(i) The Timeliness of Notifications and Consultations

4.734 The notifications were timely in that they: Were provided to the Committee on Safeguards as soon as practically possible after the conclusion of the procedural step that triggered such notification; and permitted third parties sufficient time to prepare for and engage in meaningful prior consultations.

4.735 Korea notes that as to timeliness:

(ii) The Adequacy of Notification and Consultations

4.736 Korea's notifications were adequate in that they:

• evidence of serious injury or threat thereof caused by increased imports;
• a precise description of the product involved;
• the proposed measure;
• the proposed date of introduction;
• the expected duration;
• a timetable for progressive liberalization; and

4.737 Regarding the adequacy of information provided, Korea suggests that notifications under Article 12 serve a different function from the publication of information relating to the investigation by the Korean authority under Articles 3.1 and 4.2(c) of the Agreement on Safeguards, which state respectively:

Notification is intended to provide the Committee on Safeguards with information which is to be disseminated to Members to facilitate meaningful prior consultations under Article 12.3 and, where appropriate, consultations under Article XXII GATT. This function is implied both by the structure of Article 12, which includes both notification and consultation, and by the final sentence of Article 12.2 which provides that "The Council for Trade in Goods or the Committee on Safeguards may request such additional information as they may consider necessary from the Member proposing to apply or extend the measure." Clearly, if the purpose of Article 12 were to replicate the exacting standards of Article 3 and 4.2(c), the final sentence of Article 12.2 would be redundant;

4.738 However, Korea does not view the notification procedure as a replacement for a third party Member's responsibility to be vigilant in international trade matters.Once a third party Member has been notified of the simple fact of the initiation of an investigation (and, where applicable, each of the subsequent stages), it must bear some responsibility for monitoring developments and for protecting its international law rights.

4.739 Indeed, Korea notes that the European Communities were extremely vigilant in this respect in that:

4.740 Korea is of the view that "all pertinent information" can only reasonably be interpreted as meaning all information required by Article 12.2 available at the time of the specific notification, that is, "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". "All pertinent information" does not and cannot, as the European Communities imply, mean all information and analysis produced during the investigation by the Korean authorities.In any thorough investigation, this information and analysis will run to thousands of pages and will be summarized and reported during the course of the national proceedings, as required by Article 3.1 of the Agreement on Safeguards, which again Korea notes the European Communities have conspicuously failed to use as a basis for any claims.

4.741 The requirement to provide "evidence of serious injury or threat thereof caused by increased imports" does not imply that the notifying party has to: provide further analysis, whether detailed or otherwise, of any evidence provided; or provide any separate analysis of causation ³⁸⁹;

4.742 In Korea's view, the Committee on Safeguards and the WTO Secretariat acknowledge that certain legal systems may draw a distinction between "making a finding" (triggering a notification under Article 12.1(b)) and "taking a decision" (triggering a notification under Article 12.1(c)). ³⁹⁰ Thus, in making a notification under both of these provisions, some information may not be available.In the case of Korea, it made a good faith attempt to provide relevant information that would assist prior consultations.

4.743 Finally, Korea notes that the notifications and prior consultations permitted the parties to reach a settlement ³⁹¹.The European Communities in their Oral Statement argue that no binding settlement was reached between the parties.However, the European Communities cannot deny that an exchange of proposals leading to a settlement was made.If the notifications and prior consultations were inadequate as the European Communities suggest, no such proposal could have been made at all.

(iii) Conclusion

4.744 Korea takes its obligations under Articles 3.3 and 3.7 of the Understanding on Dispute Settlement to reach a "mutually acceptable" solution very seriously.It reiterates that it acted in good faith during all consultations and is pleased that the European Communities acknowledged this in their comments at the Oral Hearing.Korea also reiterates that it unilaterally increased the amount of its quota as part of its attempt to settle this dispute. However, Korea objects to the EC argument that Korea's notification and consultations were inadequate when the real blame lies in the sectional interests of its Member States.

4.745 At the second meeting of the panel with the parties, Korea further advanced its defence on the EC claims under Article 12 as follows:

4.746 Notification and consultations are intended to provide the Committee on Safeguards with information that is to be disseminated to Members to facilitate meaningful prior consultations under Article 12.3, and where appropriate, consultations under Article XXII GATT 1994. Korea does not view its obligations under Article 12 as a complete replacement for the duty of its trading partners, including the European Communities, to be vigilant in international commercial matters, and to monitor the activities of its trading partners. Korea notes that the European Communities and certain other WTO Members were involved in every stage of the Korean investigation leading to the imposition of the safeguard measure. This involvement demonstrates both adequacy of published and publicly available information, and openness of the investigation procedure.

4.747 The European Communities addressed a regular ³⁹² and special meeting ³⁹³ of the Committee on Safeguards. While such meetings are not a replacement for the dispute settlement procedure, it is clear that although the European Communities had a full and fair opportunity to air their grievances, the Chairman of the Committee took note of the statements made, but made no recommendations and requested no further action.

4.748 Korea undertook extensive consultations with the European Communities, New Zealand and Australia prior to imposition of the safeguard measure. This process included answering very detailed questions on Korea's investigation and on the process which would eventually lead to the imposition of the safeguard measure.

4.749 Each notification provided all the information available at the time of submission, and is consistent with the pro forma drafted by a Working Group of the Committee, agreed by the Committee on Safeguards in May 1995, and provided to all Members in a Handbook prepared by the Secretariat. Korea cannot accept the EC argument that "the Handbook can therefore be of no guidance in deciding whether the information submitted to the Committee on Safeguards constituted 'all pertinent information.'" If the European Communities felt that the formats were inadequate, and could not provide guidance to Members, it should have made these points at the time of their adoption by the Committee on Safeguards rather than seeking to raise such objections when it suits its arguments.

4.750 Korea cannot accept as the European Communities appear to imply that "all pertinent information" means all information and analysis produced during the investigation by competent authorities. This information and analysis is to be found within the documents produced in accordance with Articles 3 and 4.2(c), which the European Communities have chosen not to challenge.

4.751 The EC argument that no binding settlement of this case was reached wholly misses the point of Korea's comments: clearly, the notification and prior consultations were sufficiently adequate to permit settlement.The fact that this could not be finalized by the European Communities, as a result of their internal procedures, is irrelevant.If the notifications and prior consultations were inadequate, as the European Communities suggest, no proposal to its Member States would or could have been made at all; Korea, mindful of the confidential nature of these consultations, had not provided the Panel with proces verbal containing the terms of settlement and all correspondence between the European Communities and Korea on this matter.Given the EC challenge to Korea to prove that a settlement was almost concluded, Korea provided the Panel with the following documents: ³⁹⁴

• the various versions of the exchanged proces verbal including the final settlement; and
• the relevant correspondence accompanying these documents.

4.752 As the third sentence of Article 3.7 of the DSU unequivocally states "a solution mutually acceptable to the parties to the dispute and consistent with the covered agreements is clearly to be preferred." It was pursuant to this Article of the DSU that Korea entered into settlement negotiations with the European Communities with a view to working out a mutually satisfactory solution.It was the European Communities, and not Korea, that breached the outcome of these good faith negotiations by failing to confirm this settlement with its Member States.

4.753 In response to a question of the Panel ³⁹⁵ Korea further clarified its position on Article 12 notifications:

4.754 Korea is very clear that the complete absence of a notification must be distinguished from a notification.Further, there is a distinction between a complete and incomplete notification. In Korea's view, the incompleteness of the notification cannot affect the validity of the underlying safeguard measure.

4.755 The European Communities suggested that a procedural violation, however insignificant or immaterial, could call in question the very existence of the safeguard measure.Further, Korea also understood the European Communities to be implying that a procedural violation of Article 12 could in some way also amount to a substantive violation.

4.756 Korea's view is that a procedural violation of Article 12 cannot be a substantive violation.

4.757 Korea further notes that whether or not the safeguard had been implemented did not appear to alter the issue of whether or how a deficient notification could be remedied.Korea stated that should a Member be held by a panel to violate Article 12, then as is set out in Article 19.1 of the DSU, and as is normally the case, the Member in breach should be requested to bring its measures into conformity with the agreement under consideration.In a case such as this, the question has to be asked as to exactly how a Member could bring its notification into conformity.If the Member has imposed its safeguard measure, then entry into further (meaningful) consultations would not be pointless, but could facilitate a revision in that safeguard measure (for example an increase in quota, or decrease in a tariff).If the safeguard measure was otherwise wholly in conformity with the Agreement on Safeguards, it would then be inappropriate for a Panel to suggest that a Member should be required to withdraw that safeguard.

4.758 Also in response to a question by the Panel ³⁹⁶ Korea clarified its position on the issue of the content of the notification:

4.759 Korea is of the view that "all pertinent information" should be and is based on an objective standard, that of the format.These replicate the structure and content of Article 12.2.

4.760 However, the European Communities appear to want a decision regarding the issue of what is the precise content of the term "all pertinent information".Korea suggests that the precise nature of "all pertinent information" will vary from case to case.

4.761 The Panel also requested ³⁹⁷ Korea to clarify its position on the documents that it had provided the Panel regarding the consultations held with the European Communities. Korea's answer was as follows:

4.762 Korea is of the view that the evidential value of any fact supplied by the parties ultimately has to be assessed by the Panel, and possibly the Appellate Body.This is a fortiori the case where the parties appear to dispute those facts. Korea only notes that the documentation it has supplied concerning the consultations was merely provided to establish that these consultations were adequate enough to permit the European Communities and Korea to agree on the terms of settlement, albeit not legally binding.

To continue with Third Party Arguments

³⁷⁸ See, Exhibits Korea-15 and 16.

³⁷⁹ See, G/SG/M/7 (19 March 1997) at paragraph 24.

³⁸⁰ 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.

³⁸¹The non-confidential evidence that Korea deemed pertinent for purposes of the notification included evidence on (1) the increase of imports, share of domestic industry in consumption, and stock, (2) the sale price of imported goods and domestic goods, and manufacturing costs of domestic goods, and (3) the reduction of the number of dairy farming households and loss incurred by Livestock Cooperatives. Given that the KTC's Report was publicly available, Korea did not deem it necessary to delay its notification in order to translate the report.

³⁸² See, G/SG/N/10/KOR/1 (27 January 1997).

³⁸³ Id.

³⁸⁴ See, G/SG/8 (17 December 1996).

³⁸⁵ See, G/SG/N/10/KOR/1/Suppl.1 (1April 1997).

³⁸⁶ See, G/SG/M/1, 24 May 1995 paragraphs 35 and 36, which endorsed the suggested formats set out in the Note from the Chairman contained in G/SG/W/1 (23 February 1995). On 15 October 1996, the WTO Secretariat provided Members with the Technical Cooperation Handbook on Notification Requirements, WT/TC/NOTIF/SG1.

³⁸⁷ See, Exhibit Korea-15.

³⁸⁸ See, Exhibit Korea-16

³⁸⁹ See, G/SG/W/1 (23 February 1995) where, at Section VI, the obligation to "provide evidence of serious injury or threat thereof caused by increased imports" is distinguished from the obligation to "provide information on whether there is an absolute increase in imports relative to domestic production." If evidence of causation is a separate requirement, it would have been separated out as are serious injury and increase in imports.

³⁹⁰ Id.

³⁹¹ See Korea's arguments in paragraph 8.6 above.

³⁹² See meeting of 25 October 1996, G/SG/M/7 (19 March 1997).

³⁹³ See meeting of 21 February 1997, G/S/M/8 (19 June 1997).

³⁹⁴ See, Korea Exhibit 18

³⁹⁵ 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?"

³⁹⁶ 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?"

³⁹⁷ The panel recalls that the question was: "What judicial notice should the Panel now take of the consultations?"