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WORLD TRADE
ORGANIZATION


WT/DS166/AB/R
22 December 2000
(00-5593)
  Original: English

UNITED STATES - DEFINITIVE SAFEGUARD MEASURES
    ON IMPORTS OF WHEAT GLUTEN FROM THE
    EUROPEAN COMMUNITIES

    
    
    
    AB-2000-10
 

Report of the Appellate Body


(continued)   

IX. Judicial Economy

177. Before the Panel, the European Communities made a claim under Article XIX:1(a) of the GATT 1994 regarding "unforeseen developments", and also a claim under Article I of the GATT 1994 and Article 5 of the Agreement on Safeguards regarding the nature of the remedy. In a single paragraph covering these two claims, the Panel stated:

… having determined that the measure at issue is inconsistent with Articles 2.1 and 4.2 SA, and exercising the discretion implicit in the principle of judicial economy, we do not deem it necessary to examine whether the measure at issue is also inconsistent with Article XIX of the GATT 1994 ("unforeseen developments") nor whether the form, level and allocation of the inconsistent measure are in breach of Article 5 SA or Article I of the GATT 1994.182

178. The European Communities appeals the Panel's findings on judicial economy. The European Communities asserts that the failure to make a finding regarding the claim on "unforeseen developments" means that there is a flaw in the Panel's findings, under Articles 2.1 and 4.2 of the Agreement on Safeguards, concerning increased imports and serious injury. The European Communities also argues that, by failing to address the European Communities' claims under Article I of the GATT 1994 and Article 5 of the Agreement on Safeguards, "the Panel has not clarified whether the US could simply repeat the serious injury determination and then still proceed to apply the measure in the same way."183

179. We begin by recalling certain of the statements that the Appellate Body has already made regarding the exercise of judicial economy by panels. In United States – Shirts and Blouses, we opined:

Given the explicit aim of dispute settlement that permeates the DSU, we do not consider that Article 3.2 of the DSU is meant to encourage either panels or the Appellate Body to "make law" by clarifying existing provisions of the WTO Agreement outside the context of resolving a particular dispute. A panel need only address those claims which must be addressed in order to resolve the matter in issue in the dispute.184 (emphasis added)

180. However, the "discretion" that a panel enjoys to determine which claims it should address is not without limits.185 In Australia – Salmon, we stated that a "panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings …".186

181. In Argentina – Footwear Safeguards, we were asked to address a claim on "unforeseen developments" that the panel had not examined. In that appeal, we upheld the panel's finding that Argentina's investigation "was inconsistent with the requirements of Articles 2 and 4 of the Agreement on Safeguards." We went on to state:

As a consequence, there is no legal basis for the safeguard measures imposed by Argentina. For this reason, we do not believe that it is necessary to complete the analysis of the Panel relating to the claim made by the European Communities under Article XIX of the GATT 1994 by ruling on whether the Argentine authorities have, in their investigation, demonstrated that the increased imports in this case occurred "as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions … ".187

182. In short, we considered that since the safeguard measure at issue was inconsistent with Articles 2 and 4 of the Agreement on Safeguards, there was no need to go further and examine whether, in addition, the measure was also inconsistent with Article XIX:1(a) of the GATT 1994. The inconsistency, as we said, deprived the measure of legal basis.

183. In our view, the same reasoning applies in this case. The Panel found and we have upheld, albeit for different reasons, that the measure is inconsistent with Articles 2.1 and 4.2 of the Agreement on Safeguards. Thus, the Panel found, in effect, that the safeguard measure at issue in this case, like the measure at issue in Argentina – Footwear Safeguard, has no legal basis. The reasons for which the Panel found an inconsistency with Articles 2.1 and 4.2 of the Agreement on Safeguards do not alter that conclusion. The Panel was, therefore, entitled to decline to examine the claim of the European Communities regarding "unforeseen developments". A finding on that issue would not, in our view, have added anything to the ability of the DSB to make sufficiently precise recommendations and rulings in this dispute. We, therefore, see no error in the Panel's exercise of judicial economy as regards the European Communities claim concerning "unforeseen developments".

184. The same reasoning also holds true for the European Communities' claim under Article I of the GATT 1994 and Article 5 of the Agreement on Safeguards. As the Panel had found the measure to be inconsistent with Articles 2.1 and 4.2 of the Agreement on Safeguards, the Panel was within its discretion in declining to examine these claims. Once again, a finding on this claim would not have added anything to the ability of the DSB to make sufficiently precise recommendations and rulings in this dispute.

185. Finally, the European Communities asserts that, by failing to address these claims, "the Panel has not clarified whether the US could simply repeat the serious injury determination and then still proceed to apply the measure in the same way."188 It appears, to us, that this argument invites speculation as to how the United States might implement the recommendations and rulings of the DSB. As we said in our Report in United States – Tax Treatment for "Foreign Sales Corporations", "we do not consider that it is appropriate for us to speculate on the ways in which the United States might choose to implement" the recommendations and rulings of the DSB.189 We, therefore, see no error in the Panel's exercise of judicial economy as regards the European Communities claim concerning Article I of the GATT 1994 and Article 5 of the Agreement on Safeguards.

186. For these reasons, we see no error in the Panel's exercise of judicial economy in paragraph 8.220 of the Panel Report.

X. Findings and Conclusions

187. For the reasons set out in this Report, the Appellate Body:


(a) upholds the Panel's conclusion, in paragraph 8.127 of the Panel Report, that the United States has not acted inconsistently with its obligations under Articles 4.2(a) and 4.2(b) of the Agreement on Safeguards, by declining to evaluate the overall relationship between the protein content of wheat and the price of wheat gluten as a "relevant factor" under Article 4.2(a) of that Agreement; but, in so doing, reverses the Panel's interpretation of Article 4.2(a) of the Agreement on Safeguards, in paragraph 8.69 of the Panel Report, that the competent authorities are required to evaluate only the "relevant factors" listed in Article 4.2(a) of that Agreement as well as any other "factors" which were "clearly raised before [the competent authorities] as relevant by the interested parties in the domestic investigation";

(b) reverses the Panel's interpretation of Article 4.2(b) of the Agreement on Safeguards that increased imports "alone", "in and of themselves", or "per se", must be capable of causing "serious injury", as well as the Panel's conclusions on the issue of causation, as summarized in paragraph 8.154 of the Panel Report; finds, nonetheless, that the United States acted inconsistently with its obligations under Article 4.2(b) of the Agreement on Safeguards;

(c) upholds the Panel's finding, in paragraph 8.182 of the Panel Report, that the United States acted inconsistently with its obligations under Articles 2.1 and 4.2 of the Agreement on Safeguards, by excluding imports from Canada from the application of the safeguard measure, after conducting an investigation embracing imports from all sources, including Canada, to determine whether increased imports of wheat gluten were causing or threatening to cause serious injury to the United States industry, and after subsequently conducting a separate examination of the importance of imports from Canada to the situation of the domestic industry;

(d) upholds the Panel's findings, in paragraphs 8.197 and 8.199 of the Panel Report, that the United States acted inconsistently with its obligations under Articles 12.1(a) and 12.1(b) of the Agreement on Safeguards;

(e) reverses the Panel's finding, in paragraph 8.207 of the Panel Report, that the United States acted inconsistently with its obligations under Article 12.1(c) of the Agreement on Safeguards; finds that the United States acted consistently with its obligations under Article 12.1(c) of that Agreement to notify "immediately" its decision to apply a safeguard measure;

(f) upholds the Panel's finding, in paragraph 8.219 of the Panel Report, that the United States acted inconsistently with its obligations under Article 12.3 of the Agreement on Safeguards, and, in consequence, upholds the Panel's finding, in paragraph 8.219 of the Panel Report, that the United States acted inconsistently with its obligations under Article 8.1 of the Agreement on Safeguards;

(g) finds that the Panel did not act inconsistently with Article 11 of the DSU:

(i) in concluding, in paragraph 8.45 of the Panel Report, that the USITC had "considered industry productivity as required by Article 4.2(a)" of the Agreement on Safeguards;

(ii) in finding, in paragraph 8.127 of the Panel Report, that the USITC was not required to evaluate the overall relationship between the protein content of wheat and the price of wheat gluten as a "relevant factor", under Article 4.2(a) of the Agreement on Safeguards, during the post-1994 period of investigation; and,

(iii) in declining to draw "adverse" inferences from the refusal of the United States to provide certain allegedly confidential information requested from it by the Panel under Article 13.1 of the DSU;

(h) finds that the Panel acted inconsistently with Article 11 of the DSU in finding, in paragraph 8.66 of the Panel Report, that "the USITC Report provides an adequate, reasoned and reasonable explanation with respect to 'profits and losses'" and, therefore, reverses this finding; and

(i) finds no error in the Panel's exercise of judicial economy, in paragraph 8.220 of the Panel Report, in not examining the claims of the European Communities under Article XIX:1(a) of the GATT 1994, and also under Article 5 of the Agreement on Safeguards and Article I of the GATT 1994.

188. The Appellate Body recommends that the DSB request that the United States bring its safeguard measure found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with the Agreement on Safeguards, into conformity with its obligations under that Agreement.

Signed in the original at Geneva this 8th day of December 2000 by:

 

_________________________
Julio Lacarte-Muró
Presiding Member


_______________________                                               _________________________
 Georges Michel Abi-Saab                                                                    Yasuhei Taniguchi
               Member                                                                                        Member

 

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182. Panel Report, para. 8.220.

183. European Communities' other appellant's submission, para. 108.

184. Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, DSR 1997:I, 323, at 340.

185. Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9, at 35, para. 87.

186. Appellate Body Report, Australia – Salmon, supra, footnote 119, para. 223.

187. Appellate Body Report, supra, footnote 22, para. 98.

188. European Communities' other appellant's submission, para. 108.

189. Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, para. 175.