Argentina - Safeguard Measures on Imports of Footwear
(Continued)
7.20 Furthermore, Argentina pointed at certain legal and factual arguments
which it believed the Panel should have addressed.
In Argentina's view, failing to refer to these arguments, or relegating
them to footnotes or final observations, would be a denial of procedural
fairness. In this regard, we recall
that the Appellate Body characterised an allegation that a panel has failed to
conduct an "objective assessment" in the meaning of Article 11 of the
DSU as a very serious allegation.
7.21 In particular, Argentina made specific comments on the Panel's factual
description and evaluation of the adequacy of the CNCE's explanation regarding
specific injury factors. In
reaction to these comments, we modified para. 8.173 in the section on
"production".
With respect to "sales", we modified paras. 8.175
and 8.180, and we added paras. 8.177 and 8.181.
As regards "productivity", we added language to paras. 8.183
and 8.211. In respect of
"profits and losses" we added information to the table on
"accounting data" (para. 8.188) and modified or shortened the
discussion of profits and losses in the section on "differences in
data", especially regarding the break-even point analysis in para. 8.224.
In response to Argentina's comments concerning the factor
"employment" we did not consider any adjustments necessary.
Following a comment on market shares of imports, we also modified
footnote 551.
7.22 Concerning the treatment by the CNCE of data for the year 1996, Argentina
stated that 1996 data from the questionnaires were incomplete at least as to the
financial indicators because the petitioners filed their request for safeguard
action in October 1996. We recall
our consideration in para. 8.213 that Argentina should have taken into account
1996 data as a relevant factor in the meaning of Article 4.2(a) to the extent
such data were collected during the investigation and are contained in the
CNCE's record of the case. In the
alternative, the national authority should have given an adequate explanation
why such consideration of available 1996 data by the national authority was
unnecessary or irrelevant in the particular circumstances of this case.
However, by no means did we imply an obligation for a national authority
to constantly update its data collection.
Nor do we consider our statement inconsistent with our
acceptance of Argentina's choice of an investigation period from 1991 to 1995.
More specifically, we modified footnote 540 to identify the extent to
which the CNCE had data from 1996 available in the investigation record with
respect to particular injury factors.
7.23 Argentina further criticised that the findings in para. 8.163 mentioned
only the preliminary decision as referring to the impact of the imposition of
DIEMs on imports as of 1993, but fail to mention that the CNCE's final
determination also held that imports had declined after 1993 because of the
imposition of the DIEMs.
We inserted footnote 529 to refer in that respect to the
CNCE’s final determination. At
any rate, regardless of whether Argentina raised this argument only in the
preliminary report or also in the final report, a threat
of increased imports cannot be held to amount to a threat of serious injury. We
reiterate our consideration (para. 8.284) that the Safeguards Agreement requires
actual imports in increased quantities
(in absolute terms or relative to domestic production) as one of the
preconditions for imposing a safeguard measure and that a threat of additional
imports as such is insufficient for a finding of a threat of serious injury.
7.24 Argentina also alleged that the Panel failed to reference a
"cornerstone" of the CNCE's causation decision, i.e., the specific
correlation of increasing import trends for footwear in 1991-1993 with declines
in the gross domestic product (GDP) for footwear in the same period.
In Argentina's view, this
argument was reinforced by comparative declines in the Argentine footwear GDP
versus increases of the Argentine GDP for the overall manufacturing sector.
Argentina also pointed out that import increases in 1991 and 1992 were
much higher in the footwear sector than overall imports to Argentina during the
same period. We reflected this
argument in para. 8.231 but continue to believe that above-average sectoral
import increases and above-average sectoral GDP declines per se do not necessarily justify the imposition of safeguard
measures in economic sectors whose performance is less successful than the
performance of the national economy as a whole.
We believe that a causal link needs to be established from an
analysis of the impact of increased imports on the injury factors identified in
the Safeguards Agreement.
7.25 With regard to the issue of whether the phrase "under such
conditions" in Article 2.1 requires national authorities to carry out a
price analysis, we refer to our discussion and conclusion in paras. 8.249ff that
this phrase does not constitute a specific legal requirement for a price
analysis and that products may compete on other bases than price, as enumerated
in para. 8.251.
We recall, however, as reflected in para. 8.254, that
although in our view a price analysis is not a requirement of Article 2.1, in
this case the alleged price
underselling by imports was a major basis for Argentina’s causation finding.
Consequently, it was necessary for the CNCE to collect and analyse data
to support this finding.
We note, however, that the investigation neither developed
nor analysed data on import prices, and that Argentina informed the Panel that
references in the final determination to “cheap imports” had to do with
underinvoicing rather than underselling (paras. 8.258-8.262).
In the absence of evidence on or an assessment of import prices, we
concluded that the CNCE did not adequately explain how it was possible for the
CNCE to infer that lower-priced imports had had an injurious effect on the
domestic industry.
VIII. Findings
A.
Factual background
8.1 This case concerns a challenge by the European Communities to provisional
and definitive safeguard measures taken by Argentina to limit imports of
footwear. The recent history of
Argentina's actions concerning footwear imports includes several measures and
developments.
8.2 On 31 December 1993, Resolution 1696/93 introduced minimum specific
duties (derechos de importación espicíficos mínimos or "DIEMs") on
certain footwear imports. This
measure originally foresaw the possibility of a single non-renewable extension
of six months. However, it was
extended several times. The last
extension took place on 7 January 1997 by Resolution 23/97.
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