(b) Response by Korea

4.708 Korea responds to the EC arguments as follows:

4.709 On 28 May 1996, Korea initiated the safeguards investigation at issue. On 11 June 1996, Korea forwarded its notification of the initiation to the Committee on Safeguards under Article 4.1(a) of the Agreement on Safeguards. ³⁵³ Consistent with the guidance issued by the Committee on Safeguards ³⁵⁴, Korea identified the following in its notice: (1) the date of initiation of the investigation (28 May 1996); (2) the dairy products subject to the investigation, as identified by their HS numbers, and (3) the reasons for initiating the investigation, including that the investigation was initiated on the basis of a petition filed under Article 33(1) of the Foreign Trade Act and that the non-confidential evidence indicated the specified increase in imports.Notably, the Agreement on Safeguards does not impose obligations regarding the scope of the reasons that are necessary to justify the initiation of a safeguards investigation.

4.710 Article 12.2 of the Agreement on Safeguards provides that notifications under Article 12.1(b) and (c) of the Agreement on Safeguards must include all pertinent information, including �evidence of serious injury or threat thereof caused by increased imports, precise description of the product involved and the proposed measure, proposed date of introduction, expected duration and timetable for progressive liberalization.� In the Technical Cooperation Handbook on Notification Requirements (the �Handbook�), the Committee on Safeguards adopted guidance for Members on how to comply with these notification requirements, although it did not define, for example, the amount of evidence that should be provided to comply with Article 12.2. ³⁵⁵ According to the Handbook, a Member should provide:

4.711 On 2 December 1996, Korea transmitted to the Committee on Safeguards its notification of a finding of serious injury caused by imports under Article 12.1(b) of the Agreement on Safeguards. ³⁵⁷ The notification referred Members to the 23 October 1996 KTC finding, the report of which was publicly available. Consistent with the guidance in the Handbook, the notification also (1) summarized the evidence of serious injury caused by increased imports (2) provided information on whether there is an absolute increase in imports or an increase in imports relative to domestic production, (3) described the products involved, and (4) informed the Committee that no final decision had been made to impose a safeguard measure and, thus, no information was available on the measure.

4.712 After receiving two requests for consultations under Article 12.3 of the Agreement on Safeguards, Korea provided a preliminary notification under Article 12.1(c) on 21 January 1997. ³⁵⁸ Although such preliminary notification was not required under Article 12, Korea considered that for prior consultations to be meaningful under Article 12.3, Members should have more information on the proposed measure. ³⁵⁹ Thus, Korea's preliminary notification under Article 12.1(c) included the information from the 2 December 1996 notification as well as information on the proposed measure. Given its preliminary nature, Korea expressly reserved the right to provide further relevant information after the final decision was made. In addition, the notification provided dates that the Korean delegation was available for consultations and stated that the final decision was expected the week of 24 February 1997, after consultations had been held.

4.713 On 4 and 5 February 1997, Korea held consultations with the European Communities, Australia, and New Zealand under Article 12.3 of the Agreement on Safeguards. These consultations facilitated an exchange of views regarding the measure based on Korea's earlier notifications and on the publicly-available OAI Report.

4.714 On 24 March 1997, Korea provided the Committee on Safeguards with its final notification under Article 12.1(c) of the Agreement on Safeguards. ³⁶⁰ Given the concerns raised by the European Communities and other Members regarding the scope of its earlier notifications, Korea, while not regarding itself as obliged to do so, expanded its discussion in its final notification on virtually every aspect of its 21 January 1997 notification.

4.715 Korea is of the view that it fully complied with its obligations under Article 12 of the Agreement on Safeguards. In fact, Korea took additional steps to ensure that Members were provided additional information to facilitate meaningful consultations.

(c) Rebuttal arguments made by the European Communities

4.716 The European Communities made the following arguments in rebuttal:

(i) Violation of Article 12.1-3 of the Agreement on Safeguards - Failure to comply with notification and consultation requirements

(a) Notification requirements

(1) Contents of the notifications

4.717 In this regard Korea alleges the consistency of its action with the "guidance issued by the "Committee on Safeguards" on the matter of notifications, notably the "Technical Cooperation Handbook on Notification Requirements" ("the Handbook"). ³⁶¹ However, by Korea's own admission, this Handbook does not define "the amount of evidence that should be provided to comply with Article 12.2 of the Agreement".

4.718 The European Communities do not accept that Korea's notification is consistent with the Handbook. In particular, the European Communities note that in Document. G/SG/1 quoted by Korea, it is mentioned, inter alia, that parties should "1. Provide evidence of serious injury or threat thereof caused by increased imports." ³⁶² As just noted, nowhere in the Handbook are the notions of "evidence", "serious injury", "causation" defined. It is therefore only by referring to Article 12 of the Agreement on Safeguards, as well as at the other provisions referred to therein, that these notions can be interpreted. In perfect consistence with this conclusion is the express disclaimer note at the opening of Document G/SG/1, reading as follows: "These formats are without prejudice to the interpretation of the relevant provisions in the Agreement on Safeguards by the competent bodies." ³⁶³ Interpretation obviously concerns the Agreement on Safeguards and will be conducted in line with the provisions thereof. The Handbook can therefore be of no guidance in deciding whether the information submitted to the Committee on Safeguards constituted "all pertinent information" within the meaning of the Article 12.2 of the Agreement on Safeguards.

(2) Timing of the notifications

4.719 The European Communities disagree with Korea's statement that Korea's Notification of 27 January 1997 ³⁶⁴ was not required under Article 12 of the Agreement on Safeguards if this is meant to imply that there is no obligation under Article 12.1(c) to notify "all pertinent information" prior to the application of a safeguard measure, with a view to, inter alia, holding consultations. This seems otherwise to contradict what Korea's statement in its First Written Submission:

4.720 What Korea has overlooked in this striking admission is that meaningful consultations can only take place if Members are provided all the necessary information, notably that required by Article 12.2 of the Agreement on Safeguards. ³⁶⁵ Therefore, the consultation objective contributes to define the timing of the notification and its content. Since consultations under Article 12.3 must cover "the information provided for under paragraph 2", including on "the proposed measure", Korea's notification under Article 12.1(b) could not have been the exclusive basis for consultations. ³⁶⁶ The European Communities would remind the Panel that Korea's 1 April Notification, which was the most comprehensive document ever provided by Korea to the Committee on Safeguards under Article 12.1(c), was forwarded 17 days after the entry into force of the safeguard measure.

(b) Consultations

4.721 The foregoing observations on the content and timing of notifications also confirm the EC claim that Korea failed to provide "adequate opportunity for prior consultations" within the meaning of Article 4.3 of the Agreement on Safeguards. In fact, in view of the insufficient content and late submission of Korea's notifications, consultations, which, by Korea's own admission, can only be meaningful if preceding the adoption of the measure, could certainly not be based on "all pertinent information" in terms of Article 12.2, and could not therefore be "meaningful" in terms of Article 12.3. The European Communities therefore conclude that their claim of a violation of Article 12.3 of the Agreement on Safeguards has not been rebutted by Korea and should be upheld by the Panel.

4.722 At the second meeting of the panel with the parties, the European Communities further advanced their arguments under Article 12, by presenting its own version of the sequence of events leading up to dispute settlement consultations.

23 October 1996:	Finding of serious injury by KTC
2 December 1996:	First notification of serious injury under Article 12.1(c) of the Agreement on Safeguards.
11 December 1996:	First request for consultations under Article 12.3 by the European Communities.
16 December 1996:	Reiteration of the first request for consultations, since the European Communities received information about a 30-day deadline running from the date of the recommendation of the imposition of safeguard measures by the KTC to the competent authorities within the Korean Government. Hence, the suggested date for the consultations of 20 December. It should be noted that Korea finally agreed to hold consultations 73 days after the finding of serious injury was made.
28 January 1997:	A set of written questions was sent by the EC Delegation in Geneva to the Korean Delegation with a view to preparing consultations under Article 12.3 of the Agreement on Safeguards. 367 The European Communities never received a written reply to those questions. Furthermore during the consultations, Korea equally failed to reply satisfactorily and simply promised to provide further information on specific issues as requested by the European Communities which, with one exception, it never did. 368
4 February 1997:	Article 12.3 consultations. During the consultations, the Korean Delegation read out prepared answers to the questions sent by the European Communities on 28 January. Korea refused to hand over the written answers to the EC Delegation.
21 February 1997:	Special meeting of the Committee on Safeguards. This meeting was requested by the European Communities based on Article 13 of the Agreement on Safeguards which relates to certain particular functions of that Committee, including general vigilance with respect to Members' actions related to safeguards. 369 As can be clearly seen from the record of that meeting, Korea did not provide any further pertinent information on that occasion.
24 March 1997:	Korea submitted the amended and extended version of the notification under Article 12.1(c). In the cover letter 370 sent by the Korean Delegation in Geneva to the EC Delegation, the notification was described as being "also intended to serve as an overall response to the questions raised by the European delegation during the bilateral consultations on this matter." Again, the European Communities note that all pertinent information must be notified prior to the adoption of a measure (i.e., in the present case, prior to 7 March 1997) with a view to allowing meaningful consultations, as set forth in Article 12.1-3.
3 September 1997:	The European Communities sent a second set of questions 371 to Korea ahead of the first round of dispute settlement consultations under Article XXII:1 of GATT on 10 September. The European Communities never received a written reply.
19 September 1997:	The European Communities sent a letter 372 restating questions asked during the first round of dispute settlement consultations under Article XXII:1 of GATT and one question posed during the consultations under Article 12.3 of the Agreement on Safeguards.
16 October 1997:	Second round of dispute settlement consultations. Korea gave its sole written response to any of the EC questions. It handed over one page showing a table contained in the OAI Report concerning the development of production of other dairy products in response to the question asked on 4 February 1997 and restated on 19 September 1997, i.e., eight months after the information was requested for the first time.

4.723 The conduct of the consultations as set out above shows that Korea can not rebut the EC claim that Korea violated its obligations under Article 4.1-3 of the Agreement on Safeguards in particular because it did not provide all pertinent information before or during the consultations under Article 12.3 of the Agreement on Safeguards, which could therefore not be "meaningful" in terms of Article 12.3.

4.724 In response to a question by the Panel ³⁷³ the European Communities further clarified their position on Article 12 notifications:

4.725 Although the absence of a notification is a clearer violation than a deficient notification, the European Communities consider that the adequacy of a notification must be verified by the Panel in the same way as any other alleged violation of the WTO Agreements. A violation of a procedural obligation can in principle give rise to the same kind of finding as a substantive violation, and that is what the European Communities are requesting in this case.

4.726 There are however important distinctions to be made between some procedural and substantive violations when it comes to implementing a Panel report. The violation of a procedural obligation which only serves an objective of transparency, will not have the same consequences as the violation of a procedural obligation which is an indispensable precondition for a measure (e.g., the obligation to conduct an investigation or to give adequate opportunity for prior consultations in order to review all pertinent information in the meaning of Article 12).

4.727 Also in response to a question of the Panel ³⁷⁴ the European Communities clarified their position on the issue of the content of the notification:

4.728 The European Communities are of the view that "all pertinent information" is an objective standard because it is defined in Article 12.3 of the Agreement on Safeguards as including "evidence of serious injury or threat thereof caused by increased imports, precise description of the products involved and the proposed measure, proposed date of introduction, expected duration and timetable for progressive liberalization." The Member proposing to apply safeguard measures may be obliged to provide further information since this list is not exclusive, but at least the items which are listed are objective standards and subject to review by the panel. Further guidance for the interpretation of the first item of this list, "evidence of serious injury or threat thereof caused by increased imports", can be found in Article 4.2(a) and (b) of the Agreement on Safeguards.

4.729 The consequence of a finding of violation is not a matter for the Panel, as the panel in the Guatemala case correctly concluded. ³⁷⁵

4.730 The Panel also requested ³⁷⁶ the European Communities to clarify their position on the documents that Korea provided the Panel at the second meeting of the Panel with the parties regarding the consultations held with Korea. ³⁷⁷ The EC answer was as follows:

4.731 The European Communities consider that the fact that the parties have provided details of the consultations under Article 4.3 to the panel means that the panel should take them into account in adjudicating this dispute and in its report in particular in reviewing whether Korea complied with Article 12.3.

(d) Rebuttal arguments made by Korea

4.732 Korea makes the following rebuttal arguments:

4.733 Korea reiterated its view that Korea's notifications were:

To continue with The Timeliness of Notifications and Consultations

³⁵³ G/SG/N/6/KOR/2 (1 July 1996).

³⁵⁴ Committee on Safeguards, Notification Under Article 12.1(a) of the Agreement on Safeguards on Initiation of an Investigation and the Reasons for It, G/SG/N/6 (7 February 1995).

³⁵⁵ WT/TC/NOTIF/SG/1 (15 October 1996).

³⁵⁶ Id.

³⁵⁷ G/SG/N/8/KOR/1 (6 December 1996). This notification was provided to the Committee on Safeguards on the same day as the KTC issued its recommendations. See, Exhibit Korea-11.

³⁵⁸ G/SG/N/10/KOR/1 (27 January 1997).

³⁵⁹ Korea notes that it could have held consultations based solely on the notification under Article 12.1(b), given that consultations under Article 12.3 must necessarily be held prior to the final decision to impose a safeguard measure notified under Article 12.1(c). After the decision to impose the measure is made and final notification is provided under Article 12.1(c), consultations would not be meaningful because the consultations could not result in any consideration of Member's concerns prior to the final decision.

³⁶⁰ See, G/SG/N/10/KOR/1/Suppl.1 (1 April 1997)..

³⁶¹ See, WTO Docs. WT/TC/NOTIF/SG/1, 15 October 1996 and G/SG/1, 1 July 1996; Korea's First Submission, para 142.

³⁶² See, WTO Doc. G/SG/1, Section II, item1.

³⁶³ See, WTO Doc. G/SG/1, p. 1. The EC would further recall that in EC - Bananas the Appellate Body made clear that a document not "endorsed by a formal decision of the CONTRACTING PARTIES" "cannot be considered as an authoritative interpretation" (see EC - Bananas, WT/DS27/AB/R, 9 September 1997, para 200). The EC considers that the Appellate Body's ruling in respect of GATT 1947 would apply in the present case mutatis mutandis, that is, consistently with Article IX:2 of the Agreement establishing the World Trade Organization, pursuant to which: "The Ministerial Conference and the General Council shall have the exclusive authority to adopt interpretations of this Agreement and of a Multilateral Trade Agreement in Annex 1."

³⁶⁴ See, WTO Doc. G/SG/N/10/KOR/1, 27 January 1997 (Exhibit EC-5).

³⁶⁵ The EC also points out in this connection that the Notification Handbook does not address the issue of the timing of notifications, except by repeating that they should be made "immediately" and by regulating the relationship between the one under Article 12.1(b) and the one under Article 12.1(c) of the Agreement on Safeguards. Therefore, in this respect too Korea, by referring to the Handbook, has certainly not rebutted the EC's claim of violation of the requirement to "immediately notify", which is laid down in Article 12.1 in respect of all three notifications mentioned.

³⁶⁶ See, WTO Doc. G/SG/N/8/KOR/1, 6 December 1996 (Exhibit EC-2), para 4, which reads: "Information on measure. The Korean Trade commission has not made a decision to apply a safeguard measure yet. Therefore, there is no information on such a measure at this time. The KTC will recommend to the relevant Minister an appropriate remedial measure within 45 days of the injury determination."

³⁶⁷ See, Exhibit EC-27.

³⁶⁸ See, Exhibit Annex EC 28.

³⁶⁹ See, WTO Doc. G/SG/M/8 10 June 1997, Minutes of the Special Meeting held on 21 February 1997, para 2.

³⁷⁰ See, Exhibit EC-29.

³⁷¹ See, Exhibit EC-30.

³⁷² See, Exhibit EC-31.

³⁷³ The Panel recalls that the question was: "With regard to Article 12.1 and 12.2, do the parties believe that a distinction should be drawn between a complete or a deficient notification, or between the existence or the absence of such notification? What should the consequences be of the absence or the incompleteness of the notification with regard to the safeguard measure itself?"

³⁷⁴ The Panel recalls that the question was: "Is the concept of 'all pertinent information' an objective or subjective standard? Please comment on how your answer should affect the Panel's conclusion with regard to the consequences of such a standard not being met?"

³⁷⁵ See, Panel Report in Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico, 19 June 1998, WT/DS60/R, para 8.3.

³⁷⁶ The panel recalls that the question was: "What judicial notice should the Panel now take of the consultations?"

³⁷⁷ See paragraph 12.751.