227 China contends that, by
contrast, the ordinary meaning of "contribute" is "to play a part in the achievement of a result" 228, or
"to play a significant part in bringing about an end or result" 229, which is a weaker notion than that of
"cause". China contends that a cause "produces" or "brings about" the consequence, and does not
merely "contribute to" or "play a part" in its occurrence.
7.121 China refers to the French and Spanish versions of the Protocol in support of its argument.
China asserts that the French version uses the verb "causer", which means "to be at the origin of
something, to have something as effect".230 China asserts that the verb "contribuer" is defined so as to
have a lower determinative value, meaning to mere ly "help with", or "have a part, more or less
important, in the production of a result". 231 China makes similar arguments in respect of the
translation and meaning of the Spanish terms "causar", "causa" and "contribuir". 232 According to
China, both the French and Spanish versions of the text reveal the much less-determinative character
of "to contribute" when compared with "to cause".
7.122 China asserts that the addition of the word "significant" strengthens this causal link
requirement, since the Shorter Oxford English Dicti onary defines "significant" as "important, notable,
consequential".233 China submits that the causal connec tion must be important, notable, or
consequential, such that a simple causal connection is not sufficient. China contends that the ordinary
meaning of "significant cause" therefore requires a particularly strong, manifest and important causal
connection. China contends that the U.S. statute fail s to reflect this standard, since a factor can make
an "important contribution
" at a far lower level of casual relationship than when it rises to the level of
an "important cause".

225 In doing so, we are guided in particular by the approach of the panel in Korea – Commercial
Vessels, paras. 7.60–7.67.
226 Shorter Oxford English Dictionary, Vol. 1, at 365 (2007 ed.).
227 Webster's Ninth New Collegiate Dictionary, at 217 (1986 ed.).
228 Shorter Oxford English Dictionary, Vol. 1, at 509 (2007 ed.).
229 Webster's Ninth New Collegiate Dictionary, at 285.
230 Trésor de la Langue Francaise, dictionary published by the CNRS (National Center for Scientific
Research), available at: http://atilf.atilf.fr/tlf.htm.
231 Trésor de la Langue Francaise, dictionary published by the CNRS (National Center for Scientific
Research), available at: http://atilf.atilf.fr/tlf.htm.
232 China's First Written Submission, para. 200.
233 Shorter Oxford English Dictionary, Vol. 2, at 2833 (2007 ed.).

7.123 China relies on the context of the phrase "significant cause", and the object and purpose of the
Protocol, to argue that "significant cause" should be interpreted more narrowl y than the "causal link"
causation standard set forth in Article 4.2(b) of the Safeguards Agreement.
7.124 Regarding context, China first notes that para graph 246(c) of the Working Party Report
provides:
246. …Members of the Working Party confirmed that in implementing the
provisions on market disruption, WTO Members would comply with those provisions
and the following: ….
(c) In determining whether market disruption existed, including the
causal link between imports that were increasing rapidly, either
absolutely or relatively, and any material injury or threat of material
injury to the domestic industry, the competent authority would
consider objective factors …
7.125 China contends that the term "cause" in Paragraph 16 of the Protocol and the phrase "causal
link" in the Working Party Report are used synonym ously. China then directs the Panel to the WTO
case law regarding the interpretation of the phrase "causal link" in Article 4.2(b) of the Safeguards
Agreement. In particular, China notes that the A ppellate Body has found that the phrase "causal link"
(as used in Article 4.2(b) of the Safeguards Agreement) requires a showing that there is a " genuine
and substantial relationship of cause and effect between imports and threat of injury".
234
7.126 China asserts that Paragraph 16.4 of the Protocol then goes further, as the word "significant"
is used to strengthen the basic requirement to es tablish a "genuine and s ubstantial relationship of
cause and effect between imports and threat of injury". According to China, it is no longer enough for
the relationship to be "genuine and substantial"; the relationship must be both "genuine and
substantial" and also must be "significant". Ch ina asserts that, whereas the Protocol imposes a more
stringent causation standard than the Safeguards Agreement , the U.S. statutory definition of
"contributes significantly" actually lowers that threshold.
7.127 A further contextual element relied on by Chin a concerns the meaning of the term "market
disruption". China asserts that the wo rd "disruption" means "break apart, throw into disorder, shatter;
separate forcibly; esp. interrupt the normal continui ty of (an activity etc); throw into disorder". 235
China also refers to the French and Spanish versi ons of the Protocol (which refer respectively to
"désorganisation du marché" and "desorganización del Mercado"). 236 China contends that the causal
relationship that justifies the imposition of a pr oduct-specific safeguard measure must not only be
significant, but also have the very serious conseque nce of throwing the market into disorder, breaking
it apart, or shattering it.
7.128 As for object and purpose, China asserts that th e Protocol as a whole should be viewed as an
instrument which facilitates the expansion of trade. According to China, Paragraph 16 of the Protocol
is an exceptional, country-specific measure d esigned to address unforeseen surges in imports from
China – an "escape valve" to be used only in emergency situations as an extraordinary remedy. China
contends that Paragraph 16 should therefore be given a narrow construction, to differentiate the higher

234 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 132 (emphasis
added).
235 Shorter Oxford English Dictionary, Vol. 1, at 714 (2007 ed.).
236 China's First Written Submission, para. 189.

causation standard of Paragraph 16 from th e lower causation standard applied in the Safeguards
Agreement.
7.129 The United States contends that China's argument rega rding the distinction between "cause"
and "contribute" is premised on the mistaken notion that the Protocol requires that imports from China
be the sole cause of material inju ry to an industry. The United States asserts that China's argument is
inconsistent with the text of the Protocol, as the Pr otocol provides that "market disruption shall exist"
if Chinese imports constitute " a significant cause of material injury" to the industry. By providing
that Chinese imports may constitute "a significa nt cause" of injury, the Protocol explicitly
contemplates that there may be multiple significant causes of material injury or threat to an industry, a
point which China ignores.
7.130 The United States asserts that China's argument is also inconsistent with the ordinary meaning
of the word "cause". The United States contends that, while the Shorter Oxford English Dictionary
defines the word "cause" as meaning a factor that "p roduces an effect or consequence" or "that brings
about an effect or result"
237, there is no question that the word "cause" can be used to describe a
situation where more than one factor brings about or produces a particular effect or result. According
to the United States, one can correctly state that the "hearing room's heating system and the sun's rays
on the windows of the hearing room caused the hearing room to be very hot during the morning
session". The United States asserts that, given that it is entirely correct to use "cause" in this manner,
it is also clear that "cause" can be used with respect to situations where multiple factors contribute to
"bringing about" or "producing" an effect or result.
7.131 The United States further contends that China's argument is inconsistent with the Appellate
Body's explanation of the terms "cause" and "causal link" in the Safeguards Agreement context.
According to the United States, the Appellate Body examined the "causal link" requirement contained
in Article 4.2(b) of the Safeguards Agreement in US – Wheat Gluten, and explained:
The word "causal" means "relating to a cause or causes," while the word "cause," in
turn, denotes a relationship between, at least , two elements, whereby the first element
has, in some way, "brought about," "pr oduced,", or "induced" the existence of the
second element. The word "link" indicates simply that increased imports have played
a part in, or contributed to , bringing about serious injury so that there is a causal
"connection" or "nexus" between these two elements. Taking these words together,
the term "causal link" denotes, in our view, a relationship of cause and effect such
that increased imports contribute to "bringing about, "producing," or "inducing " the
serious injury.
238
7.132 The United States contends that since China has conceded that the words "cause" and "causal
link" are effectively the same for the purposes of the analysis set forth in the Protocol 239, this
reasoning would suggest that the ITC can reaso nably assess whether increased imports are a
significant "cause" of injury to the industry by assessing whether they significantly "contribute" to the
industry's injury.

237 The United States refers in this regard to the di ctionary definition set forth at para. 198 of China's
First Written Submission.
238 Appellate Body Report, US – Wheat Gluten, para. 67, emphasis supplied.
239 The United States refers in this regard to Ch ina's First Written Submission, para. 180 ("the term
'cause' in the text of Article 16 of the Protocol and the phrase 'causal link' as used in the discussion of Article 16
of the Working Party Report are used synonymously").

7.133 The United States asserts that China is wrong to argue that by modifying "cause" with
"significant", the Protocol simply took the causation standard of the Safeguards Agreement and made
it more "severe". The United States contends that, under the Vienna Convention, each term must be
interpreted in the context of its particular agreem ent. The United States asserts that such analysis
demonstrates two different requirements: a "genuine and substantial relationship of cause and effect"
under the Safeguards Agreement and an "important, notable, or consequential" cause under
Paragraph 16 of the Protocol. The United States subm its that China's effort to argue that one is more
"severe" than the other is a poi ntless exercise, as it provides no guid ance as to the meaning of either,
or as to whether the causation standard under Secti on 241 is consistent w ith Paragraph 16 of the
Protocol.
7.134 Regarding China's reliance on definitions of the words "market" and "disruption", the
United States submits that there is no need for the Panel to consult a dictionary to define the term
"market disruption" because the Protocol itself defines the term. The United States relies on
Article 31.4 of the Vienna Convention, whereby "[a] special meaning shall be given to a term if it is
established that the parties so intended". The Unite d States contends that, in accordance with that
principle, the Protocol's explicit definition of the term makes recourse to other sources unnecessary.
7.135 The United States disputes China's argument th at a more "demanding" standard for causation
should be applied under Paragraph 16 of the Pr otocol because the transitional product-specific
safeguard mechanism is an "exceptional, country -specific measure designed to address unforeseen
surges in imports from China".
240 The United States contends that China is mistaken in claiming that
the transitional remedy under Paragraph 16 was intended to be used only in exceptional circumstances
involving unforeseen surges in Chinese imports. Ac cording to the United States, the extraordinary
nature of global safeguards is squarely rooted in the texts and immediate contexts of Article XIX of
the GATT 1994 and the text of the Safeguards Agreement, which refer to the concepts of "emergency
action" and "unforeseen and unexpected" developmen ts. The United States contends that China's
theory is based on the mistaken as sumption that the basic principles th at are applicable to an action
taken under the Safeguards Agreement are also applicable to the tr ansitional mechanism specified in
the Protocol. The United States asserts that, unlike the provisions of Article XIX of the GATT 1994
and the provisions of the Safeguards Agreement, nothing in the Protocol indicates that the Protocol's
transitional measure was intended to be an "emergency action"
241 or that the rapid increase in imports
from China must be the result of "unforeseen developments". 242 The United States submits that,
because similar terms and language were not incl uded in Paragraph 16 of the Protocol, it is
inappropriate to conclude, as China does, that the Appellate Body's statements about the
"extraordinary" nature of a globa l safeguard apply to the transitional mechanism set forth in the
Protocol.
(b) Evaluation by the Panel
7.136 The WTO Agreement does not prescribe any particular manner in which a Member's WTO
obligations and commitments must be transposed into its domestic law. Accordingly, there is nothing
to prevent a Member from including in its domestic law definitions of terms used in the WTO
Agreement. Although a Member's decision to defi ne WTO terms runs the risk that the resultant
definition may not be WTO-consistent, WTO-inconsis tency must not be presumed. Accordingly, the
onus is on China to establish that the Section 421 definition of "significant cause" as "contributes
significantly" is inconsistent with the causation standard set forth in Paragraph 16.4 of the Protocol.

240 China's First Written Submission, paras. 191-193.
241 GATT 1994, Article XIX:1(a); Safeguards Agreement, Article 11.1(a).
242 GATT 1994, Article XIX:1(a).

7.137 China seeks to meet its burden by invoking dictiona ry definitions that allegedly show that the
term "contribute" is less stringent than "cause". In particular, China submits that the ordinary
meaning of "cause" is "that which produces an effect or consequence"
243 or "something that brings
about an effect or a result" 244, whereas the ordinary meaning of "contribute" is merely "to play a part
in the achievement of a result" 245, or "to play a significant part in bringing about an end or result" 246,
which is a weaker notion than that of "cause". Thus, China contends that a cause "produces" or
"brings about" the consequence, and does not me rely "contribute to" or "play a part" in its
occurrence.247
7.138 Looking exclusively at these dictionary defin itions, one might legitimately conclude that a
"contribution" has a lesser causal effect than a " cause". In particular, implicit in the definitional
differences invoked by China is the notion that the term "contribute" allows for multiple factors to
each "play a part in" bringing about a result, whereas "cause" means that the triggering event is in and
of itself capable of bringing about, or producing, that result. In other words, a "cause" is capable of
producing or bringing about a result on its own, wh ereas a "contribution" would only ever play a part
in the occurrence of that result, along with other contributing factors.
7.139 We recall, though, that the terms of the Protocol mu st be interpreted in context. Of particular
contextual importance in this regard is the fact that, according to Paragraph 16.4 of the Protocol,
rapidly increasing imports need only be "a" significan t cause of market disruption. In other words,
the imports need not be the sole cause of the market disruption. 248 We note that the definitions cited
by China do not appear to leave room for multiple causes. In particular, China invokes The Shorter
Oxford English Dictionary definition of the noun "cause" as " that which produces an effect or
consequence", and the verb "cause" as "to be the cause of, effect, bring about". 249 These definitions
emphasise the singularity of the causal factor. The same emphasis on the singularity of cause is found
in the French and Spanish definitions advanced by China. China notes that the French verb "causer"
means "to cause", and is further defined as "to be at the origin of something, to have something as an
effect". Regarding the Spanish version of Paragr aph 16.4, China asserts that, in Spanish, the verb
"causar" means "to cause", and is further defined as "when referring to a cause: produce its effect" as
well as "[t]o be the cause, the reason and motive of the occurrence of something". 250 China further
asserts that, "[n]otably, "causa" is defined as "cause" 251 as well as that "which is considered as
fundamental to or the origin of something". Thus, both the French and Spanish definitions invoked
by China suggest that an even t has a single cause. In addition, both the French and Spanish
definitions refer to the notion of "origin". Since an event may only have one origin, the singular
nature of the causal factor inherent in the definitions proposed by China is again emphasised.
7.140 In the context of Paragraph 16.4, which refers to " a significant cause", we consider that
Members must be entitled to interpret the term "cause " in a way that allows for the possibility that the

243 Shorter Oxford English Dictionary, Vol. 1, at 365 (2007 ed.).
244 Webster's Ninth New Collegiate Dictionary, at 217 (1986 ed.).
245 Shorter Oxford English Dictionary, Vol. 1, at 509 (2007 ed.).
246 Webster's Ninth New Collegiate Dictionary, at 285.
247 The United States does not contest the dictionary definitions submitted by China.
248 In its Reply to Question 19 (para. 61) from the Panel, China acknowledges that "the rapidly
increasing imports need not 'produce' or 'bring about' the injury in and of themselves," but submits that "the
causal role of subject imports ... requires something significantly more than mere contribution". This suggests
that, for China, a contribution could necessarily only ev er be a "mere" contribution. As explained below ( See
paras. 7.158 to 7.159), the Section 421 causation standard provides for more than a "mere" contribution.
249 Shorter Oxford English Dictionary, Vol. 1, at 365-66 (2007 ed.).
250 Diccionario de la Lengua Espanola, dictionary published by the Real Academia Espanola, available
at: http://www.rae.es/rae.html.
251 The Oxford Spanish Dictionary at 149 (2003 ed.).

causal factor is one of several causal factors th at together produce or bring market disruption.
252
Where a Member does so, it is no longer appropriate to refer to each causal factor as "produc[ing] a
result" (since this implies that each cause has produced the result on its own, which is not the case).
Each causal factor might more accurately be said to play a part in producing that result. Since the
ordinary meaning of "contribute" is to "p lay a part" in the achievement of a result" 253, it seems
reasonable that Members might refer to multiple causes each "contributing" to the result.
7.141 Furthermore, we note that the parties in this case use the terms "cause" and "causal link"
synonymously.254 In the particular context of the Protoc ol, we agree with this approach. While
Paragraphs 16.1 and 16.4 use the term "cause", para graph 246(c) of the Working Party Report refers
to the concept of "causal link":
In determining whether market disruption existed, including the causal link between
imports which were increasing rapidly, eith er absolutely or relatively, and any
material injury or threat of material inju ry to the domestic industry, the competent
authorities would consider objective factors, including (1) the volume of imports of
the product which was the subject of the investigation; (2) the effect of imports of
such product on prices in the importing WTO Member's market for the like or
directly competitive products; (3) the eff ect of imports of such product on the
domestic industry producing like or di rectly competitive products. (emphasis
supplied)
7.142 According to paragraph 246(c), therefore, the finding of "cause" necessitated by
Paragraph 16.4 might properly be referred to as a finding of "causal link". Thus, a finding that rapidly
increasing imports are a (significant) cause of material injury is equivalent to a finding that there is a
(significant) causal link between the imports and th e injury. Regarding the meaning of the term
"causal link" (in the first sentence of Article 4.2(b) of the Safeguards Agreement), the Appellate Body
found in US – Wheat Gluten that:
The word "link " indicates simply that incr eased imports have played a part in, or
contributed to, bringing about serious injury so that there is a causal "connection" or
"nexus" between these two elements." Taking these words together, the term "the
causal link" denotes, in our view, a relationship of cause and effect such that
increased imports contribute to "bringing about", "producing" or "inducing" the
serious injury.
255
7.143 The Appellate Body further explained that the "contribution must be sufficiently clear as to
establish the existence of 'the causal link' required". 256 In other words, the Appellate Body finds that
the existence of a causal link might be established on the basis of a (sufficiently clear) contribution.
Since in the context of the Protocol the terms "cause" and "causal link" may properly be used
synonymously, this guidance from the Appellate Body provides support – in the context of a
provision that envisages a multiplicity of causal factors – for interpreting "cause" as "contribute to
bring about".

252 Although a Member might choose to interpret the term "cause" to mean sole cause, Paragraph 16 of
the Protocol does not require them to do so.
253 China's First Written Submission, para. 198.
254 China's First Written Submission, para. 180, and United States' First Written Submission, para. 172.
255 Appellate Body Report, US – Wheat Gluten, para. 67.
256 Appellate Body Report, US – Wheat Gluten, para. 67.

7.144 In response to Question 5 from the Panel, Chin a seeks to play down the relevance of the
abovementioned finding by the Appella te Body (which concerned the first sentence of Article 4.2(b)
of the Safeguards Agreement ) by arguing that the ordinary meaning of the term "link" does not
include the notion of "contribute to":
China strongly doubts that the Appellate B ody was focused here on the particular
meaning of the word "contribute" and how this might relate to other possible
formulations in relation to causation. Nor, in all likelihood, was the Appellate Body
attempting to set in stone a definition of the term "link" for all future cases. More
likely, the Appellate Body was concerned with setting out a reasoned explanation in
the context of the particular circumstances of US - Wheat Gluten, as well as providing
some useful guidance for the future.
China notes the ordinary meaning of the word "link," as a noun, is "a connecting part"
or "a means of connection." "Link" as a verb means "to connect or join (two things or
one thing to another) with or as with a link." The notion of "contribute to" is simply
not part of the ordinary meaning of "link."
257
7.145 We are not persuaded by China's reading of the abovementioned finding by the Appellate
Body in US – Wheat Gluten , or its suggestion that the Appellate Body could not have indicated that
the term "link" might denote "contribution", for we are in no doubt that the Appellate Body was using
the term "contribute" to denote the "connection" or "n exus" of the imports to the cause of the injury.
This is abundantly clear from the Appellate Body's fi nding that "[t]he word 'link' indicates simply that
increased imports have played a part in, or contribu ted to, bringing about serious injury". In other
words, it is through the (causal) link that imports contribute to causing, i.e., bringing about, the injury.
7.146 Thus, in the context of a provision that envi sages that there might be more than one
"significant cause" of market disruption, it is not inconsistent with Paragr aph 16.4 to interpret the
ordinary meaning of the term "cause" as "contribute".
7.147 Before concluding, we recall that the term "cau se" should also be interpreted in the light of
the object and purpose of the treaty. In this regard, China submits that Paragraph 16 of the Protocol is
an exceptional, country-specific measure desi gned to address unforeseen surges in imports from
China – an "escape valve" to be used only in em ergency situations as an extraordinary remedy. 258
China contends that Paragraph 16 should therefore be given a narrow construction, to differentiate the
higher causation standard of Paragraph 16 from the lower causation standard applied in the
Safeguards Agreement.
7.148 We note that the Appellate Body in US – Shrimp stated that:
A treaty interpreter must begin with, and focus upon, the text of the particular
provision to be interpreted. It is in the wo rds constituting that provision, read in their
context, that the object and purpose of the states parties to the treaty must first be

257 China's Second Written Submission, paras. 149–150, footnote omitted.
258 We note the U.S. argument that because "the Protocol is an integral part of the WTO Agreement, as
such, it does not have its own 'object and purpose', in the sense of Article 31(1) of the Vienna Convention".
(U.S. First Written Submission, para. 66). We disagree. Even though the Agreement on Agriculture and SCM
Agreement are both "integral parts" of the WTO Agreement (WTO Agreement, Article II:2), the Appellate Body
has on various occasions referred to the object and purpose of these specific Agreements ( See, for example,
Appellate Body Report on Canada – Autos , paras. 138 and 142, and Appellate Body Report on US – Upland
Cotton, paras. 613 and 623. We note that, in the latter cas e, even the United States referred to the object and
purpose of the Agreement on Agriculture, as distinct from the WTO Agreement (See para. 68)).

sought. Where the meaning imparted by the text itself is equivocal or inconclusive,
or where confirmation of the correctness of the reading of the text itself is desired,
light from the object and purpose of the treaty as a whole may usefully be sought.
259
7.149 With regard to the claim that Paragraph 16 is an exceptional measure to be used only in
emergency situations, the Panel notes that whether it is to be regarded as an emergency action or not
the words of Article 16 still have to be interpreted in accordance with Articles 31 and 32 of the Vienna
Convention.
7.150 To determine whether the Section 421 causati on standard is inconsistent with the
United States' WTO obligations, we must establish what that causation standard actually means. It is
well established that, when ascertaining the meaning of domestic legislation, a panel might refer to
evidence of the consistent application of that law.
260 In its defence, the United States has produced
evidence to the effect that the "c ontributes significantly" definition is equivalent to the Protocol's
"significant cause" standard because of consistent USITC practice requiring the demonstration of a
"direct and significant causal link" between the rapi dly increasing imports and the market disruption.
In particular, the United States refers to the following extract from the USITC Report in the Tyres
case:
The third statutory criterion for finding market disruption is whether the rapidly
increasing imports are a significant cause of material injury or threat of material
injury. The term "significant cause" is de fined in section 421(c)(2) of the Trade Act
of 1974 to mean "a cause which contributes si gnificantly to the material injury of the
domestic industry, but need not be equal to or greater than any other cause." The
legislative history of section 406 describes the significant cause standard as follows:
Under this standard, the imports subj ect to investigation need not be
the leading or most important cause of injury or more important than
(or even equal to) any other cause, so long as a direct and significant
causal link exists. Thus, if the ITC finds that there are several causes
of the material injury, it should seek to determine whether the
imports subject to investigation are a significant contributing cause of
the injury or are such a subordinate, subsidiary or unimportant cause
as to eliminate a direct and significant causal relationship.
261
7.151 In addition, the United States refers to tw o additional Section 421 investigations: Pedestal
Actuators From China and Certain Ductile Iron Waterworks Fittings From China . In both cases, the
USITC made the same reference to the legislative hi story of Section 406. In our view, these three
cases are sufficient to show that the USITC consis tently interprets the "contributes significantly"
standard of Section 421 as requiring a "direct and significant causal link", which is essentially
equivalent to a showing of "significant cause".
262
7.152 Although the fact that the USITC consistently interprets the "contributes significantly"
standard of Section 421 as requiring a "direct and significant causal link" is not necessarily

259 Appellate Body Report, US – Shrimp, para. 114.
260 See, for example, Appellate Body Report, US – Carbon Steel, para. 157.
261 USITC Report, page 18.
262 China has not contested that a showing of "direct and significant causal link" would meet the
Paragraph 16.4 "significant cause" standard. Indeed, China argued in para. 40 of its oral statement at the first
meeting that "this dispute would be very different" with respect to its "as such" claim if "the statute required a
'direct and significant causal link', as does the USITC determination".

determinative of the issue at hand, it does support a finding that the Section 421 "contributes
significantly" standard is no less stringent than the Paragraph 16.4 "significant cause" standard.
7.153 China argues that the above extracts from the US ITC determinations relate to the legislative
history of Section 406, rather than Section 421. The USITC references the legislative history of
Section 406 because that contains the same stat utory definition of "sig nificant cause" (i.e.,
"contributes significantly") as provided for in Se ction 421. The evidence presented by the
United States relates to the consistent applica tion of the "contributes significantly" standard in
Section 421 determinations, not in Section 406 determ inations. In these circumstances, we consider it
appropriate to take into account the legislative hi story of the Section 406 "contributes significantly"
standard.
3. Whether the statute further lowers the Paragr aph 16.4 causation standard by allowing
imports to be a less important factor than any other single cause, no matter how minor
that other cause might be
7.154 We recall that Section 421 allows a determ ination that increased imports constitute a
"significant cause" of material injury even though thei r causal effect is not "equal to or greater than"
that of any other cause.
(a) Arguments of the parties
7.155 China claims that, in circumstances where ther e are also other causes of injury to the
domestic industry, the "significance" of the incr eased imports as a causal factor should be assessed
relative to those other causes, rather than in a vacuum. According to China, the core meanings of
"significant" – important, notable, consequential
263 – all include the notion of significance relative to
other matters, in this case other causes. Thus, Ch ina claims that Paragraph 16.4 of the Protocol
prevents increased imports from being treated as a "significant cause" if the causal effect of the
increased imports is relatively less important than th e causal effect of some other factor, or if the
increased imports play a relatively small role in th e market. China submits that the U.S. statutory
definition is inconsistent with Paragraph 16.4 of th e Protocol because it fails to provide for any such
relative assessment between the causal effect of subject imports and other causes of market disruption.
China claims that, by allowing imports that are a le ss important factor than any other single cause, no
matter how minor that other cause might be, to still qualify as a "significant cause", the U.S. statutory
definition further lowers the causation standard set forth in Paragraph 16.4. For this reason, China
refers to the fact that the Section 421 "contribut es significantly" standard requires no more than a
"mere"
264 contribution.
7.156 The United States denies that Paragraph 16.4 of the Protocol requires the weighing of causal
factors, or precludes a finding that increased imports are a "significant cause" of material injury
simply because the causal effect of such increased imports may be less than some other factor(s). The
United States asserts that Paragraph 16.4 refers to "a significant cause", indicating that increased
imports might be one of several "significant causes" of injury to the domestic industry.
7.157 The United States further submits that the USIT C stated in the underlying determination that
it may not find that imports from China are a "significant cause" of material injury if those imports are
such an "unimportant," subordinate," or "subsidiary" cause of injury that there is no "direct and

263 See Panel Report, US – Upland Cotton, para. 7.1325 ("The ordinary meaning of the term 'significant
is 'important; notable … consequential. The term 's ignificant' therefore connotes something that can be
characterized as important, notable or consequential").
264 See, for example, China's Second Written Submission, para. 137.

significant causal link" between the imports and material injury or threat.
265 Instead, as the USITC
has consistently stated, the USITC must find a "direct and significant causal link" between imports
from China and material injury or threat.
266 The United States asserts that such an interpretation
precludes the possibility that increased imports might be treated as a "significant cause" when they do
not, in fact, have the requisite degree of causal effect.
(b) Evaluation by the Panel
7.158 We first consider China's argument that the core meanings of "significant" – important,
notable, consequential267 – all include the notion of significance relative to other matters (in this case
other causes).268 While we agree with China (and the United States 269) that the ordinary meaning of
the word "significant" is "important", "notable", "consequential" 270, we disagree with China's
argument that these meanings must include the notion of significance relative to other causal factors.
We note that China has provided no evidence or explanation in support of this argument. In our view,
rapidly increasing imports might properly constitute a significant cause of market disruption even
though their causal role is not as significant as other factors.
7.159 Regarding China's argument that Section 421 impe rmissibly allows an investigating authority
to determine that even a minimal cause, which can be less than any other cause, could still be
considered as "a significant cause," we consider that this possibility is excluded by the plain text of
Section 421. The statutory definition at issue in this claim provides that rapidly increasing imports
must "contribute significantly" to the market disrup tion. Since the relevant contribution must be
"significant", i.e., important, or notable, we see no basis for concl uding that only a "minimal", or
"mere", contribution might suffice.
271 Furthermore, we have already explained that, in the context of
Paragraph 16.4 of the Protocol, the term "cause" ma y be interpreted to mean "contributes". Thus, if
rapidly increasing imports "contribute significantly" to the market disruption, they will necessarily be
a "significant cause" of that market disruption for the purpose of Paragraph 16.4 of the Protocol.

265 USITC Report, page 18.
266 The United States refers, by way of an example, to page 18 of the USITC Report.
267 See Panel Report, US – Upland Cotton, para. 7.1325 ("The ordinary meaning of the term 'significant
is 'important; notable … consequential. The term 's ignificant' therefore connotes something that can be
characterized as important, notable or consequential").
268 China challenges the statement in Section 421 that imports "need not be equal to or greater than any
other cause". Inherent in this challenge seems to be the notion that imports might only satisfy the "significant
cause" standard if their impact is equal to or greater th an any other cause. This is reflected in para. 155 of
China's Second Written Submission, where China asserts that "[i]t is hard to see how a minor cause – one
indeed that is less important than any other cause – can be properly considered to be 'significant'." This
statement is also made in para. 38 of the Oral Statement of China at th e First Meeting. In our view, this
argument is at odds with the plain language of Paragraph 16.4, which requires only that rapidly increasing
imports be "a" significant cause of market disruption. If the drafters of Paragraph 16.4 had intended that rapidly
increasing imports should be "the most" significant cause of market disruption, they would have drafted
Paragraph 16.4 accordingly.
269 See, for example, the United States' First Written Submission, para. 179.
270 The New Shorter Oxford English Dictionary, (1993).
271 We note China's argument that Paragraph 16.4 focu ses on the nature of the cause, such that "the
obligation to find imports from China to be a 'significant cause' requires more than a mere contribution",
whereas Paragraph 16.1 and Article 2.1 of the Safeguards Agreement focus on the (causal) link, rather than the
nature of the cause itself (China's Reply to Question 16, paras. 61 and 63). While we do not necessarily agree
with China's interpretation of Article 2.1 of the Safeguards Agreement and Paragraph 16.1 of the Protocol, we
do agree that "significant cause" requires more than a mere contribution.

4. Conclusion
7.160 For all of the above reasons, we do not co nsider that the Section 421 "contributes
significantly" standard requires the United States to establish causation in a manner inconsistent with
Paragraph 16 of the Protocol.
D.
WHETHER THE USITC PROPERLY FOUND THAT RAPIDLY INCREASING IMPORTS WERE A
SIGNIFICANT CAUSE OF MATERIAL INJURY
7.161 China claims that the USITC failed to properly demonstrate that subject imports were a
"significant cause" of market disruption, contrary to Paragraphs 16.1 and 16.4 of the Protocol.
China's claim is based on three principal arguments: the USITC failed to show that the conditions of
competition between subject imports and the domes tic product support a finding of causation; the
USITC failed to establish any temporal correlati on between rapidly increasing subject imports and
material injury to the domestic industry; an d the USITC failed to address alternative causes of
material injury to the domestic industry, in the sense that the USITC failed to ensure that injury
caused by other factors was not improperly attributed to subject imports.
7.162 Before turning to the substance of the USIT C's causation analysis, though, we first address
disagreements between the parties re garding the nature of the causation analysis actually required by
Paragraph 16 of the Protocol.
1. The nature of the analysis required by Paragraph 16 of the Protocol
(a) Conditions of competition / correlation
7.163 The parties disagree as to whether the USITC was required to analyse the conditions of
competition and correlation. China says it was. The United States says it was not.
(i) Arguments of the parties
7.164 China submits that WTO case law has established that the conditions of competition must
always be analysed under the Safeguards Agreement, since Article 2.1 of the Safeguards Agreement
refers to a product being imported in increased quantities and "under such conditions" as to cause
serious injury. China argues that Paragraph 16.1 of the Protocol contains the same language ("under
such conditions") as Article 2.1 of the Safeguards Agreement. China contends that while a conditions
of competition assessment is required for global saf eguards, it is especially indispensable under the
more exacting causation standard of the Protocol. China submits that this is particularly the case
where the relevant market encompasses a broad range of products and market segments, as in the U.S.
tyre market.
7.165 China claims that an analysis of correlation is also required under Paragraph 16 of the
Protocol. China asserts that WTO case law highlight s the central role played by correlation in the
context of establishing causation under the Safeguards Agreement. China refers in particular to the
finding of the panel in Argentina – Footwear (EC) (affirmed by the Appellate Body) that:
In practical terms, we believe therefore that this provision means that if causation is
present, an increase in imports normally should coincide with a decline in the relevant
injury factors. While such a coincidence by itself cannot prove causation, its absence

would create serious doubts as to the existence of a causal link, and would require a
very compelling analysis of why causation still is present.
272
7.166 China submits that such case law is relevant to the Protocol, and that the correlation analysis
is even more demanding under the Protocol than under the Safeguards Agreement, given the allegedly
more onerous "significant cause" causation standard provided for in the Protocol.
7.167 The United States denies, as a legal matter, that an investigating authority is required to
analyse the conditions of competition under Paragra ph 16 of the Protocol. The United States notes in
this regard that Article 2.1 of the Safeguards Agreement provides that a Member may impose a global
safeguard only if it has determined that a product "is being imported into its territory in such increased
quantities, absolute or relative to domestic production, and under such conditions as to cause or
threaten to cause serious injury to the domestic industry". (Emphasis added). The United States
asserts, by way of comparison, that the language of Pa ragraph 16.1 of the Protocol states that a need
for a transitional measure may arise in cases wher e products from China are being imported "in such
increased quantities or under such conditions as to cause or th reaten to cause market disruption".
(Emphasis added). The United States s ubmits that, unlike the language of the Safeguards Agreement
which specifically requires an analysis of increased quantities and the conditions under which imports
are causing serious injury, the Protocol indicates that increased quantities alone or conditions alone
may cause market disruption. The United States fu rther submits that the Protocol's definition of
market disruption in Paragraph 16.4 does not require the investigating authority to examine conditions
of competition to determine if market disruption exists, but directs it only to consider import volumes,
their price effects, and the effect of imports on the domestic industry.
7.168 The United States further asserts that the Prot ocol does not indicate that the competent
authority should assess whether there is a coincide nce of trends between increasing imports and the
declines in the condition of the industry analysis , or suggest that an authority must provide a
"compelling analysis of why causation is still present" if such a coincidence does not exist, as alleged
by China. According to the Unite d States, therefore, China has no basis for asserting that the USITC
was required to perform a "coincidence of trends" analys is in its determination, or that it must provide
"a compelling analysis of why causation is still present" if that coincidence does not exist.
(ii) Evaluation by the Panel
7.169 The first sentence of Paragraph 16.4
273 requires the importing Member to determine whether
imports cause market disruption, i.e., whether impor ts (that are increasing rapidly) are a "significant
cause" of material injury, or threat thereof, to the domestic industry. The first sentence of
Paragraph 16.4 does not require that causation be established on the basis of any particular
methodology. In addition, the second sentence of Pa ragraph 16.4 requires that "objective factors " be
considered in determining the existence of market disruption, including causation:
In determining if market disruption exis ts, the affected Member shall consider
objective factors, including the volume of such imports, the effect of imports on
prices for like or directly competitive articles, and the effect of imports on the
domestic industry producing like or directly competitive products.
7.170 Thus, Paragraph 16.4 does not require the im porting Member to apply any particular
methodology for establishing market disruption, including causation. The second sentence of

272 Panel Report, Argentina – Footwear (EC) , para. 8.238; Appellate Body Report, Argentina –
Footwear (EC), paras. 144-145.
273 See paras. 7.33 to 7.37.

Paragraph 16.4 simply requires the consideration of objective factors. This suggests that an
investigating authority is free to choose any me thodology to establish causation, provided it addresses
the objective factors set forth in Paragraph 16.4, and provided in particular it is sufficient to establish
that rapidly increasing imports are a "significant cause" of material injury. We believe that an
analysis of the conditions of competition
274 and correlation will often be relevant, and may on the
facts of a given case prove essential, to a consideration of "significant cause". Indeed, it might be
very difficult to establish "significant cause" without performing these types of analyses. 275 Our task
is to perform an objective assessment of the USIT C's overall determination of "significant cause," in
light of the arguments of the parties. The USITC did rely on analyses of the conditions of competition
and correlation in determining that rapidly increasing subject imports were a "significant cause" of
material injury. Accordingly, to the extent the arguments of the parties require, we shall examine
those analyses as part of our assessment of the USITC's overall determination of "significant cause".
(b) Non-attribution
7.171 The parties disagree as to the extent to which an importing Member is required to assess the
injurious effects (on the domestic industry) of fact ors other than increased imports, and ensure that
injury caused by such other factors is not improperly attributed to increased imports. Such assessment
is generally referred to as "non-attribution".
(i) Arguments of the parties
7.172 China attributes the injury suffered by the U.S. domestic industry to a number of alternative
factors, including changes in demand and the domes tic industry's business strategy. China contends
that the USITC ignored or failed to assess fully the se other causes of injury, or to establish that the
injury caused by such ot her factors was not improperly attributed to the subject imports. China
submits that it is impossible to make the requisite determination of causati on without considering the
role played by causes of injury other than subject im ports. China asserts that it would be inconsistent
with the object and purpose of Paragraph 16 for a Member to apply a safeguard measure based on
injury caused by factors other than imports from Ch ina. China acknowledges that there is no explicit
"non-attribution" requirement in Paragraph 16, but s ubmits that this requirement is in fact embedded
in the ordinary meaning of the phrase "causal li nk", which the USITC was required to examine by
virtue of paragraph 246(c) of the Working Party Re port (and which is found in the first sentence of
Article 4.2(b) of the Safeguards Agreement ). Reading Paragraph 16 of the Protocol in light of
paragraph 246(c) of the Working Party Report, Chin a refers to a finding by the Appellate Body in
US – Lamb which, it alleges, explains how a "cau sal link" should be established under the Safeguards
Agreement. China understands the Appellate Body to ha ve found that, to establish a "causal link" for

274 We recall that, in the light of the French and Sp anish texts and in accordance with Article 33(4) of
the Vienna Convention, the word "or" in the first sentence of Paragraph 16.1 is to be taken to include "and" ( See
note 81 above).
275 In its Reply to Question 25 from the Panel, the United States has indicated that "it is possible for a
competent authority to evaluate the 'effect of imports on prices for like or directly competitive articles' and the
'effect of imports on the domestic industry producing like or directly competitive products,' as the terms are used
in paragraph 16.4, without performing a 'coincidence of trends' analysis and/or performing a detailed assessment
of all possible conditions of competition in the market. For example, a competent authority could reasonably
choose to assess the effects of imports on prices and the industry by performing an economic modelling
exercise, such as a static equilibrium or a linear regre ssion modelling analysis". We are not persuaded by this
argument, since a static equilibrium analysis generally involves an advan ced analysis of the conditions of
competition, and a linear regression modelling analysis ge nerally involves an advanced analysis of correlation
over an extended period of time (i.e., "regression" back in time). In our view, therefore, the United States' Reply
to Question 25 does not really explain how causation might be established without some form of conditions of
competition and/or correlation analysis.

the purpose of Article 4.2(b) of the Safeguards Agreement, an investigating authority had to establish
a "genuine and substantial relationship of cause and effect" between the increased imports and the
serious injury suffered by the domestic industry. China further understands the Appellate Body to
have found that, in order to establish the "genuine a nd substantial relationship of cause and effect", an
investigating authority must "distinguish[] and sep arate[]" the injurious effects caused by all the
different causal factors. China therefore submits that an investigating authority cannot conclude that a
"causal link" exists without first assessing whethe r other factors are actually responsible, or better
explain the data. However, China does not clai m that, under Paragraph 16, the authority must
perform the same non-attribution analysis for other factors in the market that it would in a global
safeguard proceeding.
276
7.173 The United States contends that China's argument regarding the need to consider other
causes, and ensure that their injurious effects are not attributed to rapidly increasing imports, is legally
mistaken because it is premised on analytical sta ndards developed by the Appellate Body under the
Safeguards Agreement, which have no basis in the text of the Protocol. The United States submits
that China's argument disregards the actual text of the Protocol, and the context and scope of the
Appellate Body's findings under the Safeguards Agreement. The United States asserts that, since the
negotiators of the Protocol were presumably aware that the Safeguards Agreement and the AD
Agreement contained "non-attribution" language but c hose not to include any "non-attribution"
requirement in the causation provisions of the Protoc ol, the Panel should assume that such an analysis
was not intended to be required. The United States submits that it is well-established that, under the
principle of inclusio unius est exclusio alterius , when a treaty includes a term or requirement in one
part but excludes that term or requirement from anot her part, the absence of that term or requirement
indicates that the drafters intentionally chose not to include that term or requirement in the provision
from which it is absent. That being said, the United States does accept that some form of non-
attribution analysis is required – albeit not the non- attribution imposed by the Appellate Body in the
context of Article 4.2(b) of the Safeguards Agreement. According to the United States, "a competent
authority may use any reasonable methodology to co nsider such other factors when assessing whether
market disruption exists.277 The United States submits that a competent authority's need to address the
effects of other possibly injurious factors will depend on the facts a nd circumstances of the particular
case. The United States posits three possibilities in th is regard: in some cases, another factor might
arguably be so significant a cause of injury to the industry that the competent authority will need to
perform a detailed and reasoned explanation of the e ffects of that factor, to ascertain whether that
factor severs the apparent causal link between imports and material injury; in other cases, the factor
may be contributing to injury in a considerably l ess significant fashion. In those circumstances, the
competent authority could reasonably reference the factor and indicate in a reasonable fashion why
the factor does not explain the inju ry caused to the pertin ent industry; and, in still other cases, the
authority could simply find that there was no ev idence establishing that a particular factor caused
injury to the industry, or that the parties have not presented sufficient evidence to establish that the
factor causes any injury at all. In such cases, the authority would have little or nothing to investigate
and no need to analyze the effects of the factor.
(ii) Evaluation by the Panel
7.174 While at the outset of this proceeding, it appear ed that the parties disagreed fundamentally on
whether an investigating authority was require d by Paragraph 16 to perform a non-attribution

276 China's Second Written Submission, para. 309, footnote omitted.
277 U.S. First Written Submission, para. 299. See also U.S. Reply to Question 29 from the Panel.

analysis, by the end it was clear that the parties agr eed that some form of non-attribution analysis may
be required in certain circumstances.
278
7.175 As to the nature of the non-attribution analys is that may be require d under Paragraph 16 of
the Protocol, we begin by considering the fo llowing finding of the Appellate Body in US – Lamb ,
which China relied on in its arguments:
In a situation where several factors are causing injury "at the same time", a final
determination about the injurious effects caused by increased imports can only be
made if the injurious effects caused by all the different causal factors are
distinguished and separated. Otherwise, any conclusion based exclusively on an
assessment of only one of the causal factors – increased imports – rests on an
uncertain foundation, because it assumes that the other causal factors are not
causing the injury which has been ascribed to increased imports.
279
7.176 Although the reasoning in US – Lamb was based on the requirement of non-attribution in
Article 4.2(b) of the Safeguards Agreement and thus is not directly applicable here, this does not mean
that the obligation to demonstrate that rapidly in creasing imports are a significant cause of material
injury should not entail some form of analysis of the injurious effects of other factors. An analogy
can be drawn with the approach in US – Upland Cotton , where notwithstanding the absence of non-
attribution language in Articles 5 and 6.3 of the SCM Agreement, both the panel and Appellate Body
found that (some form of) non-attribution is in herent in establishing the causal link between the
subsidy and price suppression. Both took that view that if non-attribution does not occur, one cannot
establish with certainty that price suppression was the effect of the subsidy (as opposed to some other
injurious factor).
7.177 Thus, we consider that the causal link between rapidly increasing imports and material injury
must be assessed "within the context of other possible causal factors". 280 In particular, a finding of
causation for the purpose of Paragraph 16.4 should only be made if it is properly established that
rapidly increasing imports have injurious effects th at cannot be explained by the existence of other
causal factors. We shall evaluate the USITC's assessment of alternative causes in this light.
7.178 We now turn to the substance of China's cl aims against the USITC's finding of significant
cause, beginning with China's claims against the USITC's assessment of the conditions of competition
between subject imports and domestic tyres.
2. The conditions of competition between subject imports and domestic tyres
7.179 China claims that the USITC's causation analys is was based on a misinterpretation and
distortion of the conditions of competition, such that the USITC failed to understand the attenuated
nature of competition between subject imports from China and domestic tyres. 281 China claims that

278 See, for example, para. 309 of China's Second Written Submission, and para. 299 of the
United States' First Written Submission. China also as serts that non-attribution under the Protocol does not
require a precise quantification of the injury caused by the various injurious factors ( See China's Reply to
Question 17(b) from the Panel, para. 71).
279 Appellate Body Report, US – Lamb, para. 179 (emphasis in original).
280 Panel Report, US – Upland Cotton, para. 7.1344.
281 In its First Written Submission, China refers to declining demand and the industry business strategy
in the context of its claim regarding the USITC's treatme nt of the conditions of competition. However, China
only develops its arguments regarding these factors when claiming that the USITC ignored or failed to assess
fully other causes of injury (in the context of its non-attribution claim) ( See paras. 219 and 220 of China's First
Written Submission, which contain cross- references to more detailed arguments set forth in Section V.C.4(a)

the USITC improperly dismissed the fact (a) that subject imports and domestic tyres focus on
different market segments in the replacement tyre market, and (b) that U.S. producers have a greater
involvement in the OEM sector. China also clai ms that the USITC (c) improperly concluded from
questionnaire responses that subject imports and domestic tyres were substitutable.
7.180 The United States denies that there were any flaws in the USITC's analysis of the conditions
of competition, or that the USITC erred in fi nding that competition between domestic tyres and
subject imports was not attenuated.
7.181 We begin by considering China's argument that the USITC dismissed the fact that domestic
tyres and subject imports focused on different segments of the replacement market.
(a) Different segments in the replacement market
(i) Arguments of the parties
7.182 China argues that the USITC failed adequately to account for the fact that, within the
replacement market, Chinese and domestic tyres focus on different market segments. China contends
that the largest share of U.S. producer shipments was to the higher-end tier 1, and that the largest
share of imports from China was to the lower-end tier 3. China refers to the USITC determination to
argue that only 18.6 per cent of U.S. producer shipments fell into tier 3. China also relies on the
finding by a dissenting commissioner that "U.S. pr oduction is focused on the higher-value, premium
branded products and the OEM market, segments in which the subject imports are not competing in
any meaningful manner".
282 According to China, the most logi cal inference from the record data is
that any competition between Chinese and domestic tyres in the replacement market is attenuated.
7.183 China acknowledges that U.S. producers have not completely exited the tier 2 and tier 3
categories, and that domestic tyres and subject imports are therefore present in these same
categories.283 Nevertheless, China contends that the US ITC fails to provide a reasoned or adequate
explanation why the "vestigial" competition within tiers 2 and 3 rises to the level of "significant
competition", or permits the further inference that imports from China rise to the level of a
"significant cause" of any injury experienced by the U.S. producers. According to China, subject
imports are absent from tier 1, which represents approximately 70 per cent of the replacement market.
7.184 The United States submits that the USITC addressed this issue at length in its determination,
but found that, although the U.S. replacement market could generally be segmented into three
categories, market participants did not ag ree on which tyres fell into which categories.
284 T h e
United States asserts that market participants responded to the USITC's supplemental questionnaires
on this issue with a wide range of estimates of th e share of U.S. producer's and subject Chinese tyre
shipments falling into each category, further evidencing the fact that there was no bright line or

and (b) of China's First Written Submission). Furthermore, in its Second Written Submission, China only refers
to demand and industry business strategy as "other causes" of injury (Section IV.C.3(b)). We therefore do not
consider it necessary to review these issues in the contex t of the present claim. At para. 234 of its First Written
Submission, China also referred to certain "other f actors" allegedly affecting the conditions of competition
which the USITC allegedly overlooked. However, China has made no specific arguments as to how such "other
factors" actually affected the conditions of competition, nor otherwise explained why the USITC should have
considered such factors in its assessment of the conditions of competition. There is therefore no basis for us to
uphold China's claim regarding these "other factors."
282 USITC Report, page 52 (dissenting Commissioners).
283 USITC Report, page 64 (dissenting Commissioners).
284 USITC Report, page 27.

industry-wide accepted dividing line between the three categories.
285 In addition, the United States
contends that the information on the record did not support China's argument that there was little
competition between subject tyres and U.S. tyres in these categories, as the re cord showed that both
subject tyres and U.S. produced tyres competed in all three segments of the market in 2008, albeit to
varying degrees. The USITC found that subject im ports and the domestic product were both present
in category one, and that both had a signi ficant presence in categories two and three. 286 T h e
United States asserts that, in 2008, 18.6 per cent of U.S. producers' U.S. shipments fell into category
three, the category in which subject tyres were most heavily concentrated, and the record showed that
there was also a significant presence of both subject imports and domestically produced tyres in
category two.
287 The United States contends that, given that the record showed that there was
significant competition between subject imports and U.S. tyres in the market sectors in which subject
imports were supposedly most heavily concentrated , the USITC reasonably rejected the claim that
competition between subject and U.S. tyres was attenuated. The United States asserts that it is
important to recall that the domestic industry shippe d 18.6 per cent of its shipments into the category
three sector in 2008, the last year of the period, after the domestic industry had already undertaken
substantial reductions and plant closures to reduce its production of low-end tyres (a decision that the
United States claims was made in reaction to the significant and increasing volume of subject
imports).
288
(ii) Evaluation by the Panel
7.185 China's argument regarding attenuated competition in the replacement market is based on the
existence of three distinct tiers, or market segments, and the fact that domestically produced tyres and
subject imports were focused on different market segments. According to China, domestic tyres were
confined principally to tier 1, whereas subject impo rts were confined principally to tiers 2 and 3.
China asserts that the limited presence of domestic tyres in tiers 2 and 3 meant that there was only
"vestigial" competition between subject imports and domestic tyres in those segments.
7.186 We note that the USITC did not deny the existenc e of different market segments. Instead, the
USITC issued a supplemental questionnaire to explor e this issue, and to examine the possibility of
attenuated competition between U.S. industry and subject imports.
289 On the basis of the
supplemental questionnaire responses, the USITC "agr ee[d] with respondents that the record supports
the view that the U.S. replacement market genera lly can be segmented into three categories", but
noted that "there was less agre ement [among firms submitting questi onnaire responses] as to which
tires were included in the two lower-priced categories".290
7.187 China acknowledges that there is no bright dividing line between the three different segments,
but argues that "[t]he fact that the distinction may not be absolute does not mean that the distinction
does not exist at all, or that the distinctio n does not produce highly attenuated competition". 291 China
further argues that "[a]lthough responses indicated some differences in opinion concerning the
dividing line between tiers 2 and 3, there was not much doubt about the dividing line between tier 1,

285 USITC Report, page 27.
286 USITC Report, page 27.
287 USITC Report, page 27.
288 USITC Report, pages 24-25.
289 USITC Report, page 27.
290 USITC Report, page 27.

on the one hand, and tiers 2 and 3, on the other".
292 According to China, "[t]he record as a whole
demonstrates a strong distinction between tier 1 tires and tier2/tier 3 tires."293
7.188 Regarding the differentiation between segments in the replacement market, we note the
finding by dissenting commissioners that:
There is consensus among the parties that the subject tire market is segmented
between the OEM and replacement markets, and, to some degree, that there are
categories or tiers within the replacement market. However, there is no consensus on
how to define what types of tires are cla ssified in each tier, or what brands are
classified in each tier wi thin the replacement market . In addition to examining
industry publications placed on the record, the Commission issued supplemental
questionnaires to gather additional in formation about competition among tiers. The
record indicated that in general, tier 1 co mprises premium or flagship brands; tier 2
comprises mid-level, secondary/associate, or smaller producer brands; and tier 3
comprises entry-level or non-recognizable branded tires.
 The majority of
questionnaire responses classify private brands as tier 3 tires but are mixed as to
where to place associate brands, with some responses placing them in tier 2 and
others placing them in tier 3 . In addition, market participants do not agree on what
specific brands are classified in each tier. Other responses classify tires based on
price.294
7.189 This finding indicates that there was no con sensus as to the dividing lines between the
three market segments in the replacement market (particularly in respect of the differentiation
between tiers 2 and 3). 295 The lack of consensus regarding the dividing lines between the market
segments is further confirmed by the fact that there were:
wide variations in the estimates for the share of the total U.S. market accounted for by
each tier. Producers and importers reported that tier 1 ranged from 21 per cent to
78 percent of the total U.S. tire market; tie r 2 ranged from 7 percent to 52 percent of
the market; and tier 3 ranged from 10 percent to 50 percent of the market.296
7.190 In other words, there was no established market perception of where the boundaries between
tiers 1, 2 and 3 should lie. Indeed, five of the 26 respondent importers reported that the replacement
market could not be segmented 297, and one major U.S. producer reported "there was no consensus in
the marketplace on how to divide the U.S. market".298
7.191 We recall China's arguments that domestically pr oduced tyres were confined principally to
tier 1, whereas subject imports were confined principally to tiers 2 and 3, and that there is "a strong
distinction between tier 1 tires and tier 2/tier 3 tires". In this regard, we note the statement in the
finding by the dissenting commissioners that:

294 USITC Report, page 51 (dissenting commissioners), emphasis supplied.
295 In its comments on the U.S. Reply to Questi on 46 from the Panel, China asserts that "the
overwhelming number of companies responding to the questionnaire ... were able to segment the market into
three tiers" (China's comments on U.S. Reply to Question 46 from the Panel, para. 21). The point is not whether
respondents could segment the repl acement market. The point is whet her the distinction between those
segments was so well established that it should necessarily have been taken into account by the USITC.
296 USITC Report, page 52 (dissenting commissioners).
297 USITC Report, page V-5.
298 USITC Report, page V-6.

While not arguing that there is a clear dividing line among each of the tiers,
respondents, in general, contend that co mpetition is attenuated between domestically
produced tires which are primarily in tier 1 and 2 tires for the OEM and replacement
markets, and subject imports which are primarily in tier 3 tires for the replacement
market.
299
7.192 This statement, which refers to respondents arguing that domestically produced tyres are
present in both tiers 1 and 2, is at odds with Chin a's argument that there is "a strong distinction
between tier 1 tires and tier 2/tier 3 tires", and that domestic tyres compete primarily in tier 1, whereas
subject imports compete primarily in tiers 2 and 3. China's argument is also at odds with the specific
statement by one Chinese producer during the underlying investigation that:
while there is certainly a real distinction between Tier 1 and Tier 2 tires, it is often
useful to group Tier 1 and Tier 2 tires together in the category of 'higher-end" tires,
since both of these segments are ones in which brand equity is an important element.
Tier 3 tires, by comparison, are 'economy' or 'low-end' tires. Brand equity plays
essentially no role in the marketing of these tires.
300
7.193 Thus, while this one Chinese producer notes that th ere is a real distinction between tiers 1 and
2, that distinction is apparently not so prof ound that tier 1 and tier 2 tyres should not be grouped
together for the purpose of identifying tyres that compete on the basis of brand equity.
7.194 Given the uncertainty regarding the basis for di stinguishing between tiers 1, 2 and 3 of the
replacement market, respondents' views that domesti cally produced tyres were primarily in tiers 1
and 2, and one respondent's view that it is in any event "useful to group Tier 1 and Tier 2 tires
together" for certain purposes, we are not persua ded by China's argument that the USITC was
required to have found that there is "a strong distinction between tier 1 tires and tier2/tier 3 tires".
7.195 Furthermore, even if tiers 2 and 3 could be c linically isolated from tier 1, record evidence
demonstrates that there remained significant competition between domestic tyres and subject imports
in tiers 2 and 3. In 2008
301, U.S. producers and subject imports accounted for 16 and 27.3 per cent
respectively of tier 2 shipments, and 18.6 and 42.4 per cent respectively of tier 3 shipments.302 In our
view, such U.S. industry presence in tiers 2 and 3 suggests significantly more than the merely
"vestigial" competition alleged by China. 303 The fact that this data relates to 2008, after the U.S.
industry closed plant producing lower-value (i.e., tier 2 and 3) tyres, suggests that the competition
between the U.S. industry and subject imports would have been even greater earlier in the period of
investigation.
7.196 We note China's argument that subject imports we re absent from tier 1, which it estimated to
represent 70 per cent of the replacement market. The United States contests China's estimate, on the
basis of a press article providing an overview of th e tyre market in 2008. The United States asserts

299 USITC Report, page 52 (dissenting commissioners), emphasis supplied.
300 Post-Hearing Brief of GITI, page 6, (emphasis supplied).
301 This data is taken from interested parties' responses to a supplemental questionnaire from the
USITC. That supplemental questionnaire only requested data for 2008.
302 These figures are based on each individual pr oducer's and importer's own estimates of the
percentage of its own shipments that were shipped in each tier in 2008. The USITC did not itself make a
determination that certain volumes of shipments by individual producers and importers in 2008 should be
classified as tier 1, 2 or 3 tyres. Certain producers and importers did not report segment-specific data, as they
claimed that the market could not be divided into distinct segments.
303 In absolute numbers, there were more U.S. industry sales in tiers 2 and 3 in 2008 than subject
imports. See U.S. Reply to Question 46 from the Panel, para. 24.

that tier 1 occupies considerably less than the 70 pe r cent share of the replacement market claimed by
China. We do not consider it necessary to enter in to the details of the par ties' arguments regarding
this issue, as China's estimate of the relative impor tance of tier 1 was made before the United States
provided the abovementioned supplem ental questionnaire data in response to Question 46 from the
Panel. On the basis of that data, we note that tier 1
304 accounted for 51.2 per cent of shipments in the
replacement market. Thus, while subject imports from China may only have had a limited presence in
tier 1305, subject imports had a far greater presence in the remainder of the replacement market where,
as explained above, domestic tyres were also prevalent.
7.197 In the circumstances, we conclude that while there was a general understanding that the tyre
replacement market was divided into 3 tiers, we fi nd no fault with the USITC's conclusion that there
was no distinct dividing line between these tiers. Also, while we recognize that there was some
variation in levels of competition between subj ect imports and domestic products as between tier 1
and tiers 2 and 3, we find no fault with the USIT C's conclusion that subj ect imports and domestic
products were not focused in different tiers and do not accept that the USITC should have found that
there was only "vestigial" competition between them in tiers 2 and 3.
(b) U.S. producers' focus on the OEM market
(i) Arguments of the parties
7.198 China claims that the USITC failed to accord si gnificance to the U.S. producers' greater
involvement in the OEM market. China contends that the USITC incorrectly found that there was
competition between domestic tyres and subject imports in the OEM market, even though
between 17.7 and 23.3 per cent of U.S. producers' shipments were in the OEM market, whereas only
0.8 to 7.3 per cent of subject imports went to the OEM market. China further contends that subject
imports only accounted for 0.2 to 4.9 per cent of all OEM shipments, such that any competition
between subject imports and domestic tyres in the domestic OEM market was negligible.
7.199 The United States submits that the USITC recognized that the vast majority of both imports
of tyres from China and domestically produced tyres were sold in the replacement market
306, but also
recognized that both Chinese and U.S. producers sold and competed in the OEM market as well. 307
The United States asserts that th e USITC record showed that U.S. producer's shipments to the
OEM market declined steadily during this peri od to a period low of 24.2 million tyres in 2008,
representing 17.7 per cent of U.S. shipments in that year 308, whereas import shipments from China
increased irregularly from 121,000 tyres in 2004 to a period high 2.3 million tyres in 2008,
representing five per cent of imports from China in that year, and 4.9 per cent of the OEM market.
309
The United States therefore asserts that, in every y ear of the period, there were considerable amounts
of U.S. tyres and an increasingly significant amount of subject imports in the OEM market, thereby
demonstrating that there was competition between imports from China and domestically produced
tyres in the OEM market.

304 We rely in this regard on the data reported by those producers and importers that did divide the
market into three segments.
305 The supplemental questionnaire data indicates that subject imports accounted for less than one per
cent of those tier 1 shipments.
306 USITC Report, page 21. The United States a sserts that the USITC noted that the replacement
market is by far the more important market for both ty pes of producers, but stated that it was relatively more
important to Chinese producers since a higher percentage of their shipments went to that market.
307 USITC Report, page 27.
308 USITC Report, Tables V-2 and V-3.
309 USITC Report, Tables V-2 and V-3.

7.200 Regarding China's argument that competiti on between domestic and Chinese tyres in the
OEM market was "negligible", b ecause Chinese tyres amounted to approximately five per cent of
shipments to that market in 2008
310, the United States contends that this assertion has no basis in the
text of the Protocol, or the facts on the record. Th e United States submits that there is no legal basis
under the Protocol for the USITC to ignore the impact of increasing volumes of subject imports in the
OEM market simply because these imports accounted for only five per cent of shipments in the
market. The United States further submits that the facts on the record showed that while
U.S. producers' U.S. shipments into the OEM market declined in ev ery year of the period examined,
shipments of imports from China increased in ever y year. The United States asserts that, even
from 2007 to 2008, when both domestically produced tyres and non-subject import tyres declined in
that sector, subject imports from China continued to grow, reaching their period high in 2008.
Furthermore, the United States disagrees that Ch inese imports were virtually absent from the OEM
market. The United States asserts that, while this st atement may have been true at the start of the
period in 2004 when Chinese imports of 121,000 tir es accounted for less than one-tenth of one per
cent of the market, it was certainly not true in 200 8, when OEM subject import volumes rose to their
period high of 2.3 million tyres and accounted for approximately 5 per cent of the OEM market.
(ii) Evaluation by the Panel
7.201 While it is true that the OEM sector was more important for U.S. producers than for subject
imports, the proportion of U.S. producer shipments to that sector was decreasing, whereas the
proportion of subject imports to the OEM sector was increasing. According to Table V-3 of the
USITC Determination, the proportion of U.S. pro ducer shipments to the OEM sector decreased
from 23.3 per cent in 2004 to 17.7 per cent in 2 008. Over the same period, the proportion of
OEM subject imports increased from 0.8 per cent to 5 per cent.
7.202 In absolute terms, the quantity of U.S. producer OEM shipments decreased from 45,351,000
in 2004 to 24,211,000 in 2008, wh ile the quantity of OEM subject imports increased from 121,000 in
2004 to 2,281,000 in 2008. Thus, as the absolute volume of U.S. producer OEM shipments decreased
by 46.6 per cent, the absolute volume of OEM subject imports increased by 1,785 per cent. The
OEM market share of subject imports increased from 0.2 to 4.9 per cent over the period of
investigation, while the OEM market share of U.S. producer shipments fell from 69.6 to 51.6 per cent.
7.203 Furthermore, we recall the USITC's finding that , overall, subject imports in 2008 increased
substantially while apparent c onsumption fell by 6.9 per cent, and non-subject imports and U.S.
producer shipments declined. 311 This trend was even more pronounced in the OEM market. As
apparent consumption in the OEM market fell by 16.4 per cent from 2007 to 2008, the volume of
OEM subject imports increased by 12.4 per cent (while the volume of OEM non-subject imports
declined by 11.3 per cent, and U.S. producer OEM shipments declined by 22 per cent).
312
7.204 Thus, during the period of investigation both s ubject imports and domestically-produced tyres
were present in the OEM sector. Over the period as a whole, the degree of the resultant competition
between subject imports and domestically-produced tyres in the OEM sector was increasing, as the
relative importance of domestically-produced tyres decreased, and that of subject imports increased.313

310 China's First Written Submission, para. 226.
311 USITC Report, page 26.
312 Apparent consumption data calculated on the basis of USITC Report, Table V-3.
313 We note China's argument (China's Second Written Submission, para. 195) that the United States
improperly relied on ex post rationa lization in arguing that, because "U.S. producers' U.S. shipments into the
OEM market declined in every year of the period examined, [while] shipments of imports from China increased
in every year", "it was therefore reasonable for the USITC to find a growing degree of competition between
subject imports and domestically produced tyres in the OEM market". (U.S. First Written Submission,

Consistent with the trend for OEM and replaceme nt market shipments overall, the competitive
importance of subject imports in the OEM market b ecame particularly pronounced at the end of the
period of investigation, when despite a fall in appa rent consumption of 16.4 per cent, subject imports
were able to increase by 12.6 per cent, while non- subject imports and U.S. producer shipments fell
by 11.3 and 22 per cent respectively.
7.205 In light of the above considerations, although we accept that there was some variation in the
levels of competition within the OEM market, we do not consider that the USITC was required to
dismiss competition from subject imports in the OEM sector as "negligible".
314
(c) Reliance on Questionnaire responses to establish the substitutability of imports and domestic
tyres
(i) Arguments of the parties
7.206 China contends that the USITC improperly found that subject imports and domestic tyres
were substitutable. China asserts that the USIT C's finding is improperl y premised on "vague" 315
responses to a questionnaire that simply asked prod ucers, importers and purchasers "if subject tires
produced in the United States and in other countries are used interchangeably", giving the option of
"always", "frequently", "sometimes", and "never". 316 China asserts that the questionnaire failed to
differentiate between product type, category or characteristics, even though there is market
segmentation between the OEM and replacement mark ets, and even though there are three separate
tiers within the replacement market, and widely vary ing tyre sizes and characteristics. China submits
that the questionnaire responses relied on by the USITC constitute the type of subjective and
overbroad questionnaire data that the panel in Argentina – Footwear (EC) warned against.
7.207 The United States submits that there was nothing "va gue" about the questionnaire responses
relied on by the USITC, and that the large majority of producers, importers, and purchasers agreed
that tyres from China and tyres pr oduced in the United States were "always" or "frequently" used
interchangeably.
317 The United States asserts that these qu estionnaire responses were also consistent
with other evidence on the record relating to substitu tability as, for example, the record showed that

para. 227). However, we see no reason why the United States may not rely on the fact (established in the
USITC's record) that OEM imports from China were grow ing while U.S. OEM shipments were falling to rebut
China's argument regarding the allegedly negligible competitive impact of subject imports in the OEM sector.
Furthermore, we note the USITC's finding that "[t]he share shipped to the OEM market by U.S. producers
declined each year during the period examined, while the share of subject imports from China shipped to the
OEM market increased irregularly and was at its highest in 2006 at 7.3 percent" (USITC Report, page 21).
314 China First Written Submission, para. 226. Regarding China's argument that non-subject
OEM imports were nine times the quantity of subject OEM imports (China's Second Written Submission,
para. 193), in our view this relates more to the possibility of non-subject imports being an "other cause" of
injury, than to the issue of whether or not there is attenuated competition between subject imports and domestic
tyres. This issue is addressed at paras. 7.364 to 7.367.
315 China's First Written Submission, para. 223.
316 USITC Report, page V-16, Table V-6, n. 1.
317 USITC Report, page 23. The United States asserts that six out of seven U.S. producers, 21 out of 25
importers, and 18 out of 22 purchasers reported that tyres from China and tyres produced in the United States
are "always" or "frequently" used inte rchangeably. USITC Report, Table V-6. The United States asserts that
any market participant that responded that tyres from China and tyres from the United States are "sometimes" or
"never" used interchangeably" was given the opportunity to provide an explanation for this answer in the
questionnaire.

tyres from China and tyres from the United States compete in all segments of the market.
318 T h e
United States contends that the interchangeability of subject imports and domestically produced tyres
was further confirmed by the fact that the USITC was able to conduct pricing comparisons of large
quantities of shipments by U.S. producers and importers of subject tyres for six specific pricing
products, each with specific dimensions, load index es, and speed ratings, in the large majority of
quarters over the period.
319 The United States submits that, acco rding to this evidence, the large
majority of responding market participants, whether they are producers, importers, or purchasers,
indicated that market segmentation was not a bar to, or limit on the interchangeability of the subject
and U.S. tyres.
7.208 Regarding China's reliance on the Appellate Body's report in Argentina – Footwear (EC), the
United States contends that the facts of the und erlying investigation are very different. The
United States submits that, in Argentina – Footwear (EC) , the panel noted that the investigating
authority performed no analysis of the conditio ns of competition in the market, but simply
summarized the conflicting views of domestic produ cers and importers. The panel noted that the
investigating authority conducted no price comparisons of imported and domestic footwear to support
its references to "cheap imports", despite the fact that its causation finding was based primarily on
price considerations. The panel stated that the au thority did not even analyze the effects of imported
prices on the domestic industry, but indicated instead that it compared broad statistical indicators,
resulting in conclusory statements. Moreover, the panel noted that the investigating authority itself
acknowledged that its references to "cheap imports" had mostly to do with a problem of customs
valuation and that the composition of imports had act ually shifted to higher-valued goods. According
to the United States, it was in the context of these glaring deficiencies that the panel stated that this "is
not an analysis of the conditions of competition that is called for by Articles 2 and 4.2". The
United States asserts that the USITC performed a much more rigorous analysis than in that case.
(ii) Evaluation by the Panel
7.209 We understand China to claim that the questi onnaire responses were insufficient to establish
the interchangeability of subject imports and do mestic tyres, as the questionnaire failed to
differentiate between "product category, characteristics, or market segment."
320 As a general matter,
we note that China's arguments concern the origin al questionnaire sent out by the USITC at the
beginning of the investigation. In light of the responses to that original questionnaire, the USITC
issued a supplemental questionnaire to gather additio nal information about the existence of segments
or product categories in the market. In our view, there is nothing inherently wrong with an
investigating authority first issuing a genera lly-worded questionnaire regarding the competitive
relationship between domestic tyres and subject imports, and then following that original
questionnaire up with a more detailed supplemental questionnaire addressing particular issues raised
in the responses to the original questionnaire.
7.210 Regarding the issue of whether the original questionnaire should have been phrased more
specifically in terms of market segmentation, we recall our findings above regarding the absence of
any clear differentiation between the market segment s. We recall that this was confirmed by the
dissenting commissioners, who found that:

318 USITC Report, page 27. The United States conten ds that the USITC noted that there was general
agreement as to the existence of thr ee categories of tyres in the replaceme nt market, but that there was less
agreement as to which tyres were included in the two lower-priced categories.
319 USITC Report, Tables V-9-V-14.
320 China's First Written Submission, para. 222.

there is no consensus on how to define what ty pes of tires are classified in each tier,
or what brands are classified in each tier within the replacement market.
321
7.211 In the absence of any industry consensus on the distinction between tiers 1, 2 and 3, we do not
consider that the USITC was required to have include d, in its original questionnaire, more specific
questions regarding interchangeability on the basis of distinctions between tie rs 1, 2 and 3 of the
replacement market.
7.212 China also raises the possibility of distinguish ing domestic tyres from subject imports on the
basis of other factors, such as "product category" or "characteristics" 322, or "tire sizes".323 However, it
is not clear to the Panel how the USITC could have drawn such distinctions, particularly since it
appears that there was no industry consensus on wh ich the USITC might have acted. Furthermore,
record evidence suggests that size and performan ce would not have been a suitable basis for
distinguishing domestic tyres from subject imports, as one Chinese respondent witness stated that tier
3 tyres "cover the same broad spectrum of size and performance as are offered in the first
two segments".324
7.213 Nor do we consider that the findings of the Panel in Argentina – Footwear (EC) provide any
guidance on whether the USITC improperly relied on "subjective" questionnaire responses. The
Argentina – Footwear (EC) panel found that "the question of pri ce [wa]s of particular importance to
the analysis" of the conditions of competition in that case, as price was "the only 'condition of
competition' between imports and domestic produ cts on which Argentina's causation finding was
based". The panel therefore "focus[ed] [its] assessme nt of this analysis primarily on whether there is
support in the record for Argentina's conclusions a bout import prices and their effect on the domestic
industry". In making its assessment, the panel found:
no evidence in the record to support the statements that the imports were cheaper than
the domestic goods. In particular, there is no evidence that any price comparisons of
imported and domestic footwear were made in the investigation, including on the
basis of average unit values of all imports and all domestic products.325
7.214 The circumstances of the USITC Tyres investigation are very different from those in
Argentina – Footwear (EC). In particular, this is not a case wh ere the investigating authority had "no
evidence" regarding the conditions of competition ot her than the original questionnaire responses.
Nor is this a case where the original questionnair e replies did not address the specific condition of
competition at hand (i.e., the competition between subject imports and domestic producers).
7.215 For the above reasons, we find no error in the USITC's reliance on the original questionnaire
responses.
(d) Conclusion
7.216 For all of the above reasons, we find no error in the USITC's assessment of the conditions of
competition.

321 USITC Report, page 51 (dissenting commissioners), emphasis supplied.
322 See China's First Written Submission, para. 222.
323 See China's First Written Submission, para. 223.
324 USITC Hearing transcript at 246.
325 Panel Report, Argentina – Footwear (EC), para. 8.259, emphasis supplied.

3. Correlation between the increase in imports and the decline in injury factors
(a) Arguments of the parties
7.217 China submits that the USITC failed to proper ly establish correlation between the rapidly
increasing subject imports and the material injury su ffered by the domestic industry. China claims
that, by finding that imports increased over the five-y ear period of investigation while injury factors
declined over that period, the USITC merely engage d in an end-point-to-end-point analysis, of the
sort rejected by the panel in Argentina – Footwear (EC). According to China, the consistent teaching
of WTO jurisprudence is that the coincidence must be apparent with respect to movements in imports
and injury factors. As the panel in Argentina – Footwear (EC) observed, in a causation analysis "it is
the relationship between the movements in imports (volume and market share) and the movements in
injury factors that must be central to a causation analysis and determination".
326 China contends that
it is not enough that imports increase in every year of the period and that injury factors decline in
every year of the period. According to China, the degree of the respec tive annual increases must
correspond generally with the degree of the respective d eclines in injury factors. China contends that
the orders of magnitude are key, in the sense that the varying degrees in annual import increases
should be reflected in varying degrees of annual dec lining injury indicators. China submits that the
USITC never addressed these orders of magnitude.
7.218 China claims that the failure in the USITC's analysis is particularly apparent with respect to
the more recent period (i.e., changes in 2006-2007 a nd 2007-2008). China contends that the USITC
statement that "the largest declines in these indi cators have occurred since 2006 when subject imports
exhibited the greatest and fastest increases" 327 is misleading on several levels. China asserts that
the USITC failed to point out that imports from Ch ina grew at their fastest rate in 2006-2007, but
grew at their slowest rate (10.8 per cent) in the period from 2007-2008. Worse still, the USITC
failed to address the fact that the various injury f actors typically showed a substantial improvement in
2006-2007, when imports from China were at their hi ghest level in the period, and experienced their
greatest declines of the period in 2008, when Chinese imports grew at the slowest rate in the period.
In other cases, the injury factors (e.g., price, R&D expenditures, and capital improvements) show
positive trends throughout the period. According to China, the record regarding the more recent
period poses two concrete tests for the U.S. theory of causation. Given the U.S. argument that
imports from China were fungible, that the produc t is price sensitive, and that different market
segments do not matter, China suggests that one would expect the large increase in imports over the
2006 to 2007 period to have the largest adverse imp act on injury indicators. China also suggests that
one would also expect that the small increase in imports over the 2007 to 2008 period would have the
smallest adverse impact on injury indicators. China submits, though, that the facts in the record belie
the U.S. theory.
7.219 Regarding the 2006-2007 period, China suggests that the U.S. correlation theory would
demonstrate that the large increase in imports from China over the 2006-2007 period to have the
largest adverse impact on injury indicators. China contends that this theory is not supported by the
facts, though, since over the 2006-2007 period, many key indicators were in fact positive. China
asserts that prices – both for specific pricing products and for average unit values overall – were up
sharply, as was net sale value. China asserts th at operating profits were also up sharply. China
further asserts that productivity, capacity utilizati on, capital expenditures and R&D spending were all
up. According to China, therefore, six of the te n factors showed strong improvements, and a seventh
factor – net sales – showed improvement on a sales value basis. China asserts that these seven out of

326 Panel Report, Argentina – Footwear (EC), para. 8.237.
327 See USITC Report, page 24 ("All of these indicators were at their lowest levels of the period
in 2008, when subject imports were at their highest ...").

ten factors improved, even in the face of the la rgest increase in imports from China over the entire
period. China acknowledges that the volume metrics – production, net sales volume, market share,
and employment – declined over th e 2006-2007 period, but claims that these declines must be placed
in context. In particular, China claims that the declines in the 2006-2007 period are more modest than
the declines in the "prior two comparison periods". China therefore claims that these factors, also,
were actually "much better" in 2007. China concludes that, of the ten indicators, at most only two
arguably suggest some possible coincidence – market share, and employment. According to China,
this pattern strongly suggests the absence of any over all coincidence, as it is hard to see an overall
coincidence when eight of ten factors actually show results that are in fact improving.
7.220 Regarding the 2007-2008 period, China recalls th at the U.S. theory of correlation should
show the small increase in imports from China ove r the 2007-2008 period having the smallest adverse
impact on injury indicators. China contends, though, that in fact the opposite is true, as six indicators
(production, net sales volume, profit, productivity, capacity utilization and employment) were all
down.
7.221 China submits, therefore, that over the 2006-2007 and 2007-2008 periods, the vast majority of
the changes in injury indicators are inconsistent with the U.S. theory, and the few changes that at least
might support the U.S. theory in fact provide very weak support.
7.222 The United States submits that China's arguments agai nst the USITC's analysis must fail
because they are premised on the concept that even a minor variation in the trends establishes that
there is not a "coincidence of trends" between increasing imports and material injury. The
United States disagrees that the USITC should have considered whether the "degree of the respective
annual increases [in Chinese imports] correspond genera lly with the degree of the respective declines
in injury factors".
328 The United States submits that China' s argument is flawed as an analytical
matter because it assumes that Chinese imports must cause all, or most, of the injury being suffered by
an industry in any particular year of the period being examined. According to the United States, it is
only in such a situation that there would be a close "correspondence" between the degree of the annual
increase in Chinese import volumes and any declines in the indicia of the industry's condition. In
cases where other factors are causing material injury to an industry at the same time as Chinese
imports, the United States contends that there might not necessarily be the same "degree" of
correspondence between changes in the volume tr ends of Chinese imports and changes in the
industry's condition.
7.223 The United States asserts that, with respect to the Safeguards Agreement, WTO panels have
explained that the "overall coincidence [in trends] is what matters and not whether coincidence or lack
thereof can be shown in relation to a few sel ect factors which the competent authority has
considered".
329 The United States notes in this regard that the panel in US – Wheat Gluten found:
[I]n light of the overall coincidence of th e upward trend in increased imports and the
negative trend in injury factors over the period of investigation, the existence of slight
absences of coincidence in the movement of individual injury factors in relation to
imports would not preclude a finding by the USITC of a causal link between
increased imports and serious injury.
330
7.224 The United States submits that the USITC properly concluded that there was a clear overall
"coincidence" in trends between the rapidly in creasing imports and their effects on the domestic

328 Oral Statement by China at the Second Panel Meeting, para. 64.
329 Panel Report, US – Steel Safeguards, para. 10.302.
330 Panel Report, US – Wheat Gluten, para. 8.101.

industry.
331 The United States asserts that, during a period in which Chinese import volumes
increased rapidly in every year of the period, the record showed that:
• The domestic industry's market share fell in every year of the period, declining by
13.7 percentage points over the period of investigation;332

• The domestic industry's production declined in every year of the period, resulting in an
overall decline of 26.6 per cent;

• The domestic industry's capacity declined in every year of the period, for an overall decline of
17.8 per cent;

• The domestic industry's U.S. shipments declined in every year of the period, for an overall
decline of 29.7 per cent;333

• The domestic industry's net sales quantities declined in every year of the period, for an overall
decline of 28.3 per cent;334 and

• The domestic industry's employment-related factors fell significantly over the period of
investigation, with the number of production -related workers falling by 14.2 per cent, the
number of hours worked falling by 17.0 per cent, and wages paid falling by 12.5 per cent over
the period.335

7.225 The United States submits that all of these factors were at their lowest levels in 2008, while
Chinese tyre imports were at their highest levels in 2008 (in terms of volume of imports and market
share). The United States also asserts that the USITC found that the U.S. industry suffered declines in
operating income, operating margins, capacity utilization, and productivity of the domestic industry in
three out of four years of the period, and all, except for capacity utilization, were at their lowest levels
for the period in 2008.336 Thus, the United States notes that:
• Productivity fell by 11.5 per cent over the period.

• Capacity utilization fell by 10.3 percentage points over the period.

• Operating margins fell by 4.8 percentage points over the period.

• Operating income fell from $256.2 million in 2004 to a loss of 262.8 million in 2008.

7.226 The United States contends that there was theref ore clear evidence of a coincidence between
imports and declines in the industry's condition over the period of investigation.
337

331 USITC Report, page 29.
332 USITC Report, pages 25-26.
333 USITC Report, pages 15-18 and 24.
334 USITC Report, pages 23-24.
335 USITC Report, pages 17 and 24.
336 USITC Report, Table C-1.
337 Oral Statement by the U.S. at the Second Panel Meeting, para. 59.

(b) Evaluation by the Panel
7.227 We shall first address China's general arguments regarding correlation. We shall then address
China's specific arguments regarding the USITC's fi nding that subject imports caused a cost-price
squeeze.
(i) Correlation generally
7.228 We recall that Paragraph 16 does not require a s howing of correlation between material injury
and rapidly increasing imports.
338 Instead, correlation is a tool that an investigating authority might
use to demonstrate causation (either alone, or in c onjunction with other analytical tools). There is a
basic disagreement between the parties regarding the type of correlation that might be sufficient to
establish causation under Paragraph 16 of the Protocol. In brief, the United States considers that there
need only be an overall coincidence between imports and injury factors, in the sense that the upward
movements in imports should occur at the same time as the downward movements in injury factors.
China submits that mere temporal coincidence does not suffice. China contends that more is required,
in the sense that the degree of the increases in imports should correspond with the degree of the
declines in injury factors. According to Chin a, simply assessing whether an upward movement in
imports over the period coincides with a downward movement in injury factors amounts to no more
than an end-point-to-end-point analysis, of the sort condemned by the Appellate Body in Argentina –
Footwear (EC).
7.229 We are not persuaded that causation might only be based on a finding of correlation if the
varying degrees of increase in imports over the peri od of investigation are reflected in the varying
degrees, or rates, of declines in injury indicators. Correlation between the varying degrees of increase
in imports and decrease in injury indicators sugg ests a certain degree of precision. However,
correlation between imports and injury factors is not an exact science, especially as there may be other
causes of injury at work. As a result, it would be unrealistic to expect, or require, a somewhat precise
correlation between the degree of change in imports a nd the degree of change in the injury factors.
While a more precise degree of correlation between the upward movements in imports and the
downward movements in injury factors might result in a more robust finding of causation, and might
indeed suffice on its own to demonstrate causation, a finding of "significant cause" is not excluded
simply because an investigating authority reli es on an overall coincidence between the upward
movement in imports and the downward movement in injury factors, especially if that finding of
overall coincidence is combined – as it was in th e present case - with other analyses indicative of
causation.
7.230 In Argentina – Footwear (EC) the panel stated that it would assess Argentina's causation
analysis:
on the basis of (i) whether an upward trend in imports coincides with downward
trends in the injury factors , and if not, whether a reasone d explanation is provided as
to why nevertheless the data show causation.339
7.231 These findings were upheld by the Appellate Body340, and were followed by the panel in US –
Steel Safeguards. The latter panel found that:

338 See paras. 7.169 to 7.170 above.
339 Panel Report, Argentina – Footwear (EC), para. 8.229, emphasis supplied.
340 Appellate Body Report, Argentina – Footwear (EC), para. 145.

the word "coincidence" in the current context refers to the temporal relationship
between the movements in imports and the m ovements in injury factors. In other
words, upward movements in imports should normally occur at the same time as
downward movements in injury factors in order for coincidence to exist.
 341
7.232 There is no suggestion in these statements by the Argentina – Footwear (EC) and US – Steel
Safeguards panels that the orders of magnitude are key, or that changes in the degree of increase in
imports should be reflected in changes in the degree of decline in injury factors. Rather, the panels
simply found that imports should increase at the same time as the injury factors decline.
7.233 The US – Steel Safeguards panel also found that it is the " overall coincidence ... that matters,
and not whether coincidence or lack thereof can be shown in relation to a few select factors which the
authority has considered".342
7.234 In light of the above considerations rega rding the degree of precision required for an
assessment of correlation, we consider that the USITC was entitled to suppor t its determination of
"significant cause" with a finding of overall coinci dence between an upward trend in subject imports
from China and downward trends in the relevant injury factors. 343 We recall our finding that the
USITC properly established that imports were "incre asing rapidly" during the period of investigation,
and that imports continued to increase in every year of the period. In terms of injury factors, we note
that:
• The domestic industry's market share fell in every year of the period, declining by
13.7 percentage points over the period of investigation;344

• The domestic industry's production declined in every year of the period, resulting in an overall
decline of 26.6 per cent;

• The domestic industry's capacity declined in every year of the period, for an overall decline of
17.8 per cent;

• The domestic industry's U.S. shipments declined in every year of the period, for an overall
decline of 29.7 per cent;345

• The domestic industry's net sales quantities declined in every year of the period, for an overall
decline of 28.3 per cent;346 and

• The domestic industry's employment-related factors fell significantly over the period of
investigation, with the number of production -related workers falling by 14.2 per cent, the
number of hours worked falling by 17.0 per cent, and wages paid falling by 12.5 per cent over
the period.347

341 Panel Report, US – Steel Safeguards, para. 10.299.
342 Panel Report, US – Steel Safeguards, para. 10.302.
343 China has advanced detailed arguments regarding the alleged lack of correlation between increased
imports and injury. Since these arguments are based on its more precise approach to correlation, which we have
rejected, we do not need to consider all of China's arguments in detail. We do, though, consider China's
arguments regarding the USITC's finding of a "cost-price squeeze" (see paras. 7.239 to 7.260 below).
344 USITC Report, pages 25-26.
345 USITC Report, pages 15-18 and 24.
346 USITC Report, pages 23-24.
347 USITC Report, pages 17 and 24.

7.235 Furthermore, the U.S. industry suffered dec lines in operating income, operating margins,
capacity utilization, and productivity of the domestic i ndustry in three out of four years of the period,
and all, except for capacity utilization, were at their lowest levels for the period in 2008, when subject
imports were at their highest.
348 In particular:
• Productivity fell by 11.5 per cent over the period;

• Capacity utilization fell by 10.3 percentage points over the period;

• Operating margins fell by 4.8 percentage points ove r the period, with declines in three out of
four years of that period; and

• Operating income fell from $256.2 million in 2004 to a loss of 262.8 million in 2008.

7.236 We consider that this data was sufficient for the USITC to properly find that there was an
overall coincidence between the upward movement in subject imports and the downward movement
in domestic industry injury factors. In our view , such overall coincidence is amply demonstrated by
the following figures submitted by the United States:

348 USITC Report, Table C-1.

Subject tires: Comparison of China imports to
U.S. industry indicators, in units, 2004-08

Source: USITC Report, Table C-1.

7.237 China contests the relevance of these figures on the basis that it relates only to volume-based
indicators. According to China, volume-based indicators are influenced by the decline in demand and
the domestic industry's business strategy of ceding the low-end of the replacement market. We are
not persuaded. First, we find below
349 that no prima facie case has been established that there was
error in the USITC's conclusion that the industry did not voluntarily adjust its business strategy (i.e.,
cede the low-end of the replacement market) independent of the rapidly increasing imports from
China. Second, we also find below that the USIT C properly considered the effect of changes in
demand on the domestic industry. In particular, it is apparent that declines in demand do not account
for the totality of the injury su ffered by the domestic industry. 350 In these circumstances, it was
appropriate for the USITC to take declines in volume-metrics into acco unt for the purpose of
analysing correlation. Finally, we recall that th e U.S. industry also suffered declines in operating
income, operating margins, capacity utilization, a nd productivity of the domestic industry in three out

349 See paras. 7.285 to 7.322 below.
350 See paras. 7.323 to 7.359 below.

of four years of the period, and all, except for capaci ty utilization, were at their lowest levels for the
period in 2008.
7.238 For these reasons, we do not accept that the USIT C failed to properly establish correlation in
the present case. The USITC's finding of overall co incidence was sufficient to support, along with
other considerations, its conclusion that subject imports from China were a "significant cause" of
material injury to the U.S. tyre industry.
(ii) Cost–price squeeze
7.239 As part of its arguments regarding an alleged lack of temporal correlation between increasing
subject imports and declining injury factors, Ch ina claims that there is no correlation between
increased imports and falling prices, as prices actually increased over the period.
351 The United States
submits that China's observation is irrelevant, as the USITC did not find that subject imports had
caused price depression. Instead, the USITC found price suppression, as underselling by subject
imports caused domestic producers to experience a "cost-price squeeze"
352, preventing them from
raising their prices sufficiently to offset increasing co sts. China submits that the USITC's "cost-price
squeeze" theory is predicated on a chain of fal se assumptions and improper inferences concerning (a)
the cost of goods sold ("COGS") to sales ratio, (b ) alleged underselling by subject imports, and (c) the
role of non-subject imports. China addresses each of these elements in turn.
COGS/sales ratio
7.240 China contends that the USITC found that there was a "cost-price squeeze" over the period
because the COGS/sales ratio rose by 5.4 percentage points from 2004 to 2008, when the volume of
imports from China was at its highest. China rej ects this finding, alleging that movements in the
COGS/sales ratio do not correlate with rapidl y increasing imports from China. China notes in
particular that the COGS/sales ratio fell by 5.3 percentage points in 2007, which was the very year
when imports from China rose by their highest ma rgin. China asserts that, if rapidly increasing
imports from China were creating a "cost-price squeeze" , one would certainly expect to see that effect
in 2007.
7.241 China asserts that the lack of correlation betw een the COGS/sales ratio and rapidly increasing
imports is further evidenced by 2008 data. In 2008, the COGS/sales ratio rose by 5.8 percentage
points, whereas the rate of increase in imports fr om China fell from the previous year. China
contends that any "cost-price squeeze" in 2008, if it existed, would have been attributable to the near
collapse of the U.S. auto industry and the onset of the worst recession since the 1930s.
7.242 China submits that the USITC theory is also at odds with the relatively greater price increases
that U.S. producers were able to achieve during th e period. Thus, China notes that the average unit
value of U.S.-produced tyres rose 44 percentage poi nts over the period, whereas the average price of
non-subject imports rose by only 36.8 percentage poi nts, and imports from China by 25.1 percentage
points. China contends that the consistent av erage unit value increases over the period, and the
magnitude of the increases U.S. producers were ab le to achieve (admittedly over all market tyre
segments, including high-value tier 1), do not support the USITC "price squeeze" hypothesis. China

351 We note that Paragraph 16.4 of the Protocol provides separately for analyses of "the effect of
imports on prices" and "the effect of such imports on the domestic industry". Accordingly, it is not apparent to
us that the question of price should necessarily be reviewed in the context of temporal correlation. However,
since the United States has not objected to China's appro ach to this issue, we consider China's arguments on
price under this section of our Report.
352 USITC Report, page 24.

notes in this regard that, for pricing product no. 1, the average U.S. price increased by $12.57,
whereas the average subject import price increased by only $1.96.
7.243 The United States asserts that China acknowledges that the ratio of costs to goods sold
increased in every year of the period but one (2007).
353 The United States submits that the fact that
the ratio of cost of goods sold to sales declined in 2007, when subject imports increased at the greatest
rate, is not enough to show that ove rall coincidence is not present, as in every other year of the period
the ratio of cost of goods sold to sales increased , thus corresponding with increases in the volumes of
subject imports in every year. The United States c ontends that increases in U.S. industry average unit
values should be viewed in light of increases in U.S. costs.
7.244 The Panel notes that China's claim that there wa s no correlation between the increase in
subject imports and the increase in the COGS/sales rati o is based on its argument that there must be a
precise correlation between the relevant trends, and that the USITC's analysis was merely a
"simplistic end-point-to-end- point juxtaposition of data"
354 that does not withstand scrutiny. As
explained above, we consider that the United Stat es properly found an overall coincidence between
rapidly increasing imports and the deterioration in the condition of the domestic industry. The fact
that annual movements in every single injury factor did not precisely track annual movements in
subject imports does not invalidate the USITC's finding of overall coincidence.
7.245 Regarding China's argument that U.S. producers were able to increase their prices by far more
than subject imports, we recall that the USITC made a finding of price suppression. Accordingly, the
price of U.S. products must be viewed in light of the costs of the U.S. industry. While China argues355
that the average U.S. industry price for product no. 1 increased by $12.57 over the period, this price
increase must be viewed in light of the $21.24 in crease in U.S. industry costs over the same period.
Similarly, although the average unit value of U.S. -produced tyres increased by 44 percentage points
over the period, the average unit cost of goods sold increased by 52.4 percentage points.356
Underselling
7.246 China contends that the USITC misleadingly relie d on questionnaire responses to assert that
there was "pervasive underselling" by imports fro m China. China acknowledges that questionnaire
data showed that imports from Ch ina were cheaper than U.S.-produced tyres in 119 of 120 instances
in which the USITC compared pricing of Chinese and U.S. tyres, but refers to the observation by the
dissent that these comparisons appear to have lumped together tyres with different speed ratings, load
indices, and levels of performance, possibly aggregating tyres at different price points. China submits
that the margin of underselling calculated and relied on by the USITC is therefore unreliable.
7.247 Furthermore, China contends that any price differences between domestic tyres and subject
imports merely reflected the fact that U.S. pr oducers were predominantly and increasingly positioned
in the higher-end, premium tyre market, and accounted for more than half of all OEM sales in
the U.S., whereas between 95 per cent and 99 per cent of imports from China were in the replacement
market, focused on lower-end production. China su bmits that these differences will inevitably skew
the data, and inflate any alleged "margin of underse lling". China contends that the data was further
skewed by the fact that no OEM sales by subject imports were included in the price comparisons,
whereas 3 of the six U.S. producers reported data for the more-expensive OEM sales. China submits

353 China's First Written Submission, para. 257.
354 China's Second Written Submission, para. 232.
355 China's Second Written Submission, para. 239.
356 USITC Report, Table C-1.

that the USITC should have engaged in a more rigorous analysis of price competition between
domestic tyres and subject imports, given the heterogeneous product market in question.
7.248 Furthermore, China criticises the USITC's re liance on questionnaire responses from three
U.S. producers to the effect that they had to re duce prices or roll back announced price increases to
avoid losing sales to competitors selling tyres from Ch ina. China laments the absence of specifics as
to when, how frequently, or in what context this dynamic allegedly occurred, or how significant it was
to operations over the period. Moreover, China notes (as the dissent observed) that not a single
producer could report a specific example of lost revenues or lost sales, and that the USITC did not ask
for or receive data from producers suggesting that Chinese import competition barred them from
passing through cost increases in the form of needed price rises (as the "cost-price squeeze" theory
would require).
7.249 In addition, China refers to the USITC's finding that the margin of underselling was the
greatest in 2007, when the imports from China incr eased by the largest amount. China notes that
2007 was also the year in which the domestic industry saw record profitability. According to China,
this disconnect between high margins of underselli ng and the financial condition of the domestic
industry calls into serious doubt the logic of the USITC.
7.250 The United States notes that Paragraph 16.4 of the Protocol states that an investigating
authority shall consider, among other things, "the effect of imports on prices for like or directly
competitive articles" to determine if market disr uption exists. The United States submits that the
USITC conducted a detailed and thorough evaluation of pricing in the tyres market, and explained
how the persistent and significant underselling by subject imports contributed to the deteriorating
condition of the domestic industry.
7.251 The United States explains that the USITC coll ected quarterly data over the period examined
for six specific products, each of which was defined by specific dimensions, load indexes, and speed
ratings of each to ensure compatibility.
357 The United States asserts that these pricing products
accounted for a significant amount of domestic pr oducer's U.S. shipments and subject import
shipments358, and that the resultant comparisons showed underselling by the subject imports in
119 out of 120 comparisons, with the average marg ins of underselling at their highest in 2007
and 2008, coinciding with the largest volumes of subject imports.359 The United States asserts that the
USITC found that the consistent underselling by the large and rapidly increasing volume of subject
tyres displaced domestic shipments by U.S. produc ers, and eroded the domestic industry's market
share, leading to a substantial reduction since 2004 in domestic capacity, production, shipments, and
employment during the period examined. The United States asserts that the USITC also noted that
continued underselling by the s ubject imports prevented domestic producers from raising prices
sufficiently to offset higher production costs and thus suppressed prices.360
7.252 The United States rejects China's argument that the price comparison data collected by the
USITC is "unreliable" because it does not define the price comparison products in a specific enough
manner.361 The United States submits th at the USITC defined its price comparison products in a

357 USITC Report, V-23-24. In response to China's argument that different speed ratings cause the
USITC data to be unreliable, the United States notes that one of the respondent's own witnesses testified in this
case that product 3 (which is the on ly passenger vehicle price product to have three speed ratings) "is a
commodity tyre size and that there is little difference in th e S, T, and H speed ratings in that particular size. Id.
at V-35 citing Hearing Transcript, page 304 (Berra).
358 USITC Report, page 23, n. 128.
359 USITC Report, Tables V-9-V-14 and Table C-1.
360 USITC Report, page 24.
361 China's First Written Submission, para. 260.

highly specific manner that allowed it to perform an apples-to-apples comparison of prices of subject
and domestic tyres. The United States further asserts that, given that the large majority of market
participants reported that tyres from China and domes tically produced were "always" or "frequently"
interchangeable, it was entirely reasonable for the US ITC to rely on this pricing data as a basis for
assessing whether the subject imports were underselling the U.S. tyres.
7.253 Regarding China's argument that the USITC's price comparison data are unreliable because
U.S. producers' ship a much higher percentage of their tyres into the more expensive OEM market,
the United States asserts that the USITC's price comp arison data only compared prices for subject and
U.S. tyres on sales into the replacement market.
362 The United States argues that, since no shipments
to the OEM market were included in these price compar isons, the fact that more U.S. tyres were sold
into the OEM sector than subject tyres does not affect the validity of the USITC's actual price
comparisons in any way.
7.254 The Panel notes that the USITC found underselling in 119 out of 120 price comparisons
undertaken on the basis of data provided by U.S. producers and importers. The USITC also found
that the margins of underselling for all six products increased during the period of investigation, and
that the increase in the margins for five of the six products were at their highest levels of the period
in 2007 and 2008. The USITC also found that the average margin of underselling for all six products
coincided with increasing volumes of subject imports , and that the greatest increase in the average
margin of underselling was in 2007, the year in which the volume of rapidly increasing imports rose
by the greatest amount.
363
7.255 China challenges the USITC's findings on variou s grounds. First, China alleges that the
USITC's price comparisons were not sufficiently preci se, in the sense that they lumped together tyres
with different speed ratings, load indices, and leve ls of performance, possibly aggregating tyres at
different price points. We note, though, that th e relevant price comparisons were undertaken in
respect of six different products, each of which was defined by reference to particular size, load index,
and speed rating criteria. For example, the USITC defined Product 1 by tyre size (P225/60R16), load
index (97-98), and speed rating S or T. 364 Product 2 was tyre size P235/75R15, load index 105-108,
and speed rating S or T. China has not provided any explanation as to why products defined on the
basis of such particular criteria would not provide a proper basis for comparing prices.
7.256 China also argues that the USITC's findings rega rding underselling were distorted by the fact
that the U.S. producers accounted for more than half of sales in the OEM market, whereas subject
imports were focused primarily on the replacement market. We note, however, that, according to
Tables V-9 to V-16 of the USITC Report, the USITC collected price data for each of the six products
for both the OEM and replacement markets. Furthermore, the USITC's findings regarding the
increase in the average margin of underselling we re based on Tables V-9 to V-14, which concerned
sales to the replacement market only. Accordingly, we consider that there was no risk that prices for
the OEM market were compared with prices for the replacement market.
365
7.257 China also argues that the USITC's findings rega rding underselling were distorted by the fact
that U.S. producers and subject imports targeted different segments of the replacement market, such

362 USITC Report Tables V-9-V-14. According to the United States, these tables specify that the price
comparisons are for shipments to the re placement market only. The United St ates asserts that shipments to the
OEM market are in a separate table, V-15.
363 USITC Report, page 23.
364 USITC Report, V-23.
365 In any event, the USITC found that, in 69 out of 78 quarters, the prices of U.S.-produced tyres sold
to the OEM market were actually lower than the pri ces of comparable U.S.-pr oduced tyres sold to the
replacement market (USITC Report, page V-35).

that the price of segment 3 subject imports should no t be compared with the price of segment 1 U.S.
products. We recall our earlier fi ndings regarding market segmentati on, and our rejection of China's
claim of attenuated competition. In light of these findings, we do not consider that any differentiation
between segments in the replacement market, was so clearly defined, or pronounced, that it should
have been incorporated into the pr icing analysis undertaken by the USITC. We also recall that, in
2008, the U.S. industry made a large proportion of its sales in tiers 2 and 3, where sales of subject
imports were concentrated.
366 As explained above 367, China's claim that the domestic industry and
subject imports targeted different segments of the replacement market is, therefore, unfounded.
7.258 Furthermore, China submits that there was no correlation between underselling and
profitability, as the largest margin of underselling coin cided with record profitability in 2007. We are
not persuaded by this argument, as the USITC did properly establish that "increases in the average
margin of underselling coincided with increasing volumes of subject imports". 368 The USITC further
established that "significant and continuous underse lling throughout the period ... by the large and
rapidly increasing volume of subject Chinese tires eroded the domestic industry's market share,
leading to a substantial reduction since 2004 in domestic capacity, production, shipments, and
employment during the period examined".
369 In other words, the USITC found that underselling by
subject imports generally had a highly detrimental im pact on the domestic industry. In our view, the
fact that the USITC might not have specifically addressed the relationship between underselling and
one single additional injury indicator – profitab ility – does not detract from the USITC's findings
regarding the effects of "increasing" underselling by subject imports more generally. Nor, as
explained above 370, does the fact that profitability might have increased in 2007 undermine the
USITC's finding of overall coincidence between rapidly increasing imports and injury to the domestic
industry (particularly as operating margins fell by 4.8 percentage points over the period, with declines
in three out of four years of the period).
7.259 Finally, we note China's argument that any pr ice suppression would more likely have been
caused by non-subject imports, which "dwarfed" s ubject imports and which also undersold domestic
tyres. We address the role of non-subject imports below 371, in the context of our consideration of
China's arguments regarding other causes of injury.
7.260 For the above reasons, we find no objection to the USITC's finding of a cost–price squeeze.
(c) Conclusion
7.261 In the light of the above considerations, we find that the USITC's reliance on an overall
coincidence between an upward movement in imports and a downward movement in injury factors to
support its finding of "significant cause" and to be in accordance with the requirements of
Paragraph 16.4 of the Protocol.
4. The non-attribution of injury caused by other factors to increasing imports
7.262 China attributes the injury suffered by the U.S. domestic industry to a number of factors other
than subject imports from China, namely: the domestic industry's business strategy; changes in
demand; non-subject imports, and various other fact ors. China submits that, as a result of these other

366 See para. 7.195 above.
367 See paras. 7.185 to 7.197 above.
368 USITC Report, page 23.
369 USITC Report, page 24.
370 See paras. 7.234 to 7.236 above.
371 See paras. 7.364 to 7.367 below.

causes of injury, the domestic producers would have experienced the same injury even without
imports from China. China contends that the US ITC ignored or failed to assess fully these other
causes of injury, or to establish th at the injury caused by such other factors was not improperly
attributed to the subject imports. China asserts th at the USITC merely listed some of the arguments
made by respondents regarding alternative causes in a single paragraph and then stated, without
explanation, that it "considered" them.
372 China submits that the USITC then dismissed these other
causes as legally irrelevant, stating that Section 421 "does not require a we ighing of causes, but only
that we find that rapidly increasing imports, in an d of themselves, are a significant cause of material
injury ...".373 China also claims that, in addition to examining the impact on the domestic industry of
each of these alternative factors individually, th e USITC should also have examined the cumulative
effect of these other causal factors.
7.263 The United States contends that the USITC properly addressed all of the factors that could
reasonably be considered significant enough to br eak the causal link between imports and material
injury.
7.264 We shall examine each of the alleged alternative causes identified by China in turn, beginning
with the change in the domestic industry's business stra tegy. In examining the parties' arguments, we
recall our view that a finding of causation for the pur pose of Paragraph 16.4 should only be made if it
is properly established that rapidly increasing imports have injurious effects that cannot be explained
by the existence of other causal factors.374
(a) The domestic industry's business strategy
(i) Arguments of the parties
7.265 China contends that the USITC relied on four factors to reject the argument that domestic
producers had voluntarily ceded the low end of the market: (1) imports from China were increasing
before plant closures in 2006 and 2008; (2) signi ficant purchases of tyre-manufacturing equipment in
China occurred over the past ten years; (3) U.S. pr oducers were not the largest importers of Chinese
tyres during the period; and (4) a 2006 article noted that imports from China were expected to
increase.375 China challenges the USITC's assessment of each of these factors.
Plant closures
7.266 China claims that the USITC improperly attrib uted plant closings to imports from China,
when the record in fact demonstrates that domest ic producers were engaged in a long-term strategy
that led them to voluntarily close high-cost U.S. pl ants and plants that focused on small-sized or low-
value tyres, and shift production in the United States towards the higher-end segments of the market.
7.267 China claims that the USITC ignored the fact th at, rather than sufferi ng injury as a result of
subject imports, the U.S. industry chose to restru cture itself voluntarily, consistent with its global
sourcing strategy. China argues that the U.S. pr oducers are "global companies with global sourcing
strategies"376, and that their "[o]perations in Chin a have enhanced the[ir] profitability". 377 China
alleges that the domestic industry voluntarily ced ed the low end of the market because it was

372 USITC Report, page 29.
373 USITC Report, page 29.
374 See para. 7.177 above.
375 USITC Report, pages 26-27.
376 China's First Written Submission, para. 345.
377 China's First Written Submission, para. 348.

profitable to do so. In particular, China argues that "the imports from China (and other low-cost
jurisdictions) are a positive factor"
378 for U.S. producers, who "were themselves responsible for
manufacturing and importing many of these tires".379
7.268 China argues that U.S. producers testified rep eatedly that they had voluntarily shifted
domestic production away from lower-end tyres to the premium, higher-value branded segment.
China contends that the USITC improperly rejected the testimony of the U.S. producers concerning
their own business strategy, declaring erroneously that the restructuring of the U.S. industry was not
"voluntary", and that the resultant plant closures were instead caused by imports from China.
380
7.269 According to China, there is no record evid ence to suggest that imports from China caused
any of the plant closures. Regarding two plant cl osures by Continental, China asserts that hearing
testimony indicated that these closures occurred because these two plants were the highest-cost
facilities in the entire company:
The Mayfield, Kentucky and Charlotte, No rth Carolina plants were closed in 2004
and 2006 respectively. Based on my pers onal knowledge of the situation as a nine-
year employee of Continental, I can tell the Commission that Chinese imports had
nothing to so with these closings. As fa r back as 1997 I was involved in monthly
staff meetings that discussed the cost leve ls in all Continental plants worldwide,
including the U.S.
The Mayfield plant was consistently the hi ghest cost plant in the global Continental
system. The Charlotte plant was also one of the highest cost plants in the system.
Continental was facing many issues during this period. But Chinese import
competition was not among them.381
7.270 China further contends that, in press releases, Continental attributed the closure of the
Mayfield site to declining business conditions and escalating energy and raw materials costs, and the
closure of its Charlotte facility to "global co mpetition putting pressure on us as our manufacturing
costs are cheaper overseas", the "skyrocketing costs of energy, raw materials, and health care", and
the plant's inability to successfully rest ructure its labor agreement with USW. 382 China submits that
no mention was made of Chinese import competition.
7.271 China notes that Bridgestone closed its Ok lahoma City facility in 2006 because it produced
smaller tyres at the lower-value end of the market. 383 China asserts that, in a press release,
Bridgestone said that "this plant produces tires in the low-end segment of the market where demand is
shrinking and fierce competition from low-cost producing countries is increasing". 384 China asserts
that the press release also stated that "the mark et is quickly running away from the products we
produce in Oklahoma City". 385 China submits that, again, no mention was made of Chinese import
competition.

378 China's First Written Submission, para. 349.
379 China's First Written Submission, para. 349.
380 USITC Report, page 26.
381 USITC Hearing Transcript, page 234.
382 USITC Report, page I-15 and n. 51 (quoting press releases); Continental, "CTNA to reduce
production at Charlotte plant", 9 January 2006; Contin ental, "CTNA announces indefinite suspension of tire
production at Charlotte plant", 10 March 2006.
383 USITC Report, page 64, n. 123 (dissenting Commissioners).
384 "Bridgestone Firestone to close Oklahoma City Tire Plant", 13 July 2006.
385 "Bridgestone Firestone to close Oklahoma City Tire Plant", 13 July 2006.

7.272 Regarding Goodyear's 2006 announcement of the clos ure of its Tyler plant, China asserts that
Goodyear's press release explained this closure as co nsistent with its June 2006 announcement that it
would exit certain segments of the private label tyre market.
386 China asserts that the press release
also noted that "[t]he Tyler plan t principally produces small diameter passenger tires, a segment that
has been under considerable pressure from low cost imports". 387 According to China, this generic
reference to "low-cost imports" could apply to any import source, including the many non-subject
imports that are cheaper than domestic tyres. China contends that the October 2006 press release
never mentions imports from China.
7.273 China also refers to three closures announ ced for 2009. China contends that these
three announced closures were all primarily due to the economic crisis that began in 2008 and the
overall decline in demand for tyres. 388 China submits that there is no evidence that imports from
China are to blame for these closures.
7.274 China further contends that the USITC improperly found that imports from China were
increasing before plant closures in 2006 and 2008, wher eas the decisions to close these plants were
made before imports rose significantly in 2007.
7.275 The United States contends that the record showed that imports were already increasing
before the announced plant closings, and that U.S. producers issued contemporaneous statements at
the time of these plant closings confirming that low-priced competition from imports, including
subject imports from China, was an important part of their decisions.
389
Purchases of tyre-manufacturing equipment by Chinese producers
7.276 China notes that the USITC relied on:
articles in trade publications referred to a surge in the purchase of Western tire
production equipment by Chinese tire manufacturers during the last ten years,
indicating that Chinese producers were e xpanding their capacity to produce and
export tires.
390
7.277 China contends that the mere fact that Chinese companies purchased western tyre
manufacturing equipment says nothing about whether the U.S. producers voluntarily adopted their
business strategy, or were "forced" to curtail lowe r-end manufacture in the United States by imports
from China arriving in the U.S. ma rket. According to China, the USITC did not find that domestic
producers shut plants or took other action due to fears about increasing Chinese capacity. China
asserts that there is no evidence on the record to su ggest such a fear. Furthermore, China contends
that the increase in Chinese production capacity is only relevant in the context of a finding of threat of
material injury.
7.278 The United States asserts that the USITC relied on the above article to demonstrate that
market participants were well aware of the extraordinary growth in the size and export capacity of the
Chinese industry before and during th e period of investigation. According to the United States, the
USITC reasonably relied on this article as evidence that U.S. producers had closed certain production

386 "Goodyear announces planned closing of Tyler facility", 30 October 2006.
387 USITC Report, pages I-16 through I-17 (citing "Goodyear announces planned closing of Tyler
facility", 30 October 2006 (press release)).
388 USITC Report, page 64 (dissenting Commissioners).
389 USITC Report, pages 26-27.
390 USITC Report, page 26.

facilities as a strategy to deal with the rapid grow th in the size and aggressiveness of the Chinese
industry, and the rapid increase in its exports to the United States.
Subject imports by U.S. producers

7.279 China notes that the USITC referred to the fact that:
U.S. producers were not among the largest importers of subject tires from China
during the period examined and collectively accounted for only approximately
23.5 percent of subject imports, including purchases in 2008.
7.280 China asserts that the fact that U.S. producers we re not the largest importers of Chinese tyres
is a non sequitur, and has no bearing on whether imports from China were a significant cause of the
business strategy that these global producers adopted.
7.281 The United States asserts that, because U.S. producers were not the primary importers of the
subject imports, they were also not responsible fo r the large bulk of the increase in Chinese imports
over the period. The United States argues that 84.2 pe r cent of the growth in subject imports over the
period of investigation was imported by companies other than U.S. producers. 391 According to the
United States, it was reasonable for the USITC to c onclude that this indicated that the industry's
alleged "voluntary business strategy" was not itsel f responsible for the tremendous growth in the
subject imports during the period.
2006 Article: imports from China expected to increase
7.282 China notes that, in concluding that "a more reasonable explanation for U.S. producers'
capacity reductions in 2006 and thereafter was a reaction to increases in subject imports from China
that were already occurring and, given the size a nd degree of the increases, likely would continue in
the future" 392, the USITC cites specifically to a March 2006 article in MTD Modern Tire Dealer ,
entitled "China and You: Expect more tire imports in the years to come". In particular, the USITC
explains that:
The article noted that China exported an estimated 21 million tires to the
United States in 2005, and described the overall effect on domestic supply as
"profound" and likely to remain so as impor ts increase. The article also said, with
respect to Chinese production and shipments of tires for the replacement market, that
"everyone agrees there will be rapid growth in the segment, especially with all the
activity from foreign investing."393
7.283 China contends that an article positing an e xpectation that imports from China would
increase by an unspecified amount in the future hardly suggests that the global sourcing strategy
adopted by the U.S. producers was not "voluntary", or that it was somehow dictated by imports from
China.
7.284 The United States asserts that this contemporaneous view of the "profound" effect that the
increasingly large industry in China had had, and woul d have on the U.S. tyre market supports the
USITC's view that the subject imports were lik ely to increase as China continued to expand its
capacity, production, and share of shipments to the United States. According to the United States, it is

391 USITC Report, Table II-3.
392 USITC Report, pages 26-27.
393 USITC Report, page 27, footnote 150.

no wonder that domestic producers soon realized th at they could not compete with the increasing
volumes of low-priced subject imports in that ma rket, and reacted by subs tantially reducing capacity
and closing U.S. plants.
(ii) Evaluation by the Panel
7.285 China presents the domestic industry' s business strategy as an "other cause"
394 of material
injury to the domestic industry, in the sense that declines in certain injury indicators (such as the
volume-metrics, including production, shipments and ne t sales quantities) should be attributed to the
domestic industry's withdrawal from the low-value seg ments of the replacement market (i.e., tiers 2
and 3), rather than subject imports. Under this theory, subject imports merely filled a "supply gap" 395
left by the retreating domestic industry.
7.286 The Chinese respondents presented similar arguments before the USITC. 396 Those arguments
raised a serious issue that had to be addressed by the USITC, particularly given the lack of domestic
producer support for the USW's petition, and the assertion by certain producers that they were not
materially injured by subject imports from China
397, and would not change their operations in the
event that a remedy were imposed.398
7.287 The USITC did address this issue in its Report. The USITC did so primarily in the follow
extract from its Report:
We do not agree that domestic producers voluntarily abandoned the lower-priced part
of the U.S. tire market and that the subject imports simply filled the void left by their
departure. Imports from China were already increasing before Bridgestone,
Continental, and Goodyear announced the plant closings that occurred in 2006 and
2008.
 The three companies confirmed in stat ements issued at the time of the
announcements that low-priced competiti on from Asia, including China, was an
important part of their decisions.** Moreove r, articles in trade publications referred
to a surge in the purchase of Western tire production equipment by Chinese tire
manufacturers during the last ten years,
 indicating that Chinese producers were
expanding their capacity to produce and e xport tires. U.S. producers were not among
the largest importers of subject tires from China during the period examined and
collectively accounted for only approximate ly 23.5 percent of subject imports,
including purchases in 2008.
 Thus, we find that a more reasonable explanation for
U.S. producers' capacity reductions in 2 006 and thereafter was a reaction to increases
in subject imports from China that were already occurring and, given the size and
degree of the increases, likely would continue in the future. 399
** In a footnote, the USITC noted that:
All three companies cited import competition as a factor in their plant
closings: Bridgestone cited "fierce competition from low-cost
producing countries" as a factor in closing its Oklahoma City plant in
2006; Continental cited "global competition" and "manufacturing

394 See Section V.C.4 of China's First Written Submi ssion, entitled "The USITC ignored or failed to
assess fully other causes of injury".
395 See, for example, China's Reply to Question 41 from the Panel, para. 58.
396 See, for example, USITC Report, pages 19-20, and 26.
397 USITC Report, page III-10.
398 USITC Report, page VI-1.
399 USITC Report, page 26, footnotes generally omitted.

costs [that] are cheaper overseas" as contributing to the closure of its
Charlotte, NC, plant in 2006; and for Goodyear, pressure from low-
cost imports was cited as contributing to closure of its Tyler, TX,
plant in 2008. CR at I-20-22, PR at I-15-17.
400
7.288 The USITC also found that "significant and continuous" underselling by subject imports
"eroded the domestic industry's market share", causing the domestic industry to "reduce capacity so as
to focus on the parts of their business in which they could expect to remain profitable despite the
impact of subject imports from China". The USIT C found that "the substan tial reduction in domestic
capacity and the closures of U.S. plants during th e period examined were largely a reaction to the
significant and increasing volume of subject imports from China, and were not, as respondents argue,
part of a strategy by domestic tire produces to volun tarily abandon the low-priced, 'value' segment of
the U.S. market".401
7.289 China challenges the USITC's treatment of a number of factors, including in particular plant
closures in 2006 and 2008, the purchase of tyre-m anufacturing equipment by Chinese producers, the
proportion of total subject imports made by U. S. producers, and a 2006 article regarding the
"profound" effect of subject imports on the U.S. industry. While we necessarily consider the USITC's
handling of these factors, and the relevant eviden ce, individually, we shall also assess the USITC's
conclusion on the basis of the totality of the factors and evidence relied on by the USITC.
7.290 Before turning to the evidence regarding the abovementioned fact ors, we first consider it
necessary to make a number of more general observations regarding China's arguments.
General observations regarding China's arguments
7.291 We note that China presents the domestic industry's business strategy as an "other cause"402 of
material injury to the domestic industry. Chin a contends that, following the domestic's industry's
abandonment of tier 3, "imports from other countries, including China, were then left to fill the
'supply gap'".403 In this sense, subject imports are to so me extent presented as an "own goal", since
they result from the industry's own business strategy. At the same time, though, China argues that the
U.S. producers are "global companies with global sourcing strategies" 404, and that their "[o]perations
in China have enhanced the[ir] profitability". 405 China further argues that "the imports from China
(and other low-cost jurisdictions) are a positive factor"406 for U.S. producers, who "were themselves
responsible for manufacturing and importing many of these tires". 407 In this sense, China also
presents the subject imports resulting from 408 the domestic industry's strategy of off-shoring the
production of low-value tyres as being non-injurious. 409 These different aspects of China's arguments
prompt the following observations.

400 USITC Report, footnote 147.
401 USITC Report, pages 24-25.
402 See Section V.C.4 of China's First Written Submi ssion, entitled "The USITC ignored or failed to
assess fully other causes of injury".
403 China's Reply to Question 41 from the Panel, para. 58.
404 China's First Written Submission, para. 345.
405 China's First Written Submission, para. 348.
406 China's First Written Submission, para. 349.
407 China's First Written Submission, para. 349.
408 This would seem to cover all subject imports, and not merely those imported by the U.S. producers.
409 In the same vein, China argues that the decline in volume-based injury factors should not justify a
determination of material injury, since those metrics simply reflect the domestic industry's desire to withdraw
from the low-end of the tyre market.

7.292 First, the argument that subject imports are non-injurious is belied by the (increasing) margin
of underselling established by the USITC.
410 Indeed, one might legitimately wonder why such
underselling was necessary if the domestic industry had, as alleged by China, voluntarily ceded the
low-end of the market, and if subject imports were merely filling the resultant "supply gap".
7.293 Second, if the domestic industry' withdrawal had really left a void in parts of the market, one
would have expected that both subject and non-su bject imports would have benefited from the
domestic industry's withdrawal. Indeed, China clai ms that "imports from other countries, including
China," were left to fill that "supply gap". The record clearly indicates, though, that only subject
imports benefited from the domestic industry's alleged withdrawal from parts of the market. 411
Furthermore, although China refers specifically to the U.S. industry shifting production to Brazil and
Indonesia412, we note that Indonesia's share of imports only increased from 1.8 to 4.3 per cent over the
period, while Brazil's share barely moved from 4 to 4.1 per cent. Over the same period, imports from
China increased from 12.9 to 33.1 per cent of total imports.
7.294 Third, we note China's argument that "[f]ro m 2006 to 2007, when the largest increases in
imports from China and Chinese market share occu rred, the U.S. tire industry in fact had its best
financial performance".413 Although the domestic industry gene rally did record its highest operating
margin (i.e., operating income as a proportion of sales) of the period in 2007 414, when the rate of
increase in subject imports was greatest, there were still three (out of ten) domestic producers who
recorded operating losses that year. 415 In addition, when the absolute volume of subject imports was
greatest, in 2008, the domestic industry recorded its worse operating loss of the period. We are not
persuaded, therefore, that there is necessarily any positive connection between the volume of subject
imports and the profitability of the domestic industry.
7.295 Fourth, although China contends that, as a re sult of their business strategy, domestic
producers "were themselves responsible for manufacturing and importing many of these tires [from
China]",
416 the USITC found 417 that domestic producers only accounted for 23.5 per cent of subject
imports in 2008, the year when "the full effect of the industry's shifting business strategy" was
allegedly being felt. 418 If subject imports really were bei ng imported by U.S. producers consistent
with their own business strategy of off-shoring produc tion of tier 2 and 3 tyres, and if subject imports
really were beneficial to domestic producers, we would expect domestic producers to account for a far
greater proportion of subject imports. In fact, over the period of investigation as a whole, the USITC
record showed that 84.2 per cent of the growth in subject imports was imported by companies other
than U.S. producers.419
7.296 Fifth, regarding China's claim that the dom estic industry's "[o]perations in China have
enhanced the[ir] profitability", 420 we find no obvious nexus betw een any increase in the domestic
industry's profitability and the volume of subject tyr es imported by domestic producers. In particular,

410 See USITC Report, page 23. China challenges the USITC's findings on underselling. We address,
and reject, China's arguments at paras. 7.254 to 7.258 above.
411 Overall, the share of non-subject imports in total U.S. imports declined from 87.1 to 66.9 per cent
over the period (USITC Report, Table II-1).
412 See China's First Written Submission, para. 346.
413 China's First Written Submission, para. 11.
414 USITC Report, Table C-1.
415 USITC Report, Table III-5.
416 China's First Written Submission, para. 349.
417 USITC Report, page 26.
418 China's comments on U.S. Reply to Question 49 from the Panel, para. 50.
419 USITC Report, Table II-3.
420 China's First Written Submission, para. 348.

as the volume of subject tyres imported by U.S. producers increased by 163 per cent between 2004
and 2008
421, the domestic industry's operating margin fell by 4.8 percentage points, going from a
positive operating margin of 2.4 per cent to a negative operating margin of 2.4 per cent. 422
Furthermore, from 2006 to 2007, when the operating margin increased by 5.5 percentage points, the
volume of subject imports by U.S. producers had increased by only 3.6 per cent. When the volume of
subject imports by U.S. producers increased more substantially – by 33.6 per cent – from 2007 to
2008, the domestic industry's operating margin fell by 6.9 percentage points.
7.297 We now turn to China's arguments concerning the a number of the specific factors relied on
by the USITC.
Plant closures
7.298 Put simply, the main issue concerning plant cl osures is whether such closures preceded, and
indeed prompted, the increase in subject imports, or whether plants were closed as a result of
competition from subject imports. In addressing this issue, the USITC relied on evidence regarding
the closure of the Continental, Charlotte, plant in 2006, the Bridgestone, Oklahoma City, plant in
2006, and the Goodyear, Tyler, plant in 2008. 423 Our analysis will ther efore focus on the evidence
and arguments regarding these three plant closures.424
7.299 Regarding the Continental, Charlotte, plant, we note that a contemporaneous Continental
press release attributed the closure of this plant to inter alia "global competition putting pressure on us
as our manufacturing costs are cheaper overseas". 425 As observed above, the USITC interpreted this
to be a reference to import competition from China. For our part, we consider that Continental's
reference to "global competition" should be understood as competition from other Continental plants
in the world. This is because the press relea se clearly refers to "our" manufacturing costs being
"cheaper overseas". As to whether import compe tition from other Continental plants in the world
might include subject imports from China, we note that the USITC Report clearly states that
Continental did not have any production facilities in China. 426 Since Continental did not have any
production facilities in China, there was no proper basi s for the USITC to conclude that imports from
Continental plants around the world might include subject imports from China. We also note that a
former Continental employee testified before the USITC that "Chinese imports had nothing to do with
[the Charlotte] closing[]".427 In these circumstances, the USITC could not properly have attributed the
closure of the Continental, Charlotte plant to subject imports from China.
7.300 Regarding Bridgestone's closure of its Okla homa plant, the contemporaneous press release
stated that "this plant produces tires in the low-end segment of the market where demand is shrinking
and fierce competition from low-cost producing countries is increasing". 428 The press release further
stated that "the market is quickly running away from the products we produce in Oklahoma City". To
some extent, then, shifts in demand played a part in the closure of the Bridgestone, Oklahoma plant.
However, the reference to "fierce competition from low-cost producing countries" suggests that shifts

421 USITC Report, Table II-3.
422 USITC Report, Table C-1.
423 See USITC Report, footnote 147, and U.S. Reply to Question 51 from the Panel.
424 Since the USITC did not rely on evidence regardin g the Continental, Mayfie ld plant, or the three
closures announced for 2009, we shall not consider the evidence regarding these additional closures.
425 Continental press release, "CTNA announces indefinite suspension of tire production at Charlotte
plant", 10 March 2006.
426 USITC Report, pages IV-3 to IV-6, describing "U.S. Producers' Subject Tire Manufacturing
Facilities in China". No Continental plant is included in this listing.
427 USITC hearing transcript, page 234, lines 7-15.
428 Bridgestone press release, "Bridgestone Firestone to close Oklahoma City Tire Plant", 13 July 2006.

in demand were not entirely responsible for the clos ure of that plant. The reference to "fierce"
competition also suggests that import competition was not as benign as China suggests, and that
imports were not merely filling a "supply gap" caused by the industry's retreat from the low-end of the
market.
429
7.301 As to whether the USITC could properly have understood Bridgestone's reference to "fierce
[import] competition" to include competition from s ubject imports from China, we note that the press
release makes no express mention of imports fro m China. However, footnote 130 of the USITC
Report provides that the average margin of underselling by subject imports was 10.8 per cent in 2004,
14.8 per cent in 2005, and 18.8 per cent in 2006. Furthermore, the average unit price for non-subject
imports was consistently higher than the averag e unit price for subject imports during the period
2004 - 2006.
430 Indeed, by 2006 only imports from Indonesia were cheaper than subject imports from
China431, and Indonesian imports represented only 3.4 per cent of total imports in 2006, compared to
subject imports' 21.2 per cent share. Furthermore, the Chair of the USITC, in expressing separate
views on remedy, stated that "information in the record shows that the volume of third-country
imports has declined since 2005, and that unit va lues of third-country imports are on average well
above those of imports from China and closer to those of domestic tires". 432 In fact, the volume of
non-subject imports declined 1.8 per cent from 102,424,000 tyres in 2005 to 100,601,000 tyres
in 2006, whereas the volume of subject im ports increased 29.9 per cent from 20,790,000 to
27,005,000 in this period. In addition, the market share of subject imports nearly doubled from
4.7 per cent in 2004 to 9.3 per cent in 2006, whereas the market share of non-subject imports
increased only slightly from 31.9 per cent to 34.5 pe r cent over the same period. In light of the
increasing underselling by, and growth in, subject impor ts relative to non-subject imports in the years
2004-2006, we consider that it was not unreasonabl e for the USITC to understand the reference to
"fierce [import] competition" to include subject imports from China.
7.302 In addition, we note that the USITC Report states:
The 2006 announced closure of Bridgestone's Oklahoma City, OK plant was
reportedly related to both the plant's pr oduct mix (low-end segment of the market)
and intense competition from lower-cost sources - low-cost Korean and Chinese-
made tires specifically cited.
433
7.303 In response to a question from the Panel regarding this statement by the USITC, the
United States explained that a senior Bridgestone employee was quoted in a contemporaneous press
article as identifying "low-cost Korean and Chinese-ma de tires flooding the U.S. market as one of the
reasons for the plant's economic troubles".434
7.304 For these reasons, we consider that the USITC c ould properly have attributed the closure of
the Bridgestone, Oklahoma City, plant to subject imports.
7.305 Regarding the closure of the Goodyear, Tyler, plant in 2008, we note that Goodyear's
contemporaneous press release noted that "[t]he Tyler plant principally produces small diameter
passenger tires, a segment that has been under c onsiderable pressure from low cost imports". 435 In

429 China's Reply to Question 41 from the Panel, para. 58.
430 USITC Report, Table C-1.
431 USITC Report, Table II-1.
432 USITC Report, page 42.
433 USITC Report, page III-16, footnote 62, emphasis added.
434 U.S. Reply to Question 52 from the Panel, para. 55.
435 USITC Report, pages I-16 through I-17 (citing "Goodyear announces planned closing of Tyler
facility", 30 October 2006 (press release)).

theory, it is possible that this generic reference to "low-cost imports" could apply to imports from any
source, including non-subject imports. In the circum stances of this case, though, we consider that the
USITC was entitled to understand this to be a referen ce to subject imports from China, particularly in
light of the above considerations regarding th e increasing underselling by, and growth in, subject
imports relative to non-subject imports. The co mpetition from subject imports was clearly greater
than the competition from non-subject imports.
436
7.306 We note China's argument that subject imports c ould not have played an important role in the
decisions by U.S. producers to close the above mentioned plants because such closures were
announced before the significant increase in subject imports in 2007. China also contends that subject
imports only represented 6.8 per cent of the U.S. ma rket by volume and 4.7 per cent by value at the
end of 2005. China adds that subject imports were "dwarfed" by non- subject imports, with non-
subject imports holding 33.6 per cent of the U.S. market by volume and 31.2 per cent by value in
2005.
7.307 The USITC record indicates that all three of the abovementioned plant closures were
announced in 2006. The press release for th e Bridgestone closure was dated July 2006. 437 The press
release for the Continental closure was also dated July 2006. 438 The Goodyear closure was described
in 2008 as being consistent with, and therefore presu mably part of, a June 2006 announcement. It is
true, therefore, that these closures were announced prior to 2007. However, although China seeks to
focus the Panel's attention on 2007, and the fact th at subject imports increased by their greatest
amount in that year, the USITC record shows a ve ry substantial increase in the volume of imports
prior to 2006. In particular, the USITC found:
Subject imports from China increased from 14.6 million tires in 2004 to 20.8 million
tires in 2005 (or by 42.7 percent), 27.0 million tires in 2006 (or by an additional
29.9 percent), and 41.5 million tires in 2007 (or by an additional 53.7 percent).
439
7.308 Thus, between 2004 and 2006, when the above mentioned plant closures were announced,
subject imports had already increased significantly by 85 per cent. 440 Although the greatest growth in

436 Furthermore, we note that union officials testified before the USITC to the effect that the Goodyear,
Tyler, plant was closed as a result of subject imports from China. One union official testified that:

Imports from China closed our plant …. From the very beginning, Goodyear told us the Tyler
plant was at risk because of low-priced imports. … the company repeatedly identified imports
from Asia, including fast-growing imports from China, as a threat to our plant. (USITC
Hearing Transcript at 93-94).

Another union official testified that:

In interim meetings with Goodyear since 2003, we've had open discussions about imports
from China. In presentations to the union, G oodyear specifically identified low-priced Asian
imports as a threat to our facilities, and they show that China's share of these imports are
rising steadily. … To help the company survive the onslaught of tires from China, it was not
enough just to cut costs. There was simply no way to compete with China on cost alone.
Their prices are so far below any rational level you would get in a functioning market that
even if we came to work for free we couldn' t compete on the basis of cost. (USITC Hearing
Transcript at pages 85-86.)
437 USITC Report, page I-15, footnote 45.
438 USITC Report, page I-15, footnote 51.
439 USITC Report, footnote 146.
440 At interim review, China argued that because the plant closures were announced only halfway
through 2006, these decisions should be viewed in light of subject import data from 2005 – not totals for the

the rate of increase in subject imports was yet to occur, in 2007, the fact that subject imports had
already increased by 85 per cent before the plant closures was sufficient for the USITC to properly
find, in the context of the additional evidentiary considerations outlined above, that these plant
closures were linked to the increase in subject im ports from China. Regarding the importance of
subject imports relative to non-subject imports, we recall our above finding concerning the increasing
underselling by, and growth in, subject imports relative to non-subject imports.
7.309 We also note China's argument that U.S. producer s "testified repeatedly that they had shifted
domestic production away from lower-end tires to the premium, higher-value branded segment".
441 In
making this argument, China cites only to the following finding by the dissenting commissioners:
Domestic producers … made significant strategic business decisions to shift U.S.
production toward higher-value tires and capitalize on consumer brand loyalty.442
7.310 This statement by the dissenting commissioners does not constitute, nor refer to, producer
testimony. Furthermore, there is no doubt that U.S. producers reduced U.S. production of tyres for
tiers 2 and 3 of the replacement market. The issue un der examination is whether the U.S. industry did
so voluntarily, independent of competition from s ubject imports, or whether the domestic industry
was forced to close U.S. production capacity as a result of competition from Chinese imports. The
abovementioned statement by the dissenting commissioners does not address this particular issue.
7.311 China also submits that testimony before the USITC by "businessmen directly engaged in
buying and selling tier 3 tires emphasized that U. S. producers were not pushed out of tier 3 – but
instead abandoned it".
443 We recall, though, that even in 2008 the U.S. industry still made 18.6 per
cent of its shipments to tier 3 of the replacement ma rket. We also recall the finding by the dissenting
commissioners that.
We recognize that domestic tire producers have not abandoned the tier 3 market, as
respondents maintain.444
7.312 Accordingly, China has not presented convinc ing evidence that producers acknowledged that
they voluntarily closed U.S. production operations for the low-end of the replacement market. While
it is true that none of the U.S. producers expr essed support for the petition, only four out of ten
producers said they were not materially injured by subject imports. Other producers either said they
were not in a position to answer, or took no pos ition on the issue. Furthermore, although some
producers said they would not change their operati ons in the event that a remedy was imposed, 445 this
fact is hardly surprising given that a remedy of only three years' duration was under consideration.
There would be little value in adapting to a market situation that would likely only last for three years,
whereupon subject imports would resume. For the a bove reasons, we consider that the USITC could
properly attribute plant closures to subject imports.

whole year 2006. We are not persuaded by this argument. First, as noted above, the USITC record indicated
that subject imports had already increased by 42.7 per cent from 2004 to 2005. Second, the volume of imports
at the end of 2006 is a fair reflecti on of the trend in subject imports during the course of 2006, while the plant
closures were occurring.
441 China's First Written Submission, para. 346.
442 USITC Report, page 45, cited by China in footnote 386 of its First Written Submission.
443 China's Reply to Question 41 from the Panel, para. 58.
444 USITC Report, page 64.
445 USITC Report, page VI-1.

Subject imports by U.S. producers

7.313 China suggests that the proportion of subject imports made by U.S. producers is not relevant
to the issue of whether or not rapidly increasing subject imports played any role in the domestic
industry's decision to shift the production of certain tyres overseas. However, we recall that the
USITC was responding to an argument that domestic producers had voluntarily ceased production in
the United States of lower- value tyres, as part of a restructuring of their global production operations,
and replaced those tyres with imports from other sources, including China. Presumably, as discussed
above,
446 if U.S. production of lower-value tyres ha d declined because domestic producers had
decided to replace domestic production of low-valu e tyres with imports from their global production
facilities, it would be expected that much of the gr owth in imports of subject merchandise would have
been on behalf of those domestic producers. In this context, the volume of subject imports made by
domestic producers is relevant. China also not es the proportion of subject imports made by
U.S. producers, and that U.S. producers importing subject imports is "in line with" the
abovementioned business strategy.
447 In other words, China itself refers to the proportion of subject
imports made by U.S. producers as proof of the existence of the abovementioned business strategy.
7.314 We already touched upon this issue at para. 7. 295 above. In this respect, we recall China's
argument that "the imports from China (and other low-cost jurisdictions) are a positive factor"448 for
U.S. producers, who "were themselves responsib le for manufacturing and importing many of these
tires".449 If China's argument were correct, it would seem reasonable to expect U.S. producers to
account for a relatively large share of subject imports (as the more they would import, the better off
they would be).
7.315 In these circumstances, we see no error in the USITC having considered the proportion of
subject imports actually accounted for by U.S. produ cers. Furthermore, we see no error in the USITC
having relied on the fact that U.S. producers onl y accounted for approximately 23.5 per cent of
subject imports to support a finding – based also on other considerations – that U.S. producers had not
voluntarily ceased U.S. production of the low-end tyres.
Purchase of tyre-manufacturing equipment by Chinese producers

7.316 As an initial matter, we note China's argum ent that any increase in Chinese production
capacity should only be relevant in the context of a finding by the USITC of a threat of material
injury. While this factor would be of particular rele vance in an analysis of threat of material injury,
we do not consider that an objective and impartia l investigating authority should be precluded from
relying on such evidence – in conjunction with additional evidence regarding other factors – to
determine whether subject impor ts might have caused domestic producers to cease producing low-
value tyres.
7.317 As to the significance of the evidence consid ered by the USITC, we note that the trade
publication article cited by the USITC reports th at Chinese producers had been increasing their
production capacity for the ten years preceding 2008, long before the abovementioned plant closures
in the United States occurred. The article also reports that the "China boom" (in purchases of tyre-
making equipment) "has not ended", even though Ch ina already hosted half of the world's tyre-
making facilities. In our view, this article provided a reasonable basis for the USITC to conclude that
U.S. producers might well have decided that subject imports from China had already become an

446 See para. 7.295 above.
447 China's First Written Submission, para. 347.
448 China's First Written Submission, para. 349.
449 China's First Written Submission, para. 349.

inescapable part of the market, and would continue to grow in significance, such that U.S. producers
should adapt their business strategy accordingly. Comb ined with other relevant evidence, this article
could properly support a determination by an objectiv e and impartial investigating authority that "a
more reasonable explanation for U.S. producers' capacity reductions in 2006 and thereafter was a
reaction to increases in subject imports from China that were already occurring and, given the size and
degree of the increases, likely would continue in the future".
450
2006 Article: imports from China expected to increase
7.318 China contends that an article positing an exp ectation that imports from China would increase
by an unspecified amount in the future hardly sugge sts that the global sourcing strategy adopted by
the U.S. producers was not "voluntary", or that it was somehow dictated by imports from China.
7.319 We agree that the article, in and of itself, does not explain that the U.S. produces closed plants
as a result of subject imports. However, the article does indicate that subject imports from China had
already had a "profound" impact on the domestic industr y, and that the industry generally agreed that
subject imports would increase further ("everyone ag rees there will be rapid growth in the segment,
especially with all the activity from foreign investing" ). When considered in light of other evidence,
this evidence might properly be used to support a determination that domestic producers would have
had an interest in adapting their business strategy in the face of, rather than independent of, subject
imports from China.
(iii) Conclusion
7.320 The Panel was confronted with the fact that the majority of the USITC and the dissenting
commissioners drew precisely the opposite conclu sions on the issue of business strategy. The
majority took the view that the strategy to reduce U.S. production and locate production in China was
itself a response to increased imports and thus it was not an alternative cause that prevented the
increasing imports from China to be a significant cau se. The dissenting commissioners took the view
that the business strategy of relocating production to China was an independent business strategy that
began before imports were increasing. Yet both cons idered precisely the same evidence. There was
no evidence considered by the dissenting commissioners that was not also considered by the majority.
And, no further evidence that might have been consid ered by the majority but was not was adduced in
this case.
7.321 In these circumstances, it would be inappropriate for the Panel simply to make a choice
between the views of the majority and the dissenting commissioners. In fact, our own assessment of
the record indicates that it is difficult to separate out the business strategy from the increasing imports.
It may well be, as the dissenting commissioners say, that the strategy of relocating to China began
before 2004 and before the substantial increases in subject imports.
451 But it is also true that plant
closures occurred after the increase in imports and may well have been linked to the competition from
imports. Indeed, the decision to locate productio n in China might have been the result of an
independent business strategy, but the decision to cl ose plants might well have been a response to
imports.
7.322 In the light of these considerations, the Pa nel can see no basis for determining that the
USITC's analysis of the alternative business strategy was in error. It was for China to establish a
prima facie case of such error and it failed to do so.

450 USITC Report, page 26.
451 USITC Report, page 49 (dissenting Commissioners).

(b) Changes in demand
7.323 China claims that a proper evaluation of demand by the USITC would have shown that any
injury suffered by the domestic industry was cau sed by changes in demand, rather than subject
imports. China submits that the USITC overlooked four important changes in demand for tyres in
the United States. First, there was a prolonged contraction in demand over the period of investigation,
with apparent consumption falling by 10.3 per cent during the 2004-2008 period. China asserts that
consumption was lower in every year except 2007, which saw a modest, but short-lived, increase.
China recalls the dissent's observation that consum ers were buying fewer ty res, and driving more
miles on their existing tyres.
452 China also asserts that, from 2007 to 2008, there was almost a one-to-
one correspondence between the decline in the overall U.S. market and the decline in U.S. domestic
shipments.
7.324 Second, China contends that the contraction in demand was particularly pronounced in the
OEM market, with total shipments in that market fall ing by 28 per cent. China recalls that the U.S.
producers devoted approximately 20 per cent of their domestic production to the OEM market.
7.325 Third, China submits that the recession of 2 008, and the near-collapse of the U.S. auto
industry, greatly accelerated this contraction in demand. China notes that consumer demand for
vehicles – a key determinant for tyre demand – fell dr amatically in 2008. China refers to the dissent's
observation that:
The near collapse of the US automobile industry lent a devastating blow to the OEM
market in 2008. Thus the fact that the industry's performance turned negative in 2008
was not the result of subject imports (whose rate of increase had slowed), but was due
to the effects of the economic recession on US producers' sales to both the OEM and
replacement markets.453
7.326 Fourth, China asserts that, at the same time c onsumer demand shifted in favour of larger
tyres, even for smaller, fuel-efficient vehicles. Ac cording to China, this required producers to shift
production, and in some cases reduce capacity or close factories that produced smaller tyres.454
7.327 China contends that the USITC barely acknowledged these changes in demand in its Report.
(i) Demand over the period of investigation as a whole: correlation with injury
Arguments of the parties
7.328 China contends that there was a "prolonged contraction" in demand over the period of
investigation, with apparent consumption falling by 10.3 per cent during the 2004-2008 period. China
asserts that consumption was lower in every year except 2007, which saw a modest, but short-lived,
increase. China also contends that the volume indi cators (of the condition of the domestic industry)
track demand more closely than subject imports. Ac cording to China, moderate declines in demand
during the 2004-2005 and 2005-2006 periods correspond with moderate declines in domestic industry
volume indicators. China asserts that, during the 2006-2007 period, demand increased, and the
domestic industry volume indicators improved as a r esult. China contends that, during the 2007-2008
period, the trends reverse: demand and volume indicators fell sharply, while imports from China

452 USITC Report, pages 47-48 (dissenting Commissioners).
453 USITC Report, page 64 (dissenting Commissioners).
454 See USITC Report, page 51, n. 47 (dissenting Commissioners); USITC Report, pages III-1
through III-6.

moderated. China also asserts that, from 2007 to 2008, there was almost a one-to-one correspondence
between the decline in the overall U.S. market and the decline in U.S. domestic shipments.
7.329 Regarding the trend in demand over the period of investigation, the United States denies that
there was a "prolonged" contraction in demand "appa rent across the entire period of investigation".
455
The United States asserts that the record showed th at apparent U.S. consumption declined slightly
by 0.8 per cent from 2004 to 2005, and by 4.4 per cent from 2005 to 2006, but actually increased
by 1.6 per cent from 2006 to 2007, before declining by 6.9 per cent from 2007 to 2008. According to
the United States, therefore, demand "fluctuated" somewhat during the period, even though it had
declined overall by the end of the period.
456
7.330 The United States submits that the USITC also c onsidered the possibility that the recession in
2008 had affected the link between the increased imports and injury, by examining the impact of the
recession in 2008 on the increasing volumes of the su bject imports, and on the volumes trends for the
U.S. industry and non-subject imports. 457 The United States notes that the USITC found that, "even
in 2008 when U.S. apparent consumption was falling, " the record showed that the subject "imports
continued to increase rapidly". 458 Specifically, the USITC stated, "subject imports increased by
4.5 million tyres in 2008, while U.S. consumption declined by 20.4 million tyres". 459 T h e
United States asserts that the USITC pointed out th at, in contrast, the quantities of U.S. tyres and
those of non-subject imports declined during 200 8, with imports from third countries falling at
roughly the same pace as the decline in consumpti on, and U.S. production falling by 11.1 per cent, a
pace that was significantly faster than the 6.9 per cent decline in consumption in that year. 460 Th e
United States argues that, given these trends in 20 08, the USITC reasonably rejected the claims of
Chinese respondents that the recession in 2008 explaine d all or most of the declines in the industry's
production and shipment levels during that year 461, and therefore reasonably concluded that the
recession did not indicate that the subject imports were not a significant cause of material injury to the
industry.462
7.331 The United States asserts that if injury fact ors tracked demand, the 2007 1.6 per cent increase
in demand should have resulted in a similar incre ase in the volume indicators. The United States
asserts that this did not happen, as volume indicator s all fell from 2006 to 2007. The United States
notes, though, that in 2007 subject imports incr eased by 53.7 per cent, in excess of the increase in
demand. The United States asserts that the lack of correlation between injury factors and demand is
also evident from the 2004-2005 period, when demand fell slightly, by 0.8 per cent, but the injury
indicia fell by a considerably faster pace. The United States acknowledges that both demand and
injury indicators fell in 2006 and 2008, but asserts that the declines in the industry's condition
considerably outpaced the declines in demand in those years.
7.332 China submits that the U.S. analysis is overly- simplistic, and based on the assumption that
the only causal factor at work is subject imports from China. Regarding 2007, China contends that
injury indicators do not have to precisely track th e increase in demand. According to China, the
changes in 2007 should rather be compared to the ch anges in 2006. In this regard, China asserts that,
because 2006 saw a decrease in demand while 2007 saw an increase, the changes in the injury

455 Oral Statement by China at First Panel Meeting, paras. 77-78.
456 USITC Report, page 15 and 32.
457 USITC Report, page 26.
458 USITC Report, page 26.
459 USITC Report, page 26.
460 USITC Report, page 26.
461 USITC Report, page 26 & 29.
462 USITC Report, page 29.

indicators in 2007 should be much more modest than the changes in 2006. China contends that they
were, in the sense that the volume indicators declin ed by less in 2007 than in 2006. According to
China, the changes in all volume-based metrics significantly improved in 2007 when demand
increased, as compared to the changes in 2006 wh en demand decreased. China contends that the
changes experienced by the domestic industry in 2007 must also be viewed in light of the industry's
change in business strategy, which inevitably cause d volume indicators to decline. Regarding the
other years, China contends that the U.S. argum ent rests on the false premise that when assessing the
changes in demand it is proper to expect the injury factors to change by the same amount . China
submits that, while correspondence in degrees of magnitude is important and indicative of
coincidence, it is unlikely that there will be a pr ecise one-to-one correlation in a multi-causal world.
China contends that, where the degree of co rrespondence between demand and the industry's
condition is not exact, the other causal factors, su ch as changing business strategy, should be taken
into account.
Evaluation by the Panel

7.333 Although the USITC did not include in its report a discrete section on demand, in our view
the USITC ultimately did properly address the issue of demand, and did prope rly find that subject
imports had injurious effects independent of any inju ry caused by changes in demand. In particular,
we note the USITC's finding that:
The large increase in the volume of subject im ports is also reflected in those imports'
large and growing share of the U.S. market. Subject imports increased their share of
the U.S. market by 12 percentage points (more than threefold) between 2004 and
2008, from 4.7 percent in 2004 to 16.7 percent in 2008. More than half of this
increase, 7.4 percentage points, has occurred since 2006.
463
7.334 In a footnote at the end of that finding, the USITC calculates subject imports' "share of the
quantity of apparent U.S. consumption" for the whol e period of investigation: 4.7 per cent in 2004,
6.8 per cent in 2005, 9.3 per cent in 2006, 14.0 per cent in 2007, and 16.7 per cent in 2008. 464 The
USITC expressly found:
The ratio of subject imports to U.S. apparent consumption increased by
12.0 percentage points during the period exam ined, with the two largest year-to-year
increases also occurring at the end of the period in 2007 and 2008.465
7.335 In a related footnote, the USITC stated:
... The ratio of subject imports to U.S. apparent consumption increased from
4.7 percent in 2004 to 6.8 percent in 2005, 9.3 percent in 2006, 14.0 percent in 2007,
and 16.7 percent in 2008.466
7.336 The USITC clearly found, therefore, that the ratio of subject imports to U.S. apparent
consumption increased throughout the period of in vestigation. Even when demand increased by
1.6 per cent in 2007, the volume of subject imports increased by the significantly greater figure of
53.7 per cent. As a result, subject import market sh are increased by 4.8 percentage points, while the
domestic industry's market share declined by 3.4 po ints (and the market share of non-subject imports

463 USITC Report, page 22.
464 USITC Report, footnote 127.
465 USITC Report, page 12.
466 USITC Report, footnote 52.

declined by 1.1 per cent).
467 In 2005, demand fell by a very modest 0.8 per cent. Subject imports in
that year increased by 42.7 per cent, resulting in a 2.1 percentage point increase in market share, while
the domestic industry's market share fell by 3.7 pe rcentage points. In 2006, as demand fell by 4.4 per
cent, the volume of subject imports increased by a fu rther 29.9 per cent, resulting in a 2.4 percentage
point increase in subject import market share. This contrasted with a 3.4 percentage point decline in
the domestic industry's market share.
7.337 Regarding 2008 in particular, the USITC found:
Moreover, imports continued to increase ra pidly even in 2008 when U.S. apparent
consumption was falling. Subject imports increased by 4.5 million tires in 2008,
while U.S. apparent consumption declined by 20.4 million tires. Imports from third
countries declined by 6.0 million tires in 2008, or by 6.1 percent, roughly consistent
with the 6.9 percent decline in U.S. apparent consumption in 2008. Meanwhile,
domestic production of subject tires declined by 20.0 million tires in 2008, or by 11.1
percent, and absorbed virtually all the d ecline in U.S. apparent consumption that
year.
468
7.338 We further note that, as demand fell by 6.9 per cent in 2008, the volume of subject imports
continued to increase by an additional 10.8 per cent, resulting in a 2.7 percentage point increase in
market share, compared with a fall in the domestic industry's market share of 2.9 percentage points.
7.339 Notwithstanding the above record evidence regard ing the injurious effects of subject imports
as distinct from the injurious effects of changes in demand, China asserts that the decline in the state
of the domestic industry correlated with a "prolonge d contraction" in demand, such that the USITC
should have attributed any injury suffered by the domestic industry to that contraction in demand. We
begin by considering whether or not there really was a "prolonged contraction" in demand over the
period of investigation as a whole, as alleged by Ch ina. We note in this regard that apparent
consumption
469 of all passenger vehicle and light truck tyres declined (by volume) by 10.3 per cent
from 2004 to 2008. We also note, though, that the bulk of this fall in apparent consumption occurred
at the end of the period of investigation, from 2007 to 2008. 470 Prior to 2007, apparent U.S.
consumption declined slightly by 0.8 per cent from 2004 to 2005, by 4.4 per cent from 2005 to 2006,
but actually increased by 1.6 per cent from 2006 to 2 007. Accordingly, while there was a pronounced

467 USITC Report, Table C-1.
468 USITC Report, page 26, footnote omitted.
469 During the Panel's second substantive meeting with the parties, China argued that the USITC
improperly relied on apparent consumption as a proxy for demand. China pursued this argument in response to
Question 31 from the Panel. In our view, it is entirely appropriate for investigating authorities to use apparent
consumption as a proxy for demand in the context of trade remedy investigations. Indeed, we understand that it
is common practice for investigating authorities to do so. Furthermore, in these proceedings China has itself
referred to apparent consumption data as a proxy for demand. At page 32 of its first oral statement, for example,
China submits a chart of graphs, the first of which is entitled "Changes in Total Consumption (Proxy for
Demand)". Furthermore, at para. 76 of its second oral st atement, China refers to the "broader trend of declining
consumption over the entire period". In doing so, China refers to para. 322 of its Second Written Submission,
which in turn refers to "the broader contraction in demand that was apparent over the entire period". In this
context, therefore, China is clearly using the term "consumption" as a synonym for demand. Furthermore, at
para. 332 of its First Written Submission China refers to the fact that "[a]pparent consumption ... fell by
10.3 percentage points" to support it argument that there was a "prolonged contraction in demand". Finally, in
China's comments on the U.S. Replies to Questions from the Panel after the second meeting, China refers to
USITC apparent consumption data to describe the movements in demand (See para. 42).
470 According to Table V-1 of the USITC Report, apparent consumption fell from 307,484,000 to
296,091,000, i.e., 3.7 per cent, over four years between 2004 and 2007. Apparent consumption fell by 6.9 per
cent in the single year from 2007 to 2008 (from 296,091,000 to 275,702,000).

decline in apparent consumption from 2007 to 2008, the record evidence does not demonstrate a
"prolonged contraction" in demand over the peri od of investigation as a whole. In these
circumstances, we see no error in the USITC's finding that demand (or apparent consumption)
"fluctuated"
471 during the period of investigation.
7.340 We note China's assertion that demand declined by 4.4 per cent from 2005 to 2006, but
improved by 1.6 per cent from 2006 to 2007, and that this improvement in demand correlates with an
"improvement" in injury factors, in the sense that the continued downward movements in volume-
based injury factors from 2006 to 2007 were "muc h more modest" than the changes from 2005
to 2006. We acknowledge that the decline in vol ume metrics from 2006 to 2007 was less than for
2005 to 2006. 472 In our view, though, if correlation betw een demand and injury were to exist, an
improvement in demand should generally result in an upward movement in volume metrics.473 In this
case, the 1.6 per cent increase in demand coincided with a 2.4 per cent decline in production, a 5 per
cent decline in U.S. shipments, a 5.5 per cent decline in net sales quantities, a 3.6 percentage point
decline in market share, a 6.4 per cent decrease in the number of production-related employees, a
3.7 per cent fall in hours worked, a 6.3 per cent decline in wages paid, and a 2.7 per cent fall in hourly
wages. Thus, injury indicators did not improve as demand increased.
7.341 Furthermore, we note that the change from 2006 to 2007 does not correlate in any meaningful
manner with the change from 2004 to 2005. In 2005, demand fell by only 0.8 per cent. At the same
time, production fell by 4.8 per cent, U.S. shipments quantities fell by 6.7 per cent, net sales quantities
fell by 5.7 per cent, and market share fell by 3.7 pe rcentage points. In other words, the 2005 0.8 per
cent fall in demand had virtually the same effect on shipments and net sales as the 2007 1.6 per cent
increase in demand.
7.342 Demand fell by 4.4 per cent in 2006, and by 6.9 pe r cent in 2008. Injury factors also declined
in those two years. However, the decline in the volume-based injury factors was considerably more
pronounced than the fall in demand. In 2006, comp ared to a 4.4 per cent decline in demand, U.S.
industry production fell by 11 per cent, shipments fell by 9.9 per cent, and net sales fell by 8.9 per
cent. In 2008, compared to a 6.9 per cent fall in demand, U.S. industry production fell by 11.1 per
cent, U.S. shipments fell by 12.1 per cent, and net sales fell by 11.7 per cent. Although the declines in
shipments and net sales were more pronounced in 2 008 than 2006, the fall in production was virtually
the same in those two years, d espite the fall in demand in 2008 (6.9 per cent) being considerably
greater than in 2006 (4.4 per cent).
7.343 Regarding 2008, China asserts that the fact that there was almost a one-to-one correspondence
between the decline in the overall U.S. market a nd the decline in U.S. domestic shipments from 2007
to 2008 shows that the decline of the domestic i ndustry was closely linked to demand. We note,
though, that the U.S. industry held only 49.6 per cent of the market in 2008. 474 Accordingly, there is
no reason why the domestic industry should have absorbed more than its pro rata share, i.e., 49.6 per
cent, of the decline in demand in that year. In our view, a decline in demand should generally have
comparable effects on all sources of supply, includi ng subject imports. The fact that the domestic
industry was required to absorb virtually 100 per cent of the decline in demand in 2008, while subject

471 USITC Report, page 15.
472 From 2005 to 2006, production fell by 11 per cent, shipments fell by 9.9 per cent, and net sales
quantities fell by 8.9 per cent.
473 China itself made a similar argument in these procee dings. At para. 42 of its second oral statement,
China argued that "production must go down if demand is going down". We agree. Just as production should
decrease if demand declines, so production should increase if demand improves.
474 USITC Report, Table C-1.

imports continued to increase by 10.8 per cent, demonstrates that subject imports were having effects
on the domestic industry that could not be explained by that decline in demand.
7.344 We note China's argument that, where the de gree of correspondence between demand and the
industry's condition is not exact, the other causal fa ctors, such as changing business strategy, should
be taken into account (in the sense that the change in strategy would explain changes in the domestic
industry's volume metrics, as the production, shipment s and sales of low-value tyres are reduced). In
the light of our earlier findings relating to the change in business strategy, this factor cannot be used to
explain any absence of correlation between demand and the state of the industry.
7.345 Taking into account the above considerations, including in particular the USITC's findings
regarding the effects of subject imports independent of changes in demand, we conclude that the
USITC's finding that injury should be attributed to subject imports rather than demand is compelling.
(ii) Demand in the OEM market
Arguments of the parties

7.346 China contends that the fall in demand was "particularly pronounced" 475 in the OEM sector,
where the domestic industry focused 20 per cent of its production. According to China, the USITC
should therefore have analysed demand trends in the OEM sector separatel y from demand trends in
the replacement market.
7.347 The United States submits that there was no need fo r the USITC to separately address the
demand trend in the OEM market, as "there were similar demand and import volume trends in the
OEM market and overall market, that is, that demand declined overall and that imports obtained an
increasing share of the overall and OEM market". 476 The United States also asserts that the OEM
market was relatively less important for both domestic producers and subject imports from China. In
this regard, the United States notes the USITC's finding that the "replacement market [was] by far the
more important market for both groups of producers".477
Evaluation by the Panel
7.348 In support of its claim that the fall in OE M demand was "particularly pronounced", China
asserts that total OEM shipments fell by 28 per cent ove r the period of investigation. China derives
this number from Table V-3 of the USITC Report. Us ing the same data source, we calculate that the
fall in total shipments to the replacement market over the period was 33 per cent. 478 By this measure,
therefore, the decline in OEM demand was actually less pronounced than the decline in demand in the
replacement market.
7.349 Furthermore, we note that the OEM sector was generally less important than the replacement
market for both the domestic industry and subject imports. In this regard, only 17.7 per cent of
U.S. producers' shipments, and 5 per cent of subject imports, went to the OEM market. The domestic

475 China's First Written Submission, para. 333.
476 U.S. Reply to Question 32 from the Panel, para. 5.
477 USITC Report, page 21.
478 According to Table V-3, shipments from all s ources to the replacement market in 2008 totalled
228,162,000. Total replacement shipments in 2004 totalled 341,332,000. This constitutes a decline of
113,170,000, which is 33 per cent of total 2004 replacement shipments.

industry therefore shipped less tyres to the OEM sector than to tier 3 of the replacement market
alone.
479
7.350 Since the decline in demand was not more pronounced in the OEM market than the
replacement market, and since the OEM market w as less important for the domestic industry and
subject imports than the replacement market, we do not consider that the USITC was required to
analyse demand in the OEM market separately from demand in the replacement market.
(iii) The 2008 recession
Arguments of the parties
7.351 China contends that the recession of 2008, and th e near collapse of the U.S. auto industry,
greatly accelerated the contraction in demand. Chin a claims that the USITC majority only mentions
the 2008 recession dismissively and in passing:
We have also considered the other possi ble causes of material injury cited by
respondents, including the current recession, the contraction in the OEM tire market,
sharp increases in raw material costs and raw material shortages, automation for
increased productivity, imports from non-subject countries, higher gasoline prices
resulting in less driving, strikes and labor actions, U.S. tire producers' high legacy
costs, and other factors such as equipment restraints.
480
7.352 The United States contends that the USITC did cons ider the possibility that the recession
in 2008 had affected the link between the increased im ports and injury, and concluded that it had not
broken that causal link. 481 The United States asserts that the USITC examined the impact of the
recession in 2008 on the increasing volumes of the su bject imports, and on the volumes trends for the
U.S. industry and non-subject imports 482, and found that, "even in 2008 when U.S. apparent
consumption was falling", the record showed that the subject "imports continued to increase
rapidly".483 Specifically, the USITC stated, "subject im ports increased by 4.5 million tires in 2008,
while U.S. consumption declined by 20.4 million tires". 484 In contrast, the USITC pointed out, the
quantities of U.S. tyres and those of non-subject imports declined during 2008, with imports from
third countries falling at roughly the same pace as the decline in consumption, and U.S. production
falling by 11.1 per cent, a pace that was signifi cantly faster than the 6.9 per cent decline in
consumption in that year.485
Evaluation by the Panel
7.353 We recall the USITC's finding that:
Moreover, imports continued to increase ra pidly even in 2008 when U.S. apparent
consumption was falling. Subject imports increased by 4.5 million tires in 2008,
while U.S. apparent consumption declined by 20.4 million tires. Imports from third

479 USITC Report, Table V-3 indicates that U.S. producers shipped 24,211,000 units to the OEM
market in 2008. According to data submitted by the United States in its Reply to Question 46 from the Panel,
U.S. producers reportedly shipped 25,430,000 units to tier 3 in 2008.
480 USITC Report, page 29, emphasis supplied, footnote omitted.
481 USITC Report, page 26.
482 USITC Report, page 26.
483 USITC Report, page 26.
484 USITC Report, page 26.
485 USITC Report, page 26.

countries declined by 6.0 million tires in 2008, or by 6.1 percent, roughly consistent
with the 6.9 percent decline in U.S. apparent consumption in 2008. Meanwhile,
domestic production of subject tires declined by 20.0 million tires in 2008, or by
11.1 percent, and absorbed virtually all the decline in U.S. apparent consumption that
year.
486
7.354 In making this finding, the USITC properly established that the injury to the domestic
industry could not be attributed in whole to the fall in demand resulting from the 2008 recession. The
fact that subject imports continued to increase significantly during that recession, forcing the domestic
industry to absorb virtually all of the resultant fall in demand, indicates that subject imports were
having an adverse impact on the domestic industry i ndependent of the effects of the fall in demand
during the 2008 recession.
(iv) Shift to larger tyres
Arguments of the parties

7.355 China asserts that the domestic industry suffered injury as a result of consumer demand
shifting in favour of larger tyres, even for smaller, fuel-efficient vehicles. According to China, this
required producers to shift production, and in some cases reduce capacity or close factories that
produced smaller tyres.487
7.356 The United States submits that the record evidence did not indicate that there was a "shift in
demand in favor of larger tires" during the period of investigation. The United States asserts that, in
its questionnaires, the USITC asked U.S. producers and importers to report the factors that had a
significant impact on demand trends during the period of investigation. 488 The United States asserts
that not one of the responding U.S. producers or impor ters reported that a "shift in demand in favor of
larger tires" had affected demand tre nds during the period of investigation. 489 Instead, producers and
importers identified such factors as the "downt urn in the economy", "lower vehicle production",
"fewer miles being driven", "overstretched tire life", "more radial tire use", "economic growth",
"increased use in performance wheels", and "con tinued popularity of SUV' s, light trucks, and
crossover vehicles" as being factors af fecting demand changes over the period. 490 The United States
further asserts that, in the press release cite d in the USITC Report's discussion of demand
characteristics, the Rubber Manufacturers Association ("RMA") similarly did not attribute declines in
the passenger or light truck tires markets in 2008 to a "shift in demand in favor of larger tires".491
Evaluation by the Panel
7.357 At para. 339 of its First Written Submission, and para. 322 of its Second Written Submission,
China asserts that the shift toward s larger tyre sizes caused U.S. pr oducers to close factories that
produced smaller tyres. In other words, China assert s that the shift to larger tyre sizes was bad for
U.S. producers, as it reduced demand for their small-sized products. In this regard, we note, as argued

486 USITC Report, page 26, footnote omitted.
487 See USITC Report, page 51, n. 47 (dissenting Commissioners); USITC Report, pages III-1 through
III-6.
488 USITC Report, page V-9-V-11.
489 USITC Report, page V-9-V-11.
490 USITC Report, page V-9.
491 USITC Report, page V-9.

by the United States
492, that none of the responding U.S. producer s or importers reported that a "shift
in demand in favor of larger tires" had affected demand trends during the period of investigation.493
7.358 Given that none of the respondent producers or importers reported any shift in demand in
favour of larger tyres, we are not persuaded that the USITC should have considered any such shift in
demand in its Determination.
(v) Conclusion
7.359 For the above reasons, we find no error in the USITC's consideration of changes in demand
for tyres in the United States or the conclusion that any injury suffered by the domestic industry was
caused by subject imports, rather than changes in demand.
(c) Non-subject imports
(i) Arguments of the parties
7.360 China argues that the USITC also failed to properly analyse the injury caused to the domestic
industry by imports from countries other than Chin a. China suggests that injury caused by non-
subject imports was improperly attributed to subject imports.
7.361 In this regard, China notes the observation by the dissent that non-subject imports "dwarf"
imports from China throughout the period. China observes that, although their share of the U.S.
market declined over the period, non-subject impo rts accounted for 66.9 to 87.1 per cent of all
U.S. imports by quantity, whereas subject imports from China accounted for only 12.9 to 33.1 per
cent.494
7.362 China contends that non-subject imports were also cheaper than U.S.-made tyres. While
China acknowledges that the average unit price for all non-subject imports in the period ($40 to $55)
was $8-$10 higher than imports from China, this av erage unit price is still below the unit value of
U.S.-produced tyres, which grew from $48/tyre to $ 69/tyre over the period. Moreover, China asserts
that the unit value of tyres imported from Indonesia was lower than that of imports from China.
7.363 The United States asserts that the average unit values for non-subject imports were well
above the average unit values for subject imports throughout the period. The United States further
asserts that the absolute volumes and market shar e for non-subject imports remained relatively steady
over the period, in contrast to the significant in creases in both volume and market share by subject
imports. The United States notes that China had beco me the largest producer of tyres in the world by
2006, producing 33 per cent of all passenger and light truck tyres produced globally in that year. 495
According to the United States, therefore, the USITC's finding that undersold subject imports, not
non-subject imports, displaced domestic sales, is fully supported by the record.

492 United States' Reply to Question 57 from the Panel, para. 67.
493 USITC Report, pages V-9 to V-11. Later in this proceeding, China linked the increase in tyre sizes
to the popularity of SUVs and light trucks. However, this is inconsistent with China's earlier arguments, as the
decline in SUV production during the period of investigation would have affected the U.S. production of large
tyres, whereas China initially argued that the shift to la rger tyres would have affected the U.S. production of
small tyres.
494 USITC Report, page II-3, Table II-1.
495 USITC Report, Table II-1.

(ii) Evaluation by the Panel
7.364 The USITC found that the average unit value of subject imports increased from $31.10 –
38.90 over the period, while the average unit valu e of non-subject imports increased from $40.42 –
55.29, and the average unit value of U.S. pro ducers' shipments increased from $48.40 to 69.69.
496
Thus, the prices of non-subject imports were lower than those of U.S. producers throughout the period
of investigation, and this may ha ve impacted negatively on the dom estic industry. We note, though,
that the average unit value of non-subject imports remained 22-25 per cent higher than the average
unit value of subject imports, suggesting that non-su bject imports would have had considerably less
price effect on the domestic industry than subject imports. Indeed, by 2006 only imports from
Indonesia were cheaper than subject imports from China 497, and Indonesian imports represented only
3.4 per cent of total imports in 2006, compared to subject imports' 21.2 per cent share. Although
imports from Indonesia remained cheaper than subject imports for the remainder of the period, the
market share of Indonesian imports only reached 4.3 per cent by the end of the period, compared with
a market share of 33.1 per cent for subject imports from China. Overall, the share of non-subject
imports in total U.S. imports declined from 87.1 to 66.9 per cent over the period, as the share of
subject imports to total U.S. imports increased from 12.9 to 33.1 per cent. In this regard, the USITC
found that "since 2006, imports from China gained a great er share of the U.S. market than was lost by
domestic producers, indicating that they also took market share away from third-country sources".498
7.365 The USITC further found that, whereas subject imports "increased by 4.5 million tires
in 2008, while U.S. apparent consumption dec lined by 20.4 million tires", "[i]mports from third
countries declined by 6.0 million tires in 2008, or by 6.1 per cent, roughly cons istent with the 6.9 per
cent decline in U.S. apparent consumption in 200 8". Furthermore, the Chair of the USITC, in
expressing separate views on remedy, stated that "inf ormation in the record shows that the volume of
third-country imports has declined since 2005, and that unit values of third-country imports are on
average well above those of imports from China and closer to those of domestic tires".499
7.366 The USITC's record also showed that, whereas subject imports from China were the fourth
largest single import source in 2004, subject imports accounted for the largest single share of imports
by 2006, and substantially increased their share of total imports by 2008.500
7.367 Thus, although the volume of non-subject imports was greater than the volume of subject
imports from China, and although non-subject impor ts remained cheaper th an domestically-produced
tyres, the dominant feature of the U.S. market was the rise of subject imports from China at the
expense of both non-subject imports and the U.S. indus try. In these circumstances, and in light of the
above considerations, we find that the USITC did not fail to properly analyse injury caused by non-
subject imports or improperly attribute injury caused by non-subject imports to subject imports.
(d) Miscellaneous other factors
(i) Arguments of the parties
7.368 China submits that the USITC also neglected several other alternative causal factors noted by
respondents, including: sharp increases in raw materi al costs and raw material shortages; automation

496 USITC Report, Table C-4.
497 USITC Report, Table II-1.
498 USITC Report, page 26.
499 USITC Report, page 42.
500 USITC Report, Table II-1, showing that subject imports accounted for 12.9 per cent of total imports
in 2004, and 33.1 per cent of total imports in 2008.

for increased productivity; higher gasoline prices resulti ng in less driving; strikes and labour actions;
U.S. tyre producers' high legacy costs; a nd other factors such as equipment restraints.
501 China does
not develop any arguments regarding these factors, other than to claim that the USITC essentially
listed and then dismissed these factors, without a reasoned and adequate explanation.
7.369 The United States submits that China has failed to o ffer evidence to support its claim that
these factors were causes of material injury to the industry during the period, or to explain why they
are significant enough to break the causal link be tween the subject imports and injury. The
United States contends that China simply asserts that the "USITC essentially listed and then dismissed
these factors, without a reasoned and adequate explanation" of them.502 The United States argues that
this is legally insufficient to meet China's burde n, as complainant, to present evidence and argument
sufficient to establish a presumption that the measu re being challenged is inconsistent with a
Member's WTO obligations.503 The United States asserts that Ch ina has failed to explain why any of
these factors was actually a cause of injury to the industry, or why th ese factors break the existence of
a causal link between the subject imports and injury to the industry. Furthermore, the United States
contends that the USITC did, in fact, address these other factors in its analysis.
7.370 China submits that it did meet its burden of proof regarding these other factors, as it "has
pointed out that the USITC wrongly dismissed these factors with little or no discussion, because the
statute did not require a weighing of causal factors". 504 China then challenges the United States'
assertion that the USITC did adequately address the relevant other factors.
(ii) Evaluation by the Panel
7.371 It is not sufficient for a complaining party to si mply point out that the investigating authority
failed to address certain other factors, or failed to address them in sufficient detail. The complaining
party must first establish prima facie the relevance of those other factors, i.e., their capacity to cause
injury to the domestic industry, and their potential to break the causal link between the subject imports
and the material injury to the domestic industry. This China has not done. Thus, while these other
alternative factors might have been relevant, we do no t consider that in this regard China has met its
burden of proof.
(e) Cumulative assessment
(i) Arguments of the parties
7.372 China asserts that each of the abovementioned factors taken individually severs the causal
link between subject imports and market disruption. China contends that, when these other factors are
considered cumulatively, "the extent to which they sever the causal link is even more dramatic".
7.373 China acknowledges that "the requirement to cons ider all alternative causes together is not
required in every case", but claims that "the in terrelated nature of the various conditions of
competition require them to be considered together."
505 China relies in this regard on the statement by
the Appellate Body in EC – Tube or Pipe Fittings that "there may be cases where because of the
specific factual circumstances therein, the failure to undertake an examination of the collective impact

501 USITC Report, page 29.
502 China's First Written Submission, para. 356.
503 Appellate Body Report, US – Shirts and Blouses, pages 14-15.
504 China's Second Written Submission, para. 337.
505 China's First Written Submission, footnote 240.

of other causal factors would result in the investigat ing authorities improperly attributing the effect of
these other causal facts to dumped imports".
506
7.374 The United States asserts 507 that China's argument ignores th e fact that the Protocol itself
imposes no obligation on the competent authority to perfo rm an analysis of such other factors at all,
and certainly does not require the authority to conduct an analysis of the effects of these factors on a
cumulative basis. The United St ates asserts that, even under the AD Agreement, the Appellate Body
has stated that an antidumping authority is not re quired to examine the collective impact of other
causal factors. 508 The United States argues that, although the AD Agreement , unlike the Protocol,
includes language contemplating that an authority should consider the injurious effects of other causal
factors in its analysis, the Appellate Body stated that this specific language:
does not compel, in every case, an assessment of the collective effects of other causal
factors, because such an assessment is not always necessary to conclude that injuries
ascribed to dumped imports are actually caused by those imports and not by other
factors.
509
7.375 According to the United States, even when a pa rticular agreement requires an analysis of
other injury factors, the Appellate Body has refused to require the investigating authorities to examine
the effects of those factors on a cumulative basis. The United States contends that since China has
failed to establish why it would be necessary to conduct such an analysis here, and since the Protocol
does not require any analysis of these factors, the Panel should reject China's interpretation of the
Protocol on this matter.
(ii) Evaluation by the Panel
7.376 China claims that the USITC was required to demonstrate that the collective injurious effects
of the industry's business strategy, the change in demand, non-subject im ports and miscellaneous
other factors were not sufficient to break the causal link between the increasing imports and the
material injury to the domestic industry.
7.377 In EC – Tube or Pipe Fittings the Appellate Body found that "there may be cases where,
because of the specific factual circ umstances therein, the failure to undertake an examination of the
collective impact of other causal factors would result in the investigating authority improperly
attributing the effects of other causal factors to dumped imports". 510 Notwithstanding the lack of any
requirement for cumulative assessment in the Prot ocol, we acknowledge that there may be cases
where the collective injurious effect of other causal factors might be so dominant that the injury
caused by increasing imports could not properly be f ound to be "significant". However China has not
demonstrated that this was the case in the underlying USITC investigation. 511 Accordingly, we find
that China has failed to establish that in the context of the present case the USITC should have
provided a cumulative assessment of the effects of the other causes of injury.

506 Appellate Body Report, EC – Tube or Pipe Fittings, para. 192.
507 U.S. First Written Submission, paras. 329–330.
508 Appellate Body Report, EC – Tube or Pipe Fittings, para. 192.
509 Appellate Body Report, EC – Tube or Pipe Fittings, para. 191.
510 Appellate Body Report, EC – Tube or Pipe Fittings, para. 192.
511 Indeed, in rejecting China's claims regarding the USITC's assessment of the individual injurious
effects of these other factors, we ha ve reviewed record evidence indicating that subject imports from China had
significant injurious effects, independent of any injurious effects of other causal factors.

(f) Conclusion
7.378 For all of the above reasons, we find that Chin a has failed to establish that injury caused by
other factors was improperly attributed to subject imports.
5. Conclusion
7.379 Having carefully considered all of the arguments of the parties, and taking into account our
standard of review, we find that the USITC did not fail to properly establish that rapidly increasing
imports from China were a "significant cause" of material injury to the domestic industry.
E.
WHETHER THE TRANSITIONAL SAFE GUARD MEASURE WENT BEYOND THE "EXTENT
NECESSARY", CONTRARY TO PARAGRAPH 16.3 OF THE PROTOCOL
7.380 China has two broad claims. First, China claims that no remedy is appropriate in this case as
the USITC failed to establish that 'increasing rapidl y' imports from China are a 'significant cause' of
market disruption. Second, China claims that even if the United States had complied with the other
requirements of Paragraph 16, the specific remedy applied by the United States in this case was
inconsistent with Paragraph 16.3 because the remedy was not limited to the market disruption caused
by rapidly increasing imports from China. China claims that the United States instead imposed a
remedy that addressed all of the alleged market disr uption, including that caused by factors other than
rapidly increasing imports.
7.381 The United States denies that the remedy we nt beyond the "extent necessary", contrary to
Paragraph 16.3 of the Protocol.
7.382 Since China's first claim relates to its subs tantive claims concerning Paragraphs 16.1 and
16.4, we only address China's second claim in this Section of our Report. That claim concerns
Paragraph 16.3 of the Protocol, which provides:
If consultations do not lead to an agr eement between China and the WTO Member
concerned within 60 days of the receipt of a request for consultations, the WTO
Member affected shall be free, in respect of such products, to withdraw concessions
or otherwise to limit imports only to the ex tent necessary to prevent or remedy such
market disruption. Any such action sha ll be notified immediately to the Committee
on Safeguards.
1. Arguments of the parties
(a) China
7.383 China argues that the ordinary meaning of th e words "only" and "necessary" (in the first
sentence of Paragraph 16.3) emphasise the need fo r any restrictions to be "narrowly defined and
properly focussed".
512 China continues that th e restrictions "cannot overcompensate and attempt to
address broader injuries being suffered by the domestic industry". 513 China argues that "the
restrictions must be narrowly drawn so that they are limited solely to the extent 'necessary' to address
the market disruption resulting from rapidly increasing imports from China that are a significant cause
of material injury, and that market disruption alone". 514 China argues that the objective is not to

512 China's First Written Submission, para. 362.
513 China's First Written Submission, para. 362.
514 China's First Written Submission, para. 362.

provide "some general benefit to the domestic industry".
515 China claims that the word "remedy" "can
be defined as 'a means of counteracting or removing so mething undesirable; redress; relief.' In other
words, to 'remedy' market disruption means to remove that market disruption".516
7.384 China argues that the terms of Paragraph 16.3 must be read in context with "other provisions
of Paragraph 16 and the provisions of other WTO agreements that address analogous issues." 517
China continues that this "context confirms that measures applied under Paragraph 16.3 can only
address rapidly increasing imports from China that ar e a significant cause of material injury, and
cannot be used to address the condition of the domestic industry more generally". 518 China claims
that "the essential phrase of Paragraph 16.3 – that r estrictions may be imposed "only to the extent
necessary to prevent or remedy such market disrupt ion" – can only be understood in the context of
understanding the meaning of 'market disruption'. 'M arket disruption' refers to a situation in which
imports are 'increasing rapidly' and are a 'significant cause of material injury'".519
7.385 China submits that the focus of any permissible remedy must be on the effect of the allegedly
injurious imports. Although it may be possible to consider permissibly other aspects pertaining to the
domestic industry, any permissible remedy must be limited to the effect of the imports – and only the
imports – themselves. China therefore asserts that the focus of a remedy should be on the effect of the
allegedly injurious imports – not on the overall effect on the domestic industry. According to China,
imports cannot be held responsible for the entire downturn being experienced by the domestic
industry, and the remedy cannot seek to address that entire downturn. China submits that, without
ever determining the amount or magnitude of the injurious impact subject imports were allegedly
having on the domestic industry, the United States could not possibly have limited the imposed
remedy to "only the extent necessary" to remedy this impact, as required by Paragraph 16.3.
7.386 China claims that there is no indication of "how the USITC took 'into account' the specific
market disruption it had found to exist". 520 Quoting further from the USITC Report, China contends
that the focus of the USITC was on the benefits to the domestic industry, not on the specific market
disruption found to exist:
"This increase in the tariff would significantly improve the competitive position of
the domestic industry, increasing domestic production, shipments and employment
and restoring the domestic industry to at l east a modest level of profitability. The
increase should accomplish this by reduci ng the quantity of subject imports and
raising their price in the US market."521
7.387 China argues that the USITC's flawed approach to remedy is partly rooted in its flawed
approach to causation. 522 China criticises the USITC for saying, without explanation, that it did not
need to weigh other causes in the market as im ports from China were themselves a significant
cause.523 China claims that the USITC failed to provid e any "analysis of the role of alternative causes
compared to that of imports from China". 524 China claims this failure carried through to its remedy

515 China's First Written Submission, para. 363.
516 China's First Written Submission, para. 363, quoting the Shorter Oxford English Dictionary.
517 China's First Written Submission, para. 364.
518 China's First Written Submission, para. 364.
519 China's First Written Submission, para. 365.
520 China's First Written Submission, para. 384.
521 China's First Written Submission, para. 384, quoting the USITC Report at page 35.
522 China's First Written Submission, para. 386.
523 China's First Written Submission, para. 386.
524 China's First Written Submission, para. 387.

analysis where the USITC made "no attempt to calib rate its remedy to the market disruption caused
solely by rapidly increasing imports from China".
525
(b) United States
7.388 The United States agrees that a remedy under the Protocol can only remedy the material
injury that results from rapidly increasing imports from China. The United States notes that China
argues that the USITC considered the effect that increased tariffs would have on the U.S. industry. In
doing so, China claims that the USITC went beyond the extent necessary to remedy market disruption
caused by rapidly increasing imports. The United Stat es argues that this reasoning runs "directly
contrary to the Protocol, which defines market disr uption, in part, in terms of material injury and
threat of material injury to the domestic industry". 526 Therefore, a Member seeking to comply with
Paragraph 16.3 is entitled to consider the effect on the domestic industry otherwise "it cannot know
whether its remedy properly addresses market disruption in the sense of material injury".527
7.389 The United States disagrees that the statem ents quoted from the USITC Report support
China's claims. The United States argues that now here does the USITC suggest that the proposed
tariffs will address all of the injury to the domestic industry. 528 The United States continues in
paragraph 341 of its submission that the USIT C gave a thorough explanation of its remedy
determination. Part D of the remedy recommenda tion "analyses the proposed tariff increase and how
it is the 'most appropriate remedy to address the market disruption caused by rapidly increasing
imports from China' making clear that it addressed only the material inju ry caused by Chinese
imports".
529 The United States argues that the USIT C discussion of why it rejected the remedy
proposed by the petitioners gives further evidence of how it addressed the market disruption caused
by the subject imports only.530 The USITC explained that the proposed quota by the petitioners would
have been "equivalent to 65 ad valorem tariff 'which we view to be higher than necessary to remedy
the market disruption caused by rapidly increasing imports from China'". 531 The United States
continues that part E of the remedy recommendation "addresses the short- and long-term effects of the
recommended remedy, explaining that economic mo delling indicates that the proposed 55 per cent
tariff would likely reduce shipments of Chinese tyres by 38.2 to 58.4 per cent in the first year. The
USITC then explains how this reduction in shipments will have an effect on domestic and non-subject
imports, on their prices, and eventually on the domestic industry's revenue".532 The United States also
quotes Chairman Aranoff's separate views on remedy as further evidence that only the material injury
caused by subject imports was addressed in its remedy recommendation. 533 The United States
concludes that the USITC conducted a detailed analysis to craft a remedy that would only address the
injury caused by Chinese imports.

525 China's First Written Submission, para. 387.
526 U.S. First Written Submission, para. 333.
527 U.S. First Written Submission, para. 333.
528 U.S. First Written Submission, para. 339.
529 U.S. First Written Submission, para. 341.
530 U.S. First Written Submission, para. 341.
531 U.S. First Written Submission, para. 341, quoting page 36 and footnote 200 of the USITC Report.
532 U.S. First Written Submission, para. 341.
533 U.S. First Written Submission, para. 342.

2. Evaluation by the Panel
7.390 China's basic argument
534 under Paragraph 16.3 of the Protoc ol is that a transitional product-
specific safeguard measure should not exceed the am ount necessary to prevent or remedy the market
disruption caused by the subject imports. China claims that the Tyres measure necessarily exceeds the
amount necessary to prevent or remedy the market disruption caused by the subject imports because
the USITC never determined the extent of the injury caused by those imports. In other words, without
knowing how much injury was caused by the subject imports, it was impossible for the United States
to limit the measure to the amount necessary to prevent or remedy that injury.
7.391 We begin by noting that the parties agree th at a remedy imposed under Paragraph 16 of the
Protocol should be limited to the injury / market disruption caused by the subject imports, rather than
the injury / market disruption caused by all injurious factors generally. We agree that the scope of the
remedy should be limited in this way.
535
7.392 We next consider China's argument that the US ITC's flawed approach to remedy is partly
rooted in its flawed approach to causation.536 This raises issues regarding the relationship between the
non-attribution requirement under the Protocol, and the scope of the remedy. The Appellate Body
found537 in US – Line Pipe that Article 5.1 of the Safeguards Agreement generally538 does not impose
any obligation on a Member to justify, at the time of application, that the safeguard measure at issue is
applied "only to the extent necessary." The Appellate Body went on to state:
This does not imply, as Korea seems to asser t, that the measure may be devoid of
justification or that the multilateral verification of the consistency of the measure with
the Agreement on Safeguards is impeded. The Member imposing a safeguard
measure must, in any event, meet several obligations under the Agreement on
Safeguards. And, meeting those obligations sh ould have the effect of clearly
explaining and "justifying" the extent of the application of the measure. By
separating and distinguishing the injurious effects of factors other than increased
imports from those caused by increased imports , as required by Article 4.2(b), and by
including this detailed analysis in the repor t that sets forth the findings and reasoned
conclusions, as required by Articles 3.1 a nd 4.2(c), a Member proposing to apply a
safeguard measure should provide suffi cient motivation for that measure.
Compliance with Articles 3.1, 4.2(b) and 4.2(c) of the Agreement on Safeguards
should have the incidental effect of providing sufficient "justification" for a measure
and, as we will explain, should also provide a benchmark against which the
permissible extent of the measure should be determined.
539

534 We note China's argument that the United States was not permitted to impose any transitional
safeguard measure as the substantive requirements of the Protocol had not been met. This argument concerns
the claims addressed in the preceding sections of this Report.
535 We note that this is broadly consistent with the findings of the Appellate Body in US – Line Pipe .
We generally consider that the reasoning at paras. 252-259 of that Appellate Body Report is not fully applicable
in these proceedings, since it is based in part on the text of the second sentence of Article 4.2(b) of the
Safeguards Agreement, which is absent from Paragraph 16 of the Protocol.
536 China's First Written Submission, para. 386. The reactions of the United States to this line of
argument by China are included in Part C, on causation.
537 Appellate Body Report, US – Line Pipe, para. 233.
538 An exception is made in cases where the safeguard measure takes the form of a quantitative
restriction which reduces the quantity of imports below th e average of imports in the last three representative
years. This exception has no bearing on the present case.
539 Appellate Body Report, US – Line Pipe, para. 236.

7.393 Thus, the Appellate Body considers that a non- attribution analysis under Article 4.2(b),
second sentence, of the Safeguards Agreement will provide a "benchmark" (of injury attributed to the
relevant imports), against which the permissible ex tent of the safeguard measure may be measured.
Indeed, the Appellate Body went on to find that a violation of the obligation to perform a non-
attribution analysis under Article 4.2(b), second sen tence, was sufficient to establish a prima facie
case of violation of the Article 5.1 obligation to rest rict the measure to the extent necessary to prevent
or remedy serious injury caused by the increased imports at issue. This finding is the basis for China's
argument that, because the USITC never determined th e extent of the injury caused by the subject
imports, the Tyres measure is necessarily excessive.
7.394 Since Paragraph 16.4 of the Protocol does not require the same type of non-attribution
analysis as that required by the second sentence of Article 4.2(b) of the Safeguards Agreement
540, the
reasoning of the Appellate Body in US – Line Pipe is not applicable. Although we consider that
increasing imports should be viewed "in the context of" other factors, to ensure a proper finding of
causation, there is no obligation to separate and disti nguish the injurious effects of factors other than
increased imports from those caused by increased im ports (as required by the second sentence of
Article 4.2(b) of the Safeguards Agreement).541 Since there is no "full-blown" non-attribution analysis
under the Protocol, there is no benchmark against whic h to measure the scope of the remedy. Nor is
there any basis for finding that a failure to separate and distinguish the injurious effects of rapidly
increasing imports from the injurious effects of othe r causal factors establishes prima facie that the
remedy is excessive. Instead, China must itself demonstrate that the scope of the measure is
excessive.
7.395 While the lack of a benchmark creates difficulties in any challenge of the measure,
nevertheless, the burden is on China to establish prima facie that the scope of the measure is
excessive. But the burden is not impossible. For example, China might have challenged the accuracy
of the analysis set forth in Exhibit US-20 which shows that the Tyres measure was based on an
objective assessment of the impact of the measure over the first year, and that the impact of the
measure would have addressed the volume and price effects of the subject imports. China has not
challenged the accuracy of any of that analysis. Nor did
 China provide any type of assessment of
what the maximum permissible extent of the measure should have been (i.e., in relation to the amount
of injury caused by increased imports), and has therefore failed to provide any benchmark by which to
conclude that the extent of the Tyres measure is excessive.
7.396 The only additional argument by China concerns the fact that the measure was focused on
improving the condition of the domestic industry generally, rather than on the specific harm caused by
subject imports. China alleges that the United States essentially assumed that the increasing imports
from China were entirely responsible for the deterior ating condition of the domestic industry. China
refers in this regard to the following reasoning by the USITC:
We believe that the tariffs will significantly reduce subject imports and boost U.S.
industry sales and prices, resulting in increasing profitability. This profitability will
lead to the preservation of jobs and the creation of new ones, as well as encourage
investment.
542

540 See para. 7.176 above.
541 We note that China agrees that non-attribution under the Protocol does not require a precise
quantification of the injury caused by the various injurious factors ( See China's Reply to Question 17(b) from
the Panel, para. 71).
542 USITC Report, page 30.

This increase in the tariff would signifi cantly improve the competitive position of the
domestic industry, increasing domestic produc tion, shipments, and employment and
restoring the domestic industry to at least a modest level of profitability. The increase
should accomplish this by reducing the quantit y of subject imports and raising their
price in the U.S. market.
543
7.397 However the Panel is not convinced that this demonstrates that the measure is excessive.
First, a measure is not necessarily excessive simply because it seeks to improve the condition of the
industry. To the extent that the condition of the industry deteriorated as a result of increased imports,
a measure designed to improve the condition of the industry does address the injurious effects of the
increased imports. While there is no guarantee that a measure imposed on this basis will not be
excessive, there is similarly no certainty that a measure imposed on this basis will necessarily be
excessive.
7.398 Second, since the USITC found that the domestic industry suffered market disruption as a
result of rapidly increasing subject imports that were underselling domestic production, a measure that
is aimed at "reducing the quantity of subject imports and raising their price in the U.S. market" can be
justified. The Panel notes, however, that it does allow for the possibility of the expansion of non-
subject imports rather than the improvement of the condition of the domestic industry, and observes
that is a consequence of a country-specific safeguard and not a defect of the remedy in this case.
7.399 For these reasons, we find that China has fa iled to establish prima facie that the Tyres
measure exceeds "the extent necessary to prevent or remedy" the market disruption caused by rapidly
increasing subject imports, contrary to Paragraph 16.3 of the Protocol.
F. WHETHER THE DURATION OF THE REMEDY EXCEEDED THE PERIOD OF TIME NECESSARY TO
PREVENT OR REMEDY MARKET DISRUPTION
7.400 China claims that the three-year duration of the remedy exceeds the period of time necessary
to prevent or remedy the market disruption, contra ry to Paragraph 16.6 of the Protocol. The first
sentence of Paragraph 16.6 provides:
A WTO Member shall apply a measure pursuan t to this Section only for such period
of time as may be necessary to prevent or remedy the market disruption.
7.401 The United States denies China's claim.
1. Arguments of the parties
(a) China
7.402 China claims that the decision by the United St ates to impose a remedy for three years is
inconsistent with Paragraph 16.6 of the Protocol, which provides that a remedy may be imposed "only
for such period of time as may be necessary to pr event or remedy the market disruption". China
asserts that this obligation limits the duration of any such safeguard measures to "such" market
disruption, which is limited to that disruption pr operly attributed to rapi dly increasing imports from
China. In particular, China asserts that the ordi nary meaning of the terms "only" and "necessary" in
Paragraph 16.6 makes it clear that a remedy measure can be in place only for the exact amount of time
that is necessary to address and remedy the "mar ket disruption" caused by the rapidly increasing
imports. China further contends that the term "n ecessary" adds an additional meaning, in the sense

543 USITC Report, page 35.

that the use of this term confirms that a remedy measure cannot simply be tangentially useful or
helpful, but must rather be essential and indispensable to prevent or remedy the market disruption that
has been significantly caused by th e rapidly increasing imports from Chin a. According to China, the
ordinary meaning of Paragraph 16.6 will not permit a remedy measure that lasts longer than
necessary, or one that is not precise in addressi ng the market disruption that has been properly
justified as having been caused by rapidly increasing imports from China. China also refers to the
context of Paragraph 16, and the object and purpose ther eof, in support. In particular, China contends
that the Safeguards Agreement , the AD Agreement and the SCM Agreement all contain durational
limitations, indicating that any remedy must be "narrowly tailored in terms of duration".
544
7.403 China notes the discussion of the majority of the USITC regarding the duration of the remedy:
We recommend that the remedy remain in place for a three-year period because we
believe that a remedy of such duration is needed to give firms and workers in the
industry time to identify and implement needed adjustments to import competition.
Although domestic producers did not identify any specific planned adjustments in
their questionnaire responses, other informati on in the record indicates that domestic
producers have put plant and equipment upgrades on hold pending more favourable
market opportunities. Moreover, we anticipa te that the relief may encourage certain
domestic producers to reconsider plant closures.
545
7.404 According to China, this rationale says nothing about why tariffs need to last for three years
to address the specific market disruption that had be en found – the market disruption that the USITC
allegedly linked to imports from China that were "increasing rapidly", and that were the "significant
cause" of injury to the domestic industry (rather than injury caused by "import competition" more
generally). China understands th e USITC's logic to be that b ecause imports from China could be
blamed for certain problems, and since the domest ic industry would benefit from three years, the
remedy should last for three years. But China c ontends that, under Paragr aph 16.6 of the Protocol,
whether the domestic industry would benefit from a three-year remedy is irrelevant, since this
provision only allows a remedy to last for the pe riod of time needed to address the specific market
disruption at issue.
7.405 China also asserts that the USITC's rationale is defective because the USITC failed to give
any significant weight to what U.S. producers them selves were saying, and the fact that the domestic
producers had not provided specific restructuring plans, even though the USITC asked them to do
so.
546 Instead, the USITC opined, that "the relief may encourage certain domestic producers to
reconsider planned plant closures". 547 China contends that such "sp eculation" is inadequate, since it
fails to demonstrate that the three-year remedy measures imposed are necessary to remedy the market
disruption (and why this three-year duration is n eeded to prompt producers to "reconsider" closure
decisions). China asserts that the President also im posed a remedy for three years without any regard
to the specific market disruption "significantly caused" by rapidly increasing imports.

544 China's First Written Submission, para. 401.
545 USITC Report, page 36.
546 USITC Report, page VI-1, Table VI-2. China asserts that the public version of the determination
does not provide any details, but does confirm the question was asked. China notes that the USITC majority
then confirms in its commentary that no specific adjustment plans were presented.
547 USITC Report, page 36 (emphasis added).

(b) United States
7.406 The United States does not dispute China's argum ents regarding the ordinary meaning of
Paragraph 16.6 of the Protocol. However, the United States rejects China's argument that the duration
requirements in the Safeguards Agreement, the AD Agreement, and the SCM Agreement demonstrate
that "any remedy imposed must be narrowly tailored in terms of duration".
548 The United States notes
in this regard that the AD Agreement and the SCM Agreement allow the imposition of relief as long as
the injurious dumping or subsidization continues.
7.407 Regarding China's argument that a remedy measu re may remain in place "only for the exact
amount of time" or "for that period of time speci fically found" to address the market disruption 549, the
United States submits that such level of exactitude is neither required nor possible. The United States
asserts that authorities cannot know at the time of ta king a measure the "exact amount of time" it will
be necessary. According to the United States, th is is why paragraph 246(f) of the Working Party
Report explicitly allowed authorities to extend a meas ure based on a finding that "action continued to
be necessary to prevent or remedy market disruption".
7.408 The United States submits that China also fails to give appropriate weight to the remaining
elements of Paragraph 16.6, which allow China to suspend concessions substantially equivalent to any
safeguard measure two years after its application if there was a relative increase in imports and three
years after application if there was an absolute increase. According to the United States, these
elements indicate that the negotiators of the Pr otocol envisaged safeguard measures remaining in
place for at least three years if there was an abso lute increase in Chinese imports, as was the case with
regard to tyres, or even longer in the case of an extension under paragraph 246(f) of the Working
Party Report. The United States notes China's refere nce to these provisions as "rights that China has
under certain circumstances"
550, but contends that they maintain their utility as context for the first
sentence of Paragraph 16.6 or as an indication of the expectations of the negotiators of the Protocol.
7.409 Regarding China's argument that the USITC's rationale "focuses entirely on the condition of
the domestic industry and the time it needs to adju st", the United States recalls its argument (see
preceding section) that the effect of the remedy on the domestic industry is not merely relevant, but
critical, in understanding whether it is "necessary to prevent or remedy market disruption".
7.410 Regarding China's argument that the USITC did not give sufficient weight to the views of
domestic producers who "had not prov ided specific restructuring plans" 551, the United States refers to
its earlier arguments (see preceding section) to the eff ect that the USITC weighed all of the evidence
before it, and considered that the evidence fa vouring its remedy outweighed the evidence cited by
China against the remedy.
7.411 Regarding China's argument that the USITC re lied on "speculation" based on a quotation of
part of one sentence stating that "we anticipate that the relief may encourage certain domestic
producers to reconsider planned plant closures"
552, the United States contends that China draws the
wrong conclusion. The United States notes that, in the preceding paragraph, the USITC explained
that it provided for progressive reduction of the leve l of the relief because "[w]e also expect the level
of tariff protection that is necessary to offset ma rket disruption to decrease as new investments and

548 China's First Written Submission, para. 401.
549 China's First Written Submission, paras. 397 and 405.
550 China's First Written Submission, para. 399.
551 China's First Written Submission, para. 414.
552 China's First Written Submission, quoting USITC Report, page 36.

other adjustments are implemented".
553 According to the United States, the subsequent statement that
the industry "may reconsider" plant closures reflects only the understanding that there are many
"investments" or other "adjustments" the industry mi ght take, and that it was impossible to know with
certainty at the time of its determinations which ones the prevailing business climate would allow.
2. Evaluation by the Panel
7.412 As a preliminary matter, we note China's argument that the United States was not permitted to
impose any transitional safeguard measure of any duration as the substantive requirements of the
Protocol had not been met. This argument is tied to the China's claims under Paragraphs 16.1
and 16.4 of the Protocol, which we address in the preceding Sections of this Report. The present
Section focuses on China's arguments regarding th e consistency of the remedy imposed by the
United States with Paragraph 16.6 of the Protocol.
7.413 The core of China's claim under Paragraph 16.6 is based on the same arguments that China
advanced under Paragraph 16.3. As China itself explains:
The arguments presented above regarding Artic le 16.3 are also applicable as regards
the U.S. failure to comply with Article 16.6. Similar to the requirements of
Article 16.3, Article 16.6 of the Protocol limits a remedy to "only for such period of
time as may be necessary…." The USITC's failure to determine – either
quantitatively or qualitatively – what effect subject imports were allegedly having on
the domestic industry makes it virtually impossible for a remedy to comply with
Article 16.6's requirement. Without knowing the effect that must be prevented or
remedied, it is impossible to know for how long a remedy needs to be imposed.
554
7.414 We recall that there was no obligation on the United States to explain why a three-year
measure was needed to prevent or remedy th e market disruption caused by subject imports. 555 We
further recall that there was also no obligation on the United States to quantify the injury caused by
increasing imports, or separate and distinguish that injury from injury caused by other factors.
Accordingly, it is not enough for China to simply "demonstrate[e] that the USITC failed to ascertain
the amount of the alleged effect of s ubject imports on the domestic industry".
556 Instead, the onus is
on China to establish prima facie that a three-year measure was excessive. China has failed to meet
this burden.
7.415 For these reasons, we find that China has fa iled to establish prima facie that the Tyres
measure exceeds the period of time necessary to preven t or remedy the market disruption, contrary to
Paragraph 16.6 of the Protocol.
G. WHETHER THE U .S. TYRES MEASURE IS INCONSISTENT WITH ARTICLES I :1 AND II :1(B) OF THE
GATT 1994
7.416 China claims that the imposition of additiona l (transitional safeguard) duties on imports of
subject tyres from China is inconsistent with Article I.1 of the GATT 1994, whereby:
With respect to customs duties and charg es of any kind imposed on or in connection
with importation or exportation or imposed on the international transfer of payments

553 USITC Report, pages 35-36.
554 China's Second Written Submission, para. 361.
555 See para. 7.20 above.
556 China's Second Written Submission, para. 362.

for imports or exports, and with respect to the method of levying such duties and
charges, and with respect to all rules a nd formalities in connection with importation
and exportation, and with respect to all matte rs referred to in pa ragraphs 2 and 4 of
Article III,* any advantage, favour, privilege or immunity granted by any contracting
party to any product originating in or destined for any other country shall be accorded
immediately and unconditionally to the like pr oduct originating in or destined for the
territories of all other contracting parties.
7.417 China also claims that the imposition of th e additional (transitional safeguard) duties on
imports of subject tyres from China is inconsistent with Article II.1(b) of the GATT 1994, whereby:
The products described in Part I of the Sc hedule relating to any contracting party,
which are the products of territories of other contracting parties, shall, on their
importation into the territory to which the Sc hedule relates, and subject to the terms,
conditions or qualifications set forth in that Schedule, be exempt from ordinary
customs duties in excess of t hose set forth and provided therein. Such products shall
also be exempt from all other duties or charges of any kind imposed on or in
connection with the importation in excess of those imposed on the date of this
Agreement or those directly and mandator ily required to be imposed thereafter by
legislation in force in the importing territory on that date.
7.418 China's GATT 1994 claims are entirely dependent on its claims under Paragraph 16 of the
Protocol.
557 Since we have not accepted China's claims under Paragraph 16 of the Protocol, we
similarly do not accept China's claims under Articles I:1 and II:1 of the GATT 1994.
VIII. CONCLUSION
8.1 For the reasons set forth above, we find that in imposing the transitional safeguards measure
on 26 September 2009 in respect of imports of subject tyres from China, the United States did not fail
to comply with its obligations under Paragraph 16 of the Protocol and Articles I:1 and II:1 of the
GATT 1994.