World Trade

Organization

Argentina - Safeguard Measures on Imports of Footwear 

5.37 According to Argentina, the fact that the term "unforeseen developments" does not appear in the text of the Agreement on Safeguards can only be taken as a conscious and deliberate removal of a standard set by Article XIX of the GATT.

5.38 Argentina points out that the actual meaning of the term "unforeseen developments" was ambiguous and subjective (to what extent is an event unforeseen?). For example, in the "Hatters' fur" case the United States considered the change in fashion for women's hats, a highly subjective and cyclical development, to be an "unforeseen development". In this case, the Panel stated that:

"The term 'unforeseen development' should be interpreted to mean developments occurring after the negotiation of the relevant tariff concession which it would not be reasonable to expect that the negotiators of the country making the concession could and should have foreseen at the time when the concession was negotiated."[67]

5.39 Argentina submits that what it is "reasonable" to expect at a time when a concession is being negotiated continues to be an ambiguous and subjective concept. Consequently, Argentina reasons, under the General Interpretative Note to Annex 1A, the Agreement on Safeguards must prevail over Article XIX in not requiring compliance with a condition provided for under Article XIX but not included in the Agreement on Safeguards.

5.40 In the alternative, on the basis of the criterion established by the Working Party and mentioned above, Argentina argues that even if this requirement is still considered enforceable as a condition for applying a safeguard measure (a hypothesis which Argentina does not accept), it would be difficult to imagine that the Argentine authorities could have predicted in 1991, when it unilaterally opened up its economy, an increase in imports of anywhere near 157 per cent.

5.41 In response to a request from the Panel that Argentina comment on whether it viewed the concepts of "conflict" (to which Argentina referred in its first written submission) and "difference" (to which Argentina referred in its oral statement at the first substantive Panel meeting) as synonymous and to specify the way in which there exists a "conflict" (defined as the case of two mutually exclusive or contradictory obligations in the sense that one obligation cannot be met without violating the other) between the "unforeseen developments" condition of Article XIX and the conditions provided for in Article 2 and other articles of the Agreement on Safeguards, Argentina stated that with respect to the validity of the "unforeseen developments" requirement of Article XIX, there is a conflict between the provisions of that Article and the Agreement on Safeguards. Argentina states that the reference by Argentina to a "difference" in its oral submission should simply be understood as a reference to a conflict of provisions which always implies a difference between them (there is a "genus to species" relationship between the concept of "difference" between provisions and the concept of "conflict" between provisions, the former being general and the latter specific.

5.42 Argentina asserts that the Agreement on Safeguards was developed to interpret Article XIX and, as stipulated in its preamble, it recognises the need to clarify and reinforce Article XIX as well as the importance of structural adjustment. Argentina considers that there is a conflict of provisions in this case, since the Article XIX "unforeseen circumstances" requirement has not been taken up in the Safeguards Agreement in spite of the fact that it had painstakingly repeated the other requirements of Article XIX.1(a). This requirement cannot be fulfilled, and not fulfilled, at the same time. The absence of any mention of this requirement in Article 2 of the AS is evidence of the fact that the "unforeseen circumstances" requirement no longer applies with respect to the application of a safeguard measure.

5.43 Moreover, according to Argentina, Article 11.1(a) of the AS specifically establishes that action under Article XIX of the GATT must conform with "the provisions of that Article applied in accordance with this Agreement" (referring to the AS) (emphasis added by Argentina). This last reference makes it clear that Article XIX has been subsumed into the Agreement on Safeguards to the extent that it conforms with that Agreement.

5.44 Argentina does not agree that the concept of conflict defined as the case of two mutually exclusive or contradictory obligations in the sense that one obligation cannot be met without violating the other can be applied to this case. This criterion was raised in paragraph 65 of the Report of the Appellate Body in Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico in connection with the effort to establish whether there was a discrepancy between the rules of procedure contained in the DSU and in Article 17 of the Anti-Dumping Agreement.

5.45 Argentina submits that this definition of "conflict" of provisions is not applicable in the case of a conflict between a provision which interprets another provision. In such cases, a conflict cannot be considered to exist only when compliance with one provision implies violation of the other, but must be understood to exist also if the interpretative provision includes or excludes a requirement or condition established in the interpreted provision.

5.46 According to Argentina, in the case at point, where the AS excludes a requirement established in Article XIX it is wrong to consider that there is no conflict simply because the requirements of Article XIX could be cumulated with Article 2 of the AS. If the AS, whose intention, as we have mentioned, was to interpret and clarify Article XIX, did not include in its provisions the "unforeseen development" requirement, it is clear that the negotiators had the intention of leaving it aside as from the entry into force of the interpretative provision. Article XIX and Article 2 of the AS are not complementary provisions as in the Guatemala - Anti-Dumping Investigation case, - indeed, there is a qualitative difference when we are dealing with the relationship between an "interpretative" provision and an "interpreted" provision. The omission of this requirement in the AS conflicts with the inclusion of the requirement in Article XIX, and in accordance with the General Interpretative Note to Annex 1A, the AS must prevail.

5.47 For Argentina, it should also be borne in mind that in fact, the CNCE found in its final determination that there had been unforeseen circumstances when it states that "The pressure exercised by imports was unforeseen in its rapid progress in the market during a period in which the country's economy was beginning to suffer from macroeconomic difficulties."[68] Imports achieved and preserved a considerable share of the domestic market, and even in 1995, they continued to preserve their share in a rapidly declining market.[69] The rapid growth in imports at the beginning of the period was also unforeseen, and particularly significant since the rate of growth was much higher than that of overall imports between 1991 and 1993.[70]

5.48 Finally, in Argentina’s view, the significance of the different impacts of imports on the footwear industry could not have been foreseen. The comparative GDP data clearly shows that the footwear industry was affected disproportionately in relation to the manufacturing sector as a whole.[71]

5.49 The European Communities observes that Argentina dismisses the European Communities' claim that it had not demonstrated the existence of any "unforeseen developments", as required by Article XIX:1(a) GATT, and that, according to Argentina this issue should be decided by invoking the General Interpretative Note to Annex 1A, which sets outs the appropriate steps to take in case of a "conflict" between a provision of GATT and a provision of another Agreement in Annex 1A. Argentina claims that in the present case such "conflict" exists, since Article XIX contains a condition which is not contained in the Agreement on Safeguards[72].

5.50 The European Communities takes issue with Argentina's position. Even if the three conditions for a "conflict" mentioned by Argentina[73] would exist in the framework of the WTO[74], there are in the present case no two mutually exclusive or contradictory obligations, in the sense that one obligation cannot be met without violating the other. The latter criterion was developed in 'Indonesia - Cars'[75] and 'Guatemala - Cement'[76] and is equally applicable as a criterion in the present case. The European Communities sees no reason why a WTO Member would not be able to respect on the one hand the obligations set out in the Agreement on Safeguards while at the same time complying with the "unforeseen developments" requirement set out in Article XIX:1(a) GATT.

5.51 The European Communities comments on Argentina's reply to questioning of the Panel[77], noting that Argentina made a number of statements with which the European Communities takes issue. The European Communities observes that Argentina claims that the above-mentioned definition of "conflict" does not apply in the present case, which concerns a conflict between a provision and a provision which interprets that provision. Argentina states that "a conflict cannot be considered to exist only when compliance with one provision implies violation of the other, but must be understood to exist also if the interpretative provision includes or excludes a requirement or condition established in the interpreted provision." (emphasis added).

5.52 The European Communities submits that this new criterion by Argentina adds nothing to the above-mentioned traditional criterion, which Argentina accepts. First, if the interpretative provision (the Agreement on Safeguards) were to include a requirement or condition established in the interpreted provision (Article XIX GATT), there can by definition be no "conflict". For example, the requirement that the domestic industry must suffer "serious injury" is a condition established in Article XIX:1(a) GATT and was included and further defined, and in that sense "subsumed" (in the words of the US) in Article 2 and 4 of the Agreement on Safeguards. If a WTO Member complies with the "serious injury" requirement in the Agreement on Safeguards, it automatically complies with the same requirement set out in Article XIX GATT and therefore no conflict exists. Second, if the interpretative provision (the Agreement on Safeguards) were to exclude a requirement or condition established in the interpreted provision (Article XIX GATT), there would be no difference with the traditional "conflict" situation: in that case there would be an obligation in one provision which cannot be met without violating the other. Therefore, Argentina's argumentation does not add anything to the traditional criterion developed in 'Indonesia - Cars' and 'Guatemala - Cement' and thus must be disregarded.

5.53 Moreover, the European Communities asserts, Argentina bases its conclusion on the wrongful assumption that the Agreement on Safeguards interprets Article XIX GATT in a full and comprehensive way[78]. This is not correct. [79] The Agreement on Safeguards establishes "rules" for the application of safeguard measures. However, it does not establish "the rules" or "the only rules". The fact that some of the conditions of Article XIX, such as "as a result of unforeseen developments", are not repeated in the Agreement on Safeguards cannot have as a consequence that they are automatically made invalid. [80]

5.54 The European Communities maintains that the wrongful assumption by Argentina leads it to unsubstantiated conclusions in its reply to the Panel. For example, Argentina claims[81] that it is somehow "clear" that the negotiators had the intention of leaving the "unforeseen developments" requirement aside with the entry into force of the Agreement on Safeguards. However, Argentina fails to provide any evidence for this claim. If Argentina were to be allowed to ignore certain legal requirements which are included in the text of an International Agreement without demonstrating, on the basis of any evidence, that there was a common intention of the parties to delete the requirement from the text, this would seriously jeopardise the security and predictability of the multilateral trading system.[82]

5.55 The European Communities cannot accept Argentina's alternative argument where Argentina claims to have fulfilled the "unforeseen developments" requirement by stating that "it would be difficult to imagine that the Argentine authorities could have predicted in 1991, when it unilaterally opened up its economy, an increase in imports of anywhere near 157 per cent." The European Communities asserts that according to the text of Article XIX:1(a) GATT, the increase of imports must occur "as a result of unforeseen developments". In other words, a certain development, unknown at the time that the tariff concession was made, must have occurred, and as a result of this development imports must have increased. Therefore, by definition, the increase in imports itself can never be the development as a result of which imports increased. Such circular interpretation would effectively empty the "unforeseen developments" requirement of its content, which according to the Appellate Body[83] is not allowed, since "an interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility".

5.56 The European Communities notes that Argentina has argued that the magnitude of the increase in imports could not have been foreseen. The European Communities notes that this argument does not stand, basing itself on the text of Article XIX:1(a) GATT, which reads "If, as a result of unforeseen developments […] any product is being imported […] in such increased quantities […]" (emphasis added).

5.57 Thus, according to the European Communities, the sequence of events is clear: first, an unforeseen development is to take place; second, as a result of this unforeseen development an increase in imports occurs. According to the European Communities, this logical sequence, based on the text of Article XIX, makes clear that Argentina's argument is circular: an increase in imports can (by definition) not be the result of an increase in imports. In fact, Argentina's argument would result in reducing the term "unforeseen developments" to redundancy or inutility.

5.58 Indeed, according to the European Communities, unforeseen developments is at the beginning of the continuum of events that may justify safeguard measures. This starts in fact with trade liberalisation which runs into unforeseen developments which causes an increase of imports in the presence of such conditions (notably price) that serious injury can be caused, starting with loss of sales, than loss of production, falling capacity utilisation leading to losses and finally unemployment.

5.59 The European Communities argues that, in the light of this explanation, the continuing need for unforeseen developments is also clear from Article I of the Safeguards agreement. This provision states that it provides "rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX GATT." In other words, according to the European Communities, the Agreement on Safeguards lays down conditions and explains how to apply safeguard measures but Article XIX GATT defines what they are. Therefore, the European Communities argues that, in the present case, not only was there no increase in imports, but the preliminary requirement of unforeseen developments which is needed to give rise to such increase was entirely missing since the imports of footwear was being carefully controlled by the application of Argentina's system of DIEMs.

5.60 The European Communities does not understand Argentina's statement[84] that "the problem of the concept of 'unforeseen developments' is that it renders the Agreement on Safeguards practically irrelevant, depriving WTO Members of a useful tool which plays an essential role as a form of reinsurance in dealing with import growth situations." The European Communities notes that Argentina adds[85] that "[t]his is contrary to the principle of encouraging trade liberalisation."

5.61 The European Communities is unable to see how the "unforeseen development" requirement, which has been present in the text of the GATT since 1947, could suddenly have such a sweeping result and render the entire safeguard regime unworkable. On the contrary, Article XIX and the Agreement on Safeguards strongly encourage trade liberalisation, by reassuring those WTO Members which engage in tariff negotiations that, if imports were to increase to such an extent that the domestic industry were to suffer "serious injury", temporary relief is available which would allow for adjustment. However, in order to prevent misuse of the safeguards regime, a number of reasonable conditions (set out in Article XIX and the Agreement on Safeguards) will need to be fulfilled before the regime can be invoked. The European Communities does not require anything more from Argentina than mere compliance with a condition which has already existed for over 50 years. According to the European Communities, such request is fully justified and does not put in jeopardy the "principle of encouraging trade liberalisation".

5.62 In response to questioning by the Panel about how the European Communities would prove or demonstrate that a given development was "unforeseen" in the sense of Article XIX:1, theEuropean Communities stated that it concurs with the interpretation of the term 'as a result of unforeseen developments' which is given by the members of the Working Party on "Withdrawal by the United States of a Tariff Concession under Article XIX of the General Agreement". These members agreed

"that the term 'unforeseen development' should be interpreted to mean developments occurring after the negotiation of the relevant tariff concession which it would not be reasonable to expect that the negotiators of the country making the concession could and should have foreseen at the time when the concession was negotiated"

Therefore, the European Communities submits that the requirement is fulfilled if: 1. a development occurred after the negotiation of the relevant tariff concession; and 2.it was not reasonable to expect that negotiators -- at the time of the tariff concession -- could and should have foreseen that the that development was to occur. The European Communities noted that the 'unforeseen development' must be the cause of the increased imports, which in turn causes 'serious injury'.[86]

5.63 Argentina takes issue with the remarks made by the European Communities concerning the general trade liberalisation process in Argentina, and the MERCOSUR integration process in particular, a policy which the European Communities describes as deliberate and whose results Argentina should have foreseen.

5.64 Argentina submits that if the European Communities' interpretation were followed, this would contradict the preambles to the Agreement Establishing the World Trade Organization and to the GATT, on which the European Communities bases its arguments. Indeed, countries grant each other mutual and reciprocal benefits designed to reduce tariffs and other barriers to trade. These benefits are granted in the framework of the multilateral disciplines in force, which include the safeguard measure as a tool for alleviating situations where the results of these concessions in fact go further than could reasonably be foreseen. In other words, Argentina could have foreseen and calculated an increase in imports (for example, up to a level of about 11 million pairs), but could never have foreseen an increase of a magnitude of 21.7million pairs when it granted the "mutual benefit on the basis of reciprocity", since an increase of that magnitude would have implied the liquidation, pure and simple, of the sector.

5.65 In other words, Argentina argues, leaving aside the different legal views defended before this Panel by the United States and Argentina on the one hand, and by the European Communities on the other, the problem of the concept of "unforeseen developments" is that it renders the Agreement on Safeguards itself practically irrelevant, depriving WTO Members of a useful tool which plays an essential role as a form of reinsurance in dealing with import growth situations. For Argentina, precisely the problem of definition of the "unforeseen" concept is the reason that, after fifty years, there is practically no example of applied safeguard measures. This is contrary to the principle of encouraging trade liberalisation in accordance with the objectives contained in the preambles to the Agreement Establishing the WTO and to the GATT.

5.66 Argentina further submits that, as regards the EC assertion that "by definition, the increase in imports itself can never be the development as a result of which imports increase"[87], even if this were considered valid, and in Argentina's view it is not, Article XIX does not require the identification of the unforeseen circumstances as such, but only "unforeseen developments", the clear manifestation of which, in this case, was the evaluation by the Argentine authorities at the time of liberalisation of tariffs in the sector which yielded unforeseen results in that the magnitude of the flow of imports resulting from the liberalisation was considerably greater than expected.

B. Interpretation and Application of Article 2.1 of the Agreement on Safeguards – "The Mercosur Question" 

1. Argument of the European Communities

5.67 The European Communities takes issue with the fact that the Argentine authorities have conducted an analysis on the basis of figures for all imports -- from MERCOSUR countries and from non-MERCOSUR counties -- while applying a safeguard measure only with respect to non-MERCOSUR countries. The European Communities fails to understand how logically, throughout the analysis of injury and causation, imports from MERCOSUR countries can be included in the figures, while the subsequent safeguard measure excludes MERCOSUR countries from its application.[88]

5.68 The European Communities clarifies that it does not challenge -- as such -- the exclusion of MERCOSUR imports of footwear from the scope of the safeguard measure imposed. However, such exclusion should necessarily entail the exclusion of MERCOSUR imports from the "increased imports", "serious injury" and "causality" analyses, as required by Article 2.1 of the Agreement on Safeguards, which Argentina did not do. This error is of particular importance, because MERCOSUR imports account for the largest percentage of imports in Argentina (Argentine data for 1996[89] show that that 7.5 million pairs were imported from MERCOSUR countries, while only 5.97 million pairs were imported from non-MERCOSUR countries, i.e. a total of 13.47 million pairs).[90] Furthermore, the European Communities notes the fact that since 1993[91] imports from non-MERCOSUR countries have actually decreased, not increased. Safeguard measures should only be allowed in exceptional circumstances, and as emergency measures, so as to allow the domestic industry relief from sharply increased imports. In the view of the European Communities, it is therefore wholly inappropriate to impose a safeguard measure if imports showed a declining trend.

5.69 The European Communities alleges that Argentina wrongly interprets the condition of "increased imports" in Article 2.1 of the Agreement on Safeguards: it has made its determinations and findings on the basis of figures for all imports – from MERCOSUR countries and from non-MERCOSUR countries – while applying a safeguard measure only with respect to non-MERCOSUR countries. The European Communities states that MERCOSUR imports should have been excluded from Argentina's increased imports, injury and causality determinations According to the European Communities, Argentina, given that it is precluded from applying safeguard measures to other MERCOSUR members, violated Article 2.1 of the Agreement on Safeguards by including imports from MERCOSUR countries in its determinations. The Agreement on Safeguards, like ArticleXIX:1(a) of GATT, sets out a number of conditions which need to be complied with before a WTO Member can take a safeguard measure. The condition of "increased imports", which is not further defined in the Agreement, should, according the European Communities, be interpreted according to the scope of the safeguard measure to be taken. For the European Communities, the question to be answered here is the following: if from the outset it is known that no measure will be applied to other MERCOSUR countries, should or should not their imports be included in the determinations concerning the scope of the measure.

5.70 The European Communities states as a preliminary matter, first that although it believes the above-mentioned issue is an important principle on which the Panel should rule, the Panel should also note that this matter is not determinative for the final outcome of this case. Indeed, whether the statistics of total imports (including imports from MERCOSUR countries) are considered or whether exclusively statistics of extra-zone imports are considered, in both cases did imports not increase. Therefore, in both cases did Argentina not comply with a key requirement of Article 2.1 of the Agreement on Safeguards and was thus not allowed to impose safeguard measures.

5.71 Second, the European Communities does not question the right of a member of a customs union to exclude other members of that customs union from the scope of a safeguard measure. What the European Communities objects to (a concern fully shared by the United States[92], is "Argentina's use of the MERCOSUR imports for its increased-imports analysis when there was no possibility that those imports could be included in any safeguard action, even where those imports are demonstrably the cause of the injury suffered by the domestic industry." In the view of the European Communities, safeguard measures do not as such affect the establishment and the nature of a customs union or free-trade area. According to the European Communities, Article XXIV GATT permits the members of a customs union or free trade area to decide whether, when applying a safeguard measure pursuant to Article XIX GATT and the Agreement on Safeguards, to exempt the other members of the customs union or free trade area from the measure. This option, however, has to be carried out in a consistent manner: for example, if -- as is the case in the present dispute -- a member of a customs union has the obligation not to impose safeguard measures on the other members of the customs union, it should necessarily exclude intra-zone imports from the determinations on which the application of safeguard measures is based. The European Communities refers the Panel to the Treaty of Asuncion (L/7370/Add.1) which contains the decision concerning the non-application of safeguards within the customs union as of 31 December 1994.

5.72 In reaction to Argentina's reply to questions by the Panel (para. ), the European Communities submits that Argentina is permitted on the basis of Article XXIV GATT to exclude MERCOSUR countries from the application of a safeguard measure. Argentina therefore was equally permitted to conclude an agreement with Paraguay, Brazil and Uruguay, that safeguard measures would not apply to MERCOSUR countries. The European Communities disagrees however with Argentina that Article 2.1 Agreement on Safeguards (and its footnote) should be interpreted as to allow for a "methodology" whereby MERCOSUR imports would be included in a determination of "increased imports" while not applying measures to those countries.

5.73 According to the European Communities, Argentina has, in answering a Panel question, attempted to explain why it believed it was "reasonable" to consider intra-zone imports in the present case[93]. It had said in its notification that such imports (in spite of different duties applied to MERCOSUR members and non-MERCOSUR members) should be considered " for injury analysis purposes since in the absence of DIEM or protective measures there would be at least an equal flow of imports from the world into the Argentine Republic”. The European Communities notes that Argentina’s response to the Panel also indicates that (para. ):

"Although import duties are different for trade within MERCOSUR than for imports from outside MERCOSUR, this difference does not alter the established fact that the levels of imports of all origins were increasing and both would have continued to increase, as happened with imports from MERCOSUR, if the specific duties had not been imposed. The logical conclusion was that the increases would have continued in the absence of the DIEMs, and the increase in imports from MERCOSUR was simply a further confirmation of this conclusion." (emphasis added by the European Communities).

5.74 The European Communities maintains that it is clear from this statement that Argentina based its measure not on the actual and present existence of an increase in imports, but on a hypothetical increase in imports, which is not allowed under Article 2.1 of the Agreement on Safeguards. In addition, no explanation is given by Argentina for the calculation that there would be "at least an equal flow of imports" from the rest of the world, in spite of the differences in tariff levels for imports from MERCOSUR countries and from non-MERCOSUR countries[94]. The European Communities agrees with the United States[95] that "the effect of Argentina's action is to penalise producers from third countries for the [alleged] injurious imports emanating from MERCOSUR."

5.75 The European Communities objects to a statement made by Argentina on page 23 of its notification of its finding of injury (Exh. EC-16), where Argentina explains why it believed that it was "reasonable" to consider intra-zone imports in the present case:

The Commission decided to investigate total imports, differentiating between those originating in Mercosur and those from the rest of the world. As has been pointed out, a good deal of the former are the result of imperfect substitution of imports from the rest of the world consequent upon the diversion of trade created by the DIEM. Therefore, it is reasonable to consider them on equal terms for injury analysis purposes since in the absence of DIEM or protective measures there would be at least an equal flow of imports from the rest of the world into the Argentina Republic.

In the view of the European Communities, this statement is a de facto acknowledgement by Argentina that imports from non-Mercosur countries should normally have been excluded from the increased imports determination if no safeguard measure would apply to them in the future.

5.76 In other words, according to the European Communities, since the minimum specific duties had been in place for some years and had reduced imports from third countries, Argentina estimated that those third-country imports would have increased by roughly the number of current imports from MERCOSUR countries. The European Communities strongly objects to this sort of calculation as a justification. For the European Communities, the quoted statement makes clear that Argentina based its measure not on an actual increase of imports but on a hypothetical increase, which Argentina conveniently equalled to imports from MERCOSUR countries. The European Communities submits that, in addition to having no legal grounds to apply such a calculation, there is absolutely no basis to assume that current MERCOSUR imports represent even a crude estimate of the increase in imports which would occur if the minimum specific duties were removed.

2. Argument of Argentina 

(a) Introduction

5.77 Regarding the EC statements about imports from MERCOSUR countries, Argentina asserts that the European Communities has obfuscated the true problem in this particular case, manipulating its arguments as though Argentina was obliged to exclude MERCOSUR imports from the analysis of injury if MERCOSUR was subsequently excluded from application of the measure. Argentina contends that, in order to win its argument, the European Communities must show that such an obligation is required under the Agreement on Safeguards. According to Argentina, the European Communities deflects attention from an essential point, namely the lack of any specific provision in the Agreement on Safeguards providing that, in the case of customs unions, if members of the union are to be excluded from a measure, the investigation must be conducted according to the methodology set out by the European Communities.

5.78 Argentina submits that if a WTO agreement is specifically recognised by the Members as having more than one possible interpretation, and, in the absence of a single interpretation, a Member adopts a measure within the scope allowed by the text, the measure must be considered to be in conformity with the agreement. The very nature of public international law supports this statement (in public international law delegation of sovereignty cannot be assumed).

5.79 Argentina submits that the footnote to Article 2.1 of the Agreement on Safeguards is the result of the maximum consensus achieved by the negotiators during the Uruguay Round. The replies by the United States to the Panel in this connection mention texts and alternatives discussed during the negotiation on which, in the end, no agreement was ever reached. The result of this situation is the footnote to Article 2.1 of the Agreement on Safeguards, which confirms the agreement on the disagreement concerning the relationship between Article XIX and Article XXIV of the GATT.

5.80 Argentina asserts that, as provided in the DSU, a panel may not "add to or diminish the rights …" under the Agreement on Safeguards. Consequently, the Panel cannot impose a single "methodology", as proposed by the European Communities, when there is no agreement among the Members on a definitive interpretation of the rights and obligations laid down in both Articles (relationship between Articles XIX and XXIV of the GATT, as stated in footnote 1 to Article2.1 of the Agreement on Safeguards).