SICE - WTO Dispute Settlement WTO Report WT/DS126/R

World Trade

Organization

WT/DS126/R
25 June 1999
(99-2217)
Original: English

Argentina - Safeguard Measures on Imports of Footwear

(Continued)

8.260 In this connection, we note in addition Argentina’s statements that the references to “cheap imports” had mostly to do with a problem of customs valuation (underinvoicing), and that the composition of imports shifted to higher-valued goods following the 1993 imposition of the DIEMs. In our view, these statements are inconsistent with the implication of the causation finding that as of 1995, imports were undercutting domestic prices so as to cause the asserted serious injury to the domestic industry.

8.261 Moreover, we find no basis in the investigation or arguments of Argentina to indicate that any such lower-priced imports had any injurious effect on the domestic industry. In particular, the report on the investigation contains no evidence to indicate that the effect of the prices of imported footwear on domestic producers' prices, production, etc., was specifically analysed, in spite of the fact that the causation finding was fundamentally based on price considerations. Rather, aggregate trends in broad statistical indicators were compared and conclusory statements made (e.g., that "the decline in output was replaced by imports, essentially cheap imports”. This is not an analysis of the conditions of competition that is called for by Articles 2 and 4.2.[557] (Indeed, as indicated above, the information on the shift in the product mix of imports toward higher-valued goods at least on its face would appear inconsistent with a finding of causation based on "cheap imports".)

8.262 Thus, in our view, Argentina in its investigation did not demonstrate either (i) that imports were lower priced than comparable domestic goods, or (ii) that any such lower-priced imports had an injurious effect on the domestic industry.

8.263 Further, regarding Article 4.2's requirement that the “relevance” of each factor be considered, we note Argentina’s reference, in answer to a Panel question on this point, to the same pages in Act 338 and the Technical Report that it indicates contain the causation analysis. We consider that these statements are juxtapositions of data on imports and data on injury factors, rather than an analysis of causation. As such, we do not consider that they constitute a demonstration of the “relevance” of factors examined as required by Article 4.2.

(iv) Other factors

8.264 The third element of a causation analysis is the consideration of whether factors other than increased imports are causing or threatening to cause serious injury to the domestic industry. If so, Article 4.2(b) requires that such injury not be attributed to increased imports.

8.265 The European Communities argues in this regard that Act 338 refers to several elements which the European Communities views as “other factors" that in fact were responsible for any injury suffered by the Argentine footwear industry. These factors were (i) the “tequila effect”, i.e., the domestic recession in Argentina brought on by the collapse of the Mexican peso; (ii) imports under the Industrial Specialisation Regime;[558] and (iii) imports from Mercosur countries. The European Communities claims that Argentina did not sufficiently examine these factors, and that it therefore wrongly attributed injury caused by them to imports.

8.266 Argentina argues that it did examine the only other factor it considered relevant to the injury, the tequila effect, and that it ensured that the injury caused by that factor was not attributed to the increased imports. Argentina does not specify explicitly how this was done in its investigation. In its arguments to the Panel, Argentina makes comparisons of the macroeconomic indicators (GDP) for the footwear sector and for the economy as a whole, and concludes that the decline in footwear in 1995 was sharper than for the economy overall, implying that imports were responsible, beyond the effects of the recession.

8.267 We recall that Article 4.2(b) requires that "[w]hen factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to increased imports." Thus, as part of the causation analysis, a sufficient consideration of "other factors" operating in the market at the same time must be conducted, so that any injury caused by such other factors can be identified and properly attributed.

a. The "tequila effect"

8.268 Regarding the so-called "tequila effect", we note that Act 338 and the Technical Report make a number of references to the “tequila effect” as such as well as to the domestic recession in 1995. For example, in its discussion of production, Act 338 [559] notes the decline in production in 1995, and states that in that year, “domestic consumption was much affected by the recession (‘tequila effect’)”. Act 338 makes a similar reference to a “sharp drop” in consumption in 1995 in its discussion of the effects of imports on domestic production. Similarly, in discussing the trends in imports, Argentina acknowledges that imports decreased in 1995, when “irrespective of any trade policy developments [i.e., the DIEMs], the Argentine economy experienced a severe recession with negative effects on all imports”. We note further that Argentina, in answer to a Panel question, states that during the investigation the CNCE considered the possible impact of the tequila effect as a cause of injury to the footwear industry, and that this analysis “verified that even in a context of depressed macroeconomic conditions, imports in themselves continued to cause injury to domestic production”. Argentina makes a similar statement in its first written submission.

8.269 In our view, the comparison of the macroeconomic indicators for footwear and for the economy as a whole is not a sufficient consideration of the potential injury from the “tequila effect” to the domestic industry. Particularly given Argentina’s several acknowledgements that the domestic recession significantly depressed both imports and domestic consumption (and certainly thereby the production and other performance indicators of the domestic industry), an analysis separating the effects of the recession from those of imports would have been necessary.

b. The Industrial Specialisation Regime

8.270 Regarding the Industrial Specialisation Regime, Argentina argues that because imports under this programme were never more than 10 percent of total imports in any one year, they were found to be insignificant as a potential cause of injury.

8.271 Although we note that the consideration in Act 338 of the Industrial Specialisation Regime is relatively cursory, the low volume of the imports under this programme supports Argentina's conclusion regarding their insignificance as a potential cause of injury.

c. Imports from other MERCOSUR countries

8.272 As regards imports from other MERCOSUR countries, the European Communities argues that even if it were correct to include the volume of imports from MERCOSUR countries in total imports, and even if Argentina had been able to show a causal link between these increased total imports and serious injury, it would still have been necessary to examine whether and to what extent the MERCOSUR imports had been causing injury and so as not to attribute this injury to the third-country imports given that any safeguard measure would not apply to MERCOSUR imports. In the EC's view, MERCOSUR imports, which increased throughout the investigation period and which were exempted from the application of the safeguard measure, were responsible for any import-related injury to the Argentine footwear industry.

8.273 Argentina, while contesting that imports from MERCOSUR caused injury, nevertheless states that the conditions of footwear imports had an important MERCOSUR component that could not be ignored. Act 338 states that it was appropriate to consider the imports from MERCOSUR countries on equal terms with other imports, as in the absence of the DIEMs or protective measures, there would have been at least an equal flow of imports from the rest of the world into Argentina.

Import volumes:[560]

(in million of pairs)	1991	1992	1993	1994	1995	1996
Total imports	8.86	16.63	21.78	19.84	15.07	13.47
MERCOSUR	1.90	3.97	5.08	5.83	4.99	7.50
Third countries	6.96	12.66	16.70	14.01	10.07	5.97

Import values:[561]

(million US$ c.i.f.)	1991	1992	1993	1994	1995	1996
Total imports	44.41	110.87	128.76	141.48	114.22	116.61
MERCOSUR	4.66	18.30	16.87	25.59	24.84	47.48
Third countries	39.75	92.58	111.89	115.89	89.39	69.09

8.274 We note that the import statistics in Act 338 and the Technical Report indicate that after 1993, imports from MERCOSUR member countries were the sole source of growth in footwear imports into Argentina. While imports from MERCOSUR countries increased steadily and significantly in every year between 1991-1996 except 1995, imports from all other countries steadily declined after 1993. As a result, by 1996, MERCOSUR countries accounted for one-half of total footwear imports, up from less than one-fifth in 1991.

(iii) Summary regarding the claims under Articles 2 and 4

8.275 As discussed above, we have considered all three major elements of Argentina's safeguard investigation and determination – the existence of (i) increased imports, (ii) serious injury, and (iii) a causal link - which the European Communities challenges as inconsistent with the requirements of Articles 2 and 4 of the Safeguards Agreement.

8.276 Regarding increased imports, we note that to meet Article 2 and 4's requirements regarding increased imports, it is necessary to consider the trends in imports over the entire period of investigation (rather than just comparing the end points), and that a decline in imports that is more than only "temporary" calls into question a finding that imports have increased. In this case, Argentina did not adequately consider the intervening trends in imports, in particular the steady and significant declines in imports beginning in 1994, as well as the sensitivity of the analysis to the particular end points of the investigation period used.

8.277 Regarding the serious injury investigation and determination, we consider that Argentina did not evaluate all of the listed factors (in particular, capacity utilisation and productivity); and that by not considering the available data for 1996 in its investigation and determination (in spite of having gathered those data along with data for 1991-1995 in its questionnaire), Argentina did not consider "all relevant factors…having a bearing on the situation of [the] industry" within the meaning of Article 4.2(a), particularly in view of the fact that in some cases the 1996 data showed upturns which were not explained. We also consider that an end-point-to-end-point comparison does not meet Article 4.2(a)'s requirement to consider all relevant factors especially where intervening trends in the injury indicators would be highly relevant to determining whether an industry was experiencing serious injury. In addition, we consider that because discrepancies in certain data series were not addressed or explained, and because other assertions were not linked to the statistical data, some of the conclusions drawn were not adequately supported by the evidence.

8.278 Regarding the existence of a causal link between increased imports and serious injury suffered by the domestic industry, we consider that the investigation did not demonstrate a coincidence in trends in injury factors and imports; that the conditions of competition between the imports and the domestic product were not analysed or adequately explained (in particular price); and that "other factors" identified by the CNCE in the investigation were not sufficiently evaluated, in particular, the tequila effect. Thus, in our view, Argentina’s findings and conclusions regarding causation were not adequately explained and supported by the evidence.

8.279 For the foregoing reasons, we conclude that Argentina’s investigation did not demonstrate that there were increased imports within the meaning of Articles 2.1 and 4.2(a); that the investigation did not evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of the domestic industry within the meaning of Article 4.2(a); that the investigation did not demonstrate on the basis of objective evidence the existence of a causal link between increased imports and serious injury within the meaning of Article 2.1 and 4.2(b); that the investigation did not adequately take into account factors other than increased imports within the meaning of Article 4.2(b); and that the published report concerning the investigation did not set forth a complete analysis of the case under investigation as well as a demonstration of the relevance of the factors examined within the meaning of Article 4.2(c).

8.280 Therefore, we find that Argentina’s investigation and determinations of increased imports, serious injury and causation are inconsistent with Articles 2 and 4 of the Safeguards Agreement. As such, we find that Argentina’s investigation provides no legal basis for the application of the definitive safeguard measure at issue, or any safeguard measure.

(b) Threat of serious injury

8.281 The European Communities claims that Argentina's finding of threat of serious injury violates Articles 4.1 and 4.2 of the Agreement, as it was based on a prognosis of what would happen if the DIEMs were removed. The European Communities submits that because Article 4.2(a) requires an investigation on the basis of "objective and quantifiable" information, a hypothetical analysis does not satisfy this requirement. In particular, the European Communities argues that there were no increased imports, and that therefore the threat finding constituted a finding of threat of increased imports, rather than a threat of serious injury. For the European Communities, no threat finding can be made absent actual increased imports.

8.282 The CNCE stated in its conclusions in Act 338 that it found in addition to serious injury a threat of serious injury in the absence of the measures additional to the Common External Tariff. We can find no specific reference to an analysis of threat, as such, either in Act 338 or in the Technical Report, however. In answer to a Panel question regarding the basis for Act 338's threat of serious injury finding, Argentina indicated that the finding of threat had been the basis for the application of the provisional measure. Argentina stated that the industry’s condition worsened during the course of the investigation, leading to the decision to apply the definitive measure. In response to a Panel question regarding whether it is possible to simultaneously find present serious injury and threat thereof, Argentina indicated that this is possible, as the concepts of serious injury and threat thereof, in the meanings of Articles 4.1(a) and (b), respectively, are not mutually exclusive.[562]

8.283 We recall that pursuant to Article 4.1(b):

"'threat of serious injury' shall be understood to mean serious injury that is clearly imminent, in accordance with the provisions of paragraph 2. A determination of the existence of a threat of serious injury shall be based on facts and not merely on allegation, conjecture or remote possibility;"

8.284 Thus, the question of threat, whether instead of or in addition to a finding of present serious injury, must be explicitly examined in an investigation and supported by the evidence in accordance with Article 4.2(a-c). Moreover, if only a threat of increased imports is present, rather than actual increased imports, this is not sufficient. Article 2.1 requires an actual increase in imports as a basic prerequisite for a finding of either threat of serious injury or serious injury. A determination of the existence of a threat of serious injury due to a threat of increased imports would amount to a determination based on allegation or conjecture rather than one supported by facts as required by Article 4.1(b).

8.285 Given that the question of threat as such was not adequately addressed or analysed in Act 338 or in the Technical Reports, we do not consider it necessary to rule on the question of whether it is possible to make simultaneously findings of serious injury and threat of serious injury. We further note that, pursuant to paragraphs 1(b) and 2(a) of Article 4, any determination of threat must be supported by specific evidence and adequate analysis.

8.286 For the foregoing reasons, we find that Argentina’s determination of the existence of a threat of serious injury does not conform to the requirements of Articles 2 and 4 of the Agreement.

2. Claims regarding the application of safeguard measures (Article 5)

8.287 The European Communities also claims, in the event the Panel should find that the analyses by Argentina's national authorities of "increased imports", "serious injury" and "causation" were consistent with the Safeguards Agreement, that Argentina violated Article 5.1. The European Communities alleges that Argentina did not demonstrate that safeguard measures were applied only "to the extent necessary to prevent or remedy serious injury and to facilitate adjustment". Specifically, the European Communities requests the Panel to find Argentina's provisional and definitive measures based on the safeguard investigation subject to this dispute, however adapted or adjusted in the meantime (including Resolutions 512/97, 1506/98 and 837/98), to be in violation of Article 5.1.

8.288 Argentina contends that such claims amount to hypotheses about "future" measures and that preventive adjudication is not the function of the dispute settlement system. Argentina reiterates that the modifications of the definitive safeguard measure are not within this Panel's terms of reference. Since Articles 3.7[563] and 19.[564] of the DSU only require the withdrawal of measures that are WTO-inconsistent, it is Argentina's position that measures that are not in existence at the time of a Panel's establishment cannot be subject to dispute settlement because they only could be inconsistent with the WTO agreements.

8.289 In the light of our findings, supra, that the safeguard investigation and determination leading to the imposition of the definitive safeguard measure is inconsistent with Articles 2 and 4 of the Safeguards Agreement, and thus provide no legal basis for the application of a safeguard measure, we do not consider it necessary to make findings on the European Communities' claims concerning Argentina's alleged violations of Article 5.

3. Claims regarding the provisional safeguard measure (Article 6)

8.290 The European Communities has raised a claim that the provisional measure applied by Argentina violated Article 6 of the Safeguards Agreement. In particular, the European Communities claims that the measure, which according to Argentina was applied on the basis of a finding of clear evidence of a threat of serious injury, was in fact applied on the basis of a threat of increased imports. The European Communities maintains that the resolution applying the measure makes this clear, in that it refers to a threat of serious injury from future increases in imports expected to result from the removal of the DIEMs on footwear. In the view of the European Communities, it is not a sufficient basis for the application of a provisional measure to equate a threat of increased imports with a threat of serious injury. Rather, there must be an actual increase in imports and clear evidence of at least a threat of serious injury for a provisional measure to be applied consistently with the Agreement on Safeguards.

8.291 Argentina argues that the increased imports requirement was satisfied at the time of the decision to apply the provisional measure, and further maintains that the Panel should not rule on the provisional measure as it had expired well before the commencement of this Panel proceeding.

8.292 In the light of our findings concerning the investigation and the definitive measure, we do not find it necessary to make a finding concerning this claim.

4. Claims regarding notification requirements (Article 12)

8.293 The European Communities’ claims under Article 12 have two main elements. First, the European Communities alleges that Argentina failed to notify “all pertinent information” relating to its serious injury and causation findings, as required under Article 12.1(b). Second, the European Communities claims that by failing to notify Resolutions 512/98, 1506/98 and 837/98, which modified the definitive safeguard measure after its imposition, Argentina violated the notification obligations of Article 12.1 and 12.2, as in the European Communities’ view these provisions require notification of the safeguard measure as actually applied.

(a) The notification of "all pertinent information"

Articles 12.1 and 12.2 of the Safeguards Agreement read as follows:

"1. A Member shall immediately notify the Committee on Safeguards upon:

(a) initiating an investigatory process relating to serious injury or threat thereof and the reasons for it;

(b) making a finding of serious injury or threat thereof caused by increased imports; and

(c) taking a decision to apply or extend a safeguard measure.

2. In making the notifications referred to in paragraphs 1(b) and (c), the Member proposing to apply or extend a safeguard measure shall provide the Committee on Safeguards with all pertinent information, which shall include evidence of serious injury or threat thereof caused by increased imports, precise description of the product involved and the proposed measure, proposed data of introduction, expected duration and timetable for progressive liberalisation. In the case of an extension of a measure, evidence that the industry concerned is adjusting shall also be provided. 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."

8.294 Regarding the first claim, the European Communities argues that Article 12.1(b) requires a Member to notify “all pertinent information” concerning its injury and causation finding. In the European Communities’ view, this constitutes a requirement to notify “all facts, investigated data, and evaluations needed to establish ‘increased imports’, ‘serious injury or threat’ and ‘causal link’”. The European Communities challenges Argentina’s argument that “the relevant information for evaluating compliance with Articles 2 and 4 cannot consist only of the information notified to the Committee according to the approved formats”. In the European Communities' view, this argument implies that information relevant to the determination of compliance with Article 4.2 could be missing from the Article 12 notifications. For the European Communities, Article 12 notifications should provide the basis for other Members to “verify whether the conditions of Article 2 and 4 had been met”.

8.295 Argentina argues that the European Communities confuses the procedural requirements of Article 12 concerning notification with the substantive requirements of Articles 2 and 4 for the application of a safeguard measure. In Argentina’s view, if the European Communities’ arguments were accepted, this would add the substantive requirements under Article 2.1 to the notification obligations under Article 12, implying a double failure by Argentina to comply with the Agreement and establishing a standard of notification that the Agreement does not provide for. Argentina also argues that if it were to follow the methodology proposed by the European Communities, it would have to notify the entire 10,000-plus page record of the investigation.

8.296 The European Communities disagrees with Argentina's argument that the European Communities “confuses” the substantive and notification requirements of the Agreement, acknowledging that these are separate obligations. For the European Communities, this separateness does not exclude the possibility, however, that a violation of one of these requirements can lead to the violation of the other. That is, the European Communities maintains, if a Member does not provide, in its Article 12 notification, the evidence necessary to prove that the requirements of Articles 2 and 4 have been fulfilled, then Article 12 automatically would be violated – in this case the violation of Article 12 (in particular Article 12.2) would derive from a violation of Articles 2 and 4. For the European Communities, Article 12 also could be violated without relying on Articles 2 and 4, for example when a justified safeguard measure is taken without any (or insufficient) notification. The European Communities also disagrees that it has implied that the entire record of the investigation should have been notified. Rather, the European Communities argues, all “pertinent” information from that record should have been notified.

8.297 We note that the European Communities’ arguments seem to imply that an insufficient notification under Article 12 per se implies or leads to a violation of Articles 2 and 4 (i.e., its argument that it is the notifications that permit other Members to judge substantive compliance with Articles 2 and 4). The European Communities also seems to argue this point vice versa (i.e., its argument that the violation of Article 12 in this case was “derived from” the substantive violation of Articles 2 and 4). By this, we understand the European Communities to mean that adequate notification under Article 12 is impossible where the substantive requirements of Articles 2 and 4 have not been satisfied.

8.298 In our view, the notification requirements of Article 12 are separate from, and in themselves do not have implications for, the question of substantive compliance with Articles 2 and 4. Similarly, we consider that the substantive requirements of Articles 2 and 4 do not have implications for the question of compliance with Article 12. Article 12 serves to provide transparency and information concerning the safeguard-related actions taken by Members. We note in this context that notification under Article 12 is just the first step in a process of transparency that can include, inter alia, review by the Committee as part of its surveillance functions (Article 13.1(f)), requests for additional information by the Council for Trade in Goods or the Committee on Safeguards (Article 12.2), and/or eventual bilateral consultations with affected Members if application of a measure is proposed (Article 12.3). In this regard, the important point is that the notifications be sufficiently descriptive of the actions that have been taken or are proposed to be taken, and of the basis for those actions, that Members with an interest in the matter can decide whether and how to pursue it further.

8.299 In this context, we recall the statement of the Panel in Guatemala - Cement that

"… [a] key function of the notification requirements in the [Anti-dumping Agreement] is to ensure that interested parties, including Members, are able to take whatever steps they deem appropriate to defend their interests…."[565]

8.300 Articles 12.2 and 12.3 in our view confirm that Members are not required to notify the full detail of their investigations and findings. Article 12.2 specifically provides for the possibility of requests for further information by the Council for Trade in Goods or the Committee on Safeguards. Article 12.3 provides, inter alia, for consultations, upon request, with other Members, to review the information contained in the notifications. Thus, these provisions specifically create opportunities for further information to be provided, upon request, concerning the details of the actions summarised in the notifications. Ultimately, should a violation of Articles 2 and 4 be alleged, it would be the more detailed information from the record of the investigation, and in particular the published report(s) on the findings and reasoned conclusions of that investigation, that would form the basis for evaluation of such an allegation.

8.301 We note that Argentina’s notification to the Committee on Safeguards, under Article 12.1(b), in fact is the full text of Act 338, which Argentina indicates in response to a Panel question is the published report on its serious injury finding (although it also refers to some portions of the "Technical Report"). We find that by having notified this full text, Argentina certainly met the requirements, which we find to be rather descriptive, applicable to notifications under the Articles 12.1 and 12.2. Therefore, we reject the European Communities’ claim that Argentina’s notification of its finding of serious injury and causation was insufficient, and conclude that in this respect Argentina has not violated Articles 12.1 and 12.2.

(b) Notification of subsequent modifications

8.302 We now turn to the second aspect of the European Communities’ claims regarding notifications which is that Argentina should have notified under the Agreement on Safeguards Resolutions 512/98, 1506/98 and 837/98, which modify the definitive safeguard measure. In the European Communities’ view, Members are obligated to notify safeguard measures as applied. The European Communities has argued that these resolutions have made the safeguard measure more restrictive than it was when originally applied. We note that the modifications of definitive safeguard measures foreseen in the Agreement (namely early elimination or faster liberalisation potentially resulting from mid-term reviews under Article 7.4, [566] and extension of measures beyond the initial period of application under Article 7.[567] and 7.4), all are subject to notification requirements under Articles 12.5 and 12.1(c)/12.2, respectively.

8.303 In this context, we note that the only modifications of safeguard measures that Article 7.4 contemplates are those that reduce its restrictiveness (i.e., to eliminate the measure or to increase their pace of its liberalisation pursuant to a mid-term review). The Agreement does not contemplate modifications that increase the restrictiveness of a measure, and thus contains no notification requirement for such restrictive modifications.

8.304 We note that the modifications of the definitive safeguard measure made by Argentina are not contemplated by Article 7, and thus Article 12 does not foresee notification requirements with respect to such modifications. Any substantive issues pertaining to these subsequent Resolutions would need to be addressed under Article 7, but the European Communities made no such claim. Where the situation at issue is primarily one of substance, i.e., modification of a measure in a way not foreseen by the Safeguards Agreement, we believe that we cannot address the alleged procedural violation concerning notification arising therefrom, as no explicit procedural obligation is foreseen. Therefore, we see no possibility for a ruling on this aspect of the European Communities’ claim under Article 12.

(c) Concluding remark

8.305 We recall our findings that our terms of reference include the definitive safeguard measure in its original legal form (i.e., Resolution 987/97) as well as in its subsequently modified form (i.e., Resolutions 512/98, 1506/98 and 837/98). We further recall our findings that Argentina's safeguard investigation and determination underlying the definitive safeguard measure are inconsistent with Articles 2 and 4 of the Safeguards Agreement and thus cannot serve as a legal basis for any safeguard measure. Given that the subsequent modifications of the definitive safeguard measure are based on the same safeguard investigation and determination, we are of the view that our findings of violations of Articles 2 and 4 resolve the dispute with respect to these modifications as well.

IX. Conclusions

9.1 The Panel concludes that for the reasons outlined in this Report the definitive safeguard measure on footwear based on Argentina's investigation and determination is inconsistent with Articles 2 and 4 of the Agreement on Safeguards. We therefore conclude that there is nullification or impairment of the benefits accruing to the European Communities under the Agreement on Safeguards within the meaning of Article 3.8 of the DSU.

9.2 The Panel recommends that the Dispute Settlement Body request Argentina to bring its measure into conformity with the Agreement on Safeguards.

ANNEX I:

The safeguard investigation and measures referred to the following tariff headings:

6401	WATERPROOF FOOTWEAR OF RUBBER OR PLASTICS
6401.10.00	Footwear incorporating a protective metal toe-cap
6401.91.00	Other footwear, covering the knee
6401.92.00	Other footwear, covering the ankle, but not covering the knee
6401.99.00	Other
6402	FOOTWEAR OF RUBBER OR PLASTICS
6402.12.00	Ski and snowboard boots
6402.19.00	Other (sports)
6402.20.00	Footwear with uppers of straps (thongs)
6402.30.00	Other footwear, incorporating a protective metal toe-cap
6402.91.00	Other, covering the ankle
6402.99.00	Other
6403	FOOTWEAR WITH LEATHER UPPERS
6403.12.00	Ski and snowboard boots
6403.19.00	Other (sports)
6403.20.00	Footwear with outer soles of leather and uppers of straps
6403.30.00	Footwear made on a platform of wood
6403.40.00	Other footwear, incorporating a protective metal toe-cap
6403.51.00	Other footwear covering the ankle, with soles of leather
6403.59.00	Other, with soles of leather
6403.91.00	Other, covering the ankle, with outer soles of rubber or plastics
6403.99.00	Other, with outer soles of rubber or plastics
6404	FOOTWEAR WITH TEXTILE UPPERS
6404.11.00	Sports footwear with outer soles of rubber or plastics
6404.19.00	Other, with outer soles of rubber or plastics
6404.20.00	Footwear with outer soles of leather
6405	OTHER FOOTWEAR
6405.10	With uppers of leather
6405.10.10	With soles of rubber or plastics and uppers of composition leather
6405.10.20	With soles and uppers of composition leather
6405.10.90	Other
6405.20.00	With uppers of textile material
6405.90.00	Other

[557] We note in this regard that there would seem to be a relationship between the depth of detail and degree of specificity required in a causation analysis and the breadth and heterogeneity of the like or directly competitive product definition. Where as here a very broad product definition is used, within which there is considerable heterogeneity, the analysis of the conditions of competition must go considerably beyond mere statistical comparisons for imports and the industry as a whole, as given their breadth, the statistics for the industry and the imports as a whole will only show averages, and therefore will not be able to provide sufficiently specific information on the locus of competition in the market. With regard to the present case, we do not disagree that a quite detailed investigation of the industry was conducted, in which a great deal of statistical and other information was amassed. What in our view was missing was a detailed analysis, on the basis of objective evidence, of the imports and of how in concrete terms those imports caused the injury found to exist in 1995. In this regard, we note that Act 338 contains a section entitled "Conditions of competition between the domestic products and imports". This section does not contain such a detailed analysis, however, but rather summarizes questionnaire responses from domestic producers about their strategies for “fending off foreign competition”, and from importers and domestic producers concerning “the sales mix” of domestic products and imports, including their overall views about quality and other issues concerning domestic and imported footwear, with the importers stressing the benefits of imports. This summary of subjective statements by questionnaire respondents does not constitute an analysis of the "conditions of competition" by the authority on the basis of objective evidence.

[558] The Industrial Specialization Regime, which terminated in 1996, allowed footwear producers to import duty-free a certain volume of footwear to round out their production lines, based on the volume of their footwear exports.

[559] Exhibit EC-16, p.14.

[560] See document G/SG/N/8/ARG/1, submitted as Exhibit EC-16, p.21.

[561] Ibid.

[562] See descriptive part, paras. 5.303 .

[563] Article 3.7 of the DSU: "[t]he aim of the dispute settlement mechanism is to secure a positive solution to a dispute. … the first objective of dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements."

[564] Article 19.1 of the DSU which provides "where a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned bring the measures into conformity with that agreement."

[565] Panel report on Guatemala – Anti-dumping Investigation regarding Portland Cement from Mexico (WT/DS60/R), adopted on 25 November 1998, para. 7.42.

[566] Article 7.4: "In order to facilitate adjustment in a situation where the expected duration of a safeguard measure as notified under the provisions of paragraph 1 of Article 12 is over one year, the Member applying the measure shall progressively liberalise it at regular intervals during the period of application. If the duration of the measure exceeds three years, the Member applying such a measure shall review the situation not later than the mid-term of the measure and, if appropriate, withdraw it or increase the pace of liberalisation. A measure extended under paragraph 2 shall not be more restrictive than it was at the end of the initial period, and should continue to be liberalised."

[567] Article 7.2: "The period mentioned in paragraph 1 [the initial period of application] may be extended provided that the competent authorities of the importing Member have determined, in conformity with the procedures set out in Articles 2, 3 4 and 5, that the safeguard measure continues to be necessary to prevent or remedy serious injury and that there is evidence that the industry is adjusting, and provided that the pertinent provisions of Articles 8 and 12 are observed."

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