UNITED STATES - SAFEGUARD MEASURES ON
IMPORTS OF FRESH, CHILLED OR FROZEN
LAMB MEAT FROM NEW ZEALAND AND AUSTRALIA

AB-2001-1

Report of the Appellate Body

(Continued)

III. Issues Raised in this Appeal

64. This appeal raises the following issues:

(a) whether the Panel erred in finding, in paragraph 8.1(a) of the Panel Report, that the United States acted inconsistently with Article XIX:1(a) of the GATT 1994 by failing to demonstrate, as a matter of fact, the existence of "unforeseen developments"; and, if so, whether changes in the product mix of imported lamb meat and/or in the cut size of imported lamb meat constitute "unforeseen developments" within the meaning of Article XIX:1(a) of the GATT 1994;

(b) whether the Panel erred in finding, in paragraphs 7.118 and 8.1(b) of the Panel Report, that, by defining the relevant domestic industry for purposes of its safeguard investigation to include growers and feeders of live lambs, the United States acted inconsistently with Article 4.1(c) of the Agreement on Safeguards and, in consequence, also with Article 2.1 of that Agreement;

(c) whether the Panel erred in its review of the USITC's determination that there existed a "threat of serious injury", in particular, in the Panel's interpretation and application of the appropriate standard of review under Article 11 of the DSU, and in its interpretation and application of the requirement in Article 4.2(a) of the Agreement on Safeguards to "evaluate all relevant factors";

(d) whether the Panel erred in finding, in paragraph 8.1(f) of the Panel Report, that the examination of causation by the USITC was inconsistent with Article 4.2(b) of the Agreement on Safeguards and, in consequence, also with Article 2.1 of that Agreement;

(e) whether the Panel erred in its exercise of judicial economy, in particular in declining to rule on New Zealand's claim under Article 5.1 of the Agreement on Safeguards; and

(f) if the Appellate Body finds that the Panel erred in finding the United States' safeguard measure to be inconsistent with Articles 2.1, 4.1(c) and 4.2(b) of the Agreement on Safeguards, whether that safeguard measure is inconsistent with Articles I and II of the GATT 1994, and with Articles 2.2, 3.1, 5.1, 8.1, 11.1(a) and 12.3 of the Agreement on Safeguards.

IV. Unforeseen Developments

65. Before the Panel, Australia and New Zealand claimed that the United States failed to comply with the requirements of Article XIX:1(a) of the GATT 1994 regarding "unforeseen developments". The Panel found:

Article XIX:1 read in the context of SG Article 3.1 requires the competent national authority, in its determination, to reach a conclusion demonstrating the existence of "unforeseen developments" in the sense of GATT Article XIX:1.²⁸

66. The Panel was of the view that the USITC's statements concerning the "changes in product mix" or the "increase in cut size" of imported lamb meat were "simple descriptive statements", and that those statements did not constitute "a conclusion" on the existence of unforeseen developments, in the sense of Article XIX:1 of the GATT 1994.²⁹ On this reasoning, the Panel concluded that the United States had acted inconsistently with Article XIX:1(a) of the GATT 1994 by "fail[ing] to demonstrate as a matter of fact the existence of unforeseen developments".³⁰

67. The United States argues on appeal that the Panel made two significant errors.³¹ First, the United States argues that the Panel erred in finding that Article XIX:1(a) requires the competent authorities, in demonstrating the existence of "unforeseen developments", to set forth in their report a finding or a "conclusion" with respect to those "unforeseen developments". According to the United States, it is sufficient for purposes of Article XIX:1(a) that the existence of unforeseen developments can be inferred from the factual record of the investigating authority, and that the existence of such developments can be "demonstrated during" dispute settlement proceedings in the WTO. The United States maintains that there is no basis for "copying into" or "reading into" Article XIX of the GATT 1994 the requirements from Article 3.1 of the Agreement on Safeguards relating to the publication of a "report" by the "competent authorities".³² Second, the United States argues that, in any event, the Panel erred in finding that the USITC Report failed to demonstrate, as a matter of fact, the existence of "unforeseen developments" under Article XIX:1(a); in the view of the United States, the existence of unforeseen developments, namely, the shift in product mix from frozen to fresh lamb meat, and from smaller to larger cuts, may be discerned from the contents of the USITC Report. In this regard, we note that, at the oral hearing, the United States confirmed that its appeal on this issue is limited to the Panel's finding that the United States acted inconsistently with Article XIX:1(a) of the GATT 1994 because the Report did not contain a "reasoned conclusion" on unforeseen developments.³³

68. We begin by noting that the claim made by both Australia and New Zealand before the Panel was that the United States acted inconsistently with its obligation in Article XIX:1(a) of the GATT 1994 relating to "unforeseen developments". Article XIX:1(a) of the GATT 1994 reads:

If, as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions, any product is being imported into the territory of that Member in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the Member shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.

69. In our Reports in Argentina - Footwear Safeguard and Korea - Dairy Safeguard, we examined the relationship between Article XIX of the GATT 1994 and the Agreement on Safeguards and, in particular, whether, with the entry into force of the Agreement on Safeguards, Article XIX continues to impose obligations on WTO Members when they apply safeguard measures. We observed in those two appeals that "the provisions of Article XIX of the GATT 1994 and the provisions of the Agreement on Safeguards are all provisions of one treaty, the WTO Agreement", and we said that these two texts must be read "harmoniously" and as "an inseparable package of rights and disciplines".³⁴ We derived support for this interpretation from Articles 1 and 11.1(a) of the Agreement on Safeguards. We observed, in both the Reports, that:

Article 1 states that the purpose of the Agreement on Safeguards is to establish "rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994." (emphasis added) The ordinary meaning of the language in Article 11.1(a) - "unless such action conforms with the provisions of that Article applied in accordance with this Agreement" - is that any safeguard action must conform with the provisions of Article XIX of the GATT 1994 as well as with the provisions of the Agreement on Safeguards. Thus, any safeguard measure imposed after the entry into force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994.³⁵

70. We reiterate: Articles 1 and 11.1(a) of the Agreement on Safeguards express the full and continuing applicability of Article XIX of the GATT 1994, which no longer stands in isolation, but has been clarified and reinforced by the Agreement on Safeguards.

71. Based on this interpretation of the relationship between Article XIX of the GATT 1994 and the Agreement on Safeguards, we found in both these previous Reports:

The first clause in Article XIX:1(a) - "as a result of unforeseen developments and of the obligations incurred by a Member under the Agreement, including tariff concessions � " - is a dependent clause which, in our view, is linked grammatically to the verb phrase "is being imported" in the second clause of that paragraph. Although we do not view the first clause in Article XIX:1(a) as establishing independent conditions for the application of a safeguard measure, additional to the conditions set forth in the second clause of that paragraph, we do believe that the first clause describes certain circumstances which must be demonstrated as a matter of fact in order for a safeguard measure to be applied consistently with the provisions of Article XIX of the GATT 1994. In this sense, we believe that there is a logical connection between the circumstances described in the first clause - "as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions � " � and the conditions set forth in the second clause of Article XIX:1(a) for the imposition of a safeguard measure.³⁶ (underlining added)

72. Although we stated in these two Reports that, under Article XIX:1(a) of the GATT 1994, unforeseen developments "must be demonstrated as a matter of fact", we did not have occasion, in those two appeals, to examine when, where or how that demonstration should occur. In conducting such an examination now, we note that the text of Article XIX provides no express guidance on this issue. However, as the existence of unforeseen developments is a prerequisite that must be demonstrated, as we have stated, "in order for a safeguard measure to be applied" ³⁷ consistently with Article XIX of the GATT 1994, it follows that this demonstration must be made before the safeguard measure is applied. Otherwise, the legal basis for the measure is flawed. We find instructive guidance for where and when the "demonstration" should occur in the "logical connection" that we observed previously between the two clauses of Article XIX:1(a). The first clause, as we noted, contains, in part, the "circumstance" of "unforeseen developments". The second clause, as we said, relates to the three "conditions" for the application of safeguard measures, which are also reiterated in Article 2.1 of the Agreement on Safeguards. Clearly, the fulfilment of these conditions must be the central element of the report of the competent authorities, which must be published under Article 3.1 of the Agreement on Safeguards.³⁸ In our view, the logical connection between the "conditions" identified in the second clause of Article XIX:1(a) and the "circumstances" outlined in the first clause of that provision dictates that the demonstration of the existence of these circumstances must also feature in the same report of the competent authorities. Any other approach would sever the "logical connection" between these two clauses, and would also leave vague and uncertain how compliance with the first clause of Article XIX:1(a) would be fulfilled.

73. In this case, we see no indication in the USITC Report that the USITC addressed the issue of "unforeseen developments" at all. It is true that the USITC Report identifies two changes in the type of lamb meat products imported into the United States. These were: the proportion of imported fresh and chilled lamb meat increased in relation to the proportion of imported frozen lamb meat; and, the cut size of imported lamb meat increased. The USITC Report mentions the first of these changes in examining the "like products" at issue, and mentions both changes under the heading "causation" while describing the substitutability of domestic and imported lamb meat in the domestic marketplace.³⁹ However, we observe that the USITC Report does not discuss or offer any explanation as to why these changes could be regarded as "unforeseen developments" within the meaning of Article XIX:1(a) of the GATT 1994. It follows that the USITC Report does not demonstrate that the safeguard measure at issue has been applied, inter alia, "� as a result of unforeseen developments �".

74. The USITC's failure to address the existence of unforeseen developments, in the USITC Report of April 1999, is not surprising, as the USITC is not obliged by any United States legislation, regulation, or other domestic rule, to examine the existence of unforeseen developments in its investigation into the situation of a domestic industry. Although the United States has subsequently modified its position on this issue⁴⁰, we recall that, as a third participant in both Korea - Dairy Safeguard and Argentina - Footwear Safeguard, the United States argued that the omission of unforeseen developments from the Agreement on Safeguards meant that it was no longer necessary to demonstrate the existence of unforeseen developments.⁴¹ Our Reports in Korea - Dairy Safeguard and Argentina - Footwear Safeguard, in which we found that unforeseen developments must be demonstrated as a matter of fact, were circulated on 14 December 1999, that is to say, more than seven months after the report of the USITC on the domestic lamb meat industry was published in April 1999. Our two Reports were, therefore, not known to the USITC when it rendered its report in the present case.

75. Accordingly, although we do not agree with every aspect of the Panel's reasoning, we uphold the Panel's conclusion, in paragraphs 7.45 and 8.1(a) of the Panel Report, "that the United States has failed to demonstrate as a matter of fact the existence of unforeseen developments as required by Article XIX:1(a) of GATT 1994". In view of this finding, we do not find it necessary to examine Australia's conditional appeal on the issue of whether a change in the product mix and/or the cut size of imported lamb meat could qualify as "unforeseen developments" within the meaning of Article XIX:1(a) of the GATT 1994; the condition on which that issue is appealed has not been fulfilled.

76. We emphasize that neither Australia nor New Zealand has claimed that the United States acted inconsistently with Article 3.1 of the Agreement on Safeguards with respect to unforeseen developments.⁴² We do not, therefore, rule on whether the USITC, and, hence, the United States, acted inconsistently with Article 3.1 of the Agreement on Safeguards because the USITC failed to "set[] forth � findings and reasoned conclusions" on this issue. Nonetheless, we observe that Article 3.1 requires competent authorities to set forth findings and reasoned conclusions on "all pertinent issues of fact and law" in their published report. As Article XIX:1(a) of the GATT 1994 requires that "unforeseen developments" must be demonstrated, as a matter of fact, for a safeguard measure to be applied, the existence of "unforeseen developments" is, in our view, a "pertinent issue[] of fact and law", under Article 3.1, for the application of a safeguard measure, and it follows that the published report of the competent authorities, under that Article, must contain a "finding" or "reasoned conclusion" on "unforeseen developments".

V. Domestic Industry

77. The USITC defined the domestic industry in this case to include growers and feeders of live lambs, as well as packers and breakers of lamb meat. The USITC did so because it considered that there was a "continuous line of production from the raw to the processed product", and that there was a "substantial coincidence of economic interests" between and among the growers and feeders of live lambs, and the packers and breakers of lamb meat.⁴³

78. Before the Panel, Australia and New Zealand claimed that the USITC had improperly interpreted the term "domestic industry" by including in that industry growers and feeders of live lambs, even though they did not produce the product at issue, lamb meat. In assessing this claim, the Panel examined the definition of the term "domestic industry" in Article 4.1(c) and stated that:

We find no basis in the text of this phrase ["producers � of the like or directly competitive products"] for considering that a producer that does not itself make the product at issue, but instead makes a raw material or input that is used to produce that product, can nevertheless be considered a producer of the product.

�

� the relevant industry consists of producers that themselves have "output" of the "like" or "directly competitive" products.⁴⁴ (emphasis added)

79. The Panel added that the phrase "producers as a whole", which forms part of the definition in Article 4.1(c), offered no support for the broader approach adopted by the USITC.⁴⁵ The Panel also examined previous GATT panel reports which had addressed this issue, and concluded that these reports supported its reading of Article 4.1(c) of the Agreement on Safeguards.⁴⁶

80. On the basis of this reasoning, the Panel found:

� that the USITC's inclusion in the lamb meat investigation of input producers (i.e., growers and feeders of live lamb) as producers of the like product at issue (i.e. lamb meat) is inconsistent with Article 4.1(c), and thus also with Article 2.1 of the Agreement on Safeguards.⁴⁷

81. The United States appeals this finding and argues that the USITC's determination of "domestic industry" is correct, in particular, in its reliance on the criteria of a "continuous line of production" and a "coincidence of economic interests" to assess which producers make up the domestic industry. The United States argues that the Agreement on Safeguards allows Members some discretion when defining the term "producers" in the light of the facts and circumstances of each case. Moreover, the United States argues that the Panel's own criteria for determining the scope of the domestic industry are devoid of a textual basis. In this respect, the United States asserts that the Panel incorrectly stated that the USITC had found growers and feeders to be producers of a product separate and distinct from lamb meat. The United States maintains that the USITC's approach in this case is appropriate in order to capture in full the affected domestic industry.

82. As a preliminary matter, we note that the USITC clearly stated in its report that the issue of whether the producers of an input product could be included in the domestic industry producing the processed product is not addressed in the United States safeguard statute.⁴⁸ In response to questioning at the oral hearing, the United States confirmed that the two-pronged test applied by the USITC in deciding this issue is not mandated either by the United States safeguard statute or by any provision of the United States Code of Federal Regulations that applies to safeguard investigations and determinations. The United States also confirmed, at the oral hearing, that the USITC has adopted this test for defining a "domestic industry" in safeguard actions as a matter of practice in the evolution of its own case law; for safeguard actions, the test has not been enacted into law or promulgated as a regulation.

83. We begin our analysis with the definition of the term "domestic industry" in Article 4.1(c) of the Agreement on Safeguards, which reads:

(c) in determining injury or threat thereof, a "domestic industry" shall be understood to mean the producers as a whole of the like or directly competitive products operating within the territory of a Member, or those whose collective output of the like or directly competitive products constitutes a major proportion of the total domestic production of those products." (emphasis added)

84. The definition of "domestic industry" in this provision refers to two elements. First, the industry consists of "producers". As the Panel indicated, "producers" are those who grow or manufacture an article; "producers" are those who bring a thing into existence.⁴⁹ This meaning of "producers" is, however, qualified by the second element in the definition of "domestic industry". This element identifies the particular products that must be produced by the domestic "producers" in order to qualify for inclusion in the "domestic industry". According to the clear and express wording of the text of Article 4.1(c), the term "domestic industry" extends solely to the "producers � of the like or directly competitive products". (emphasis added) The definition, therefore, focuses exclusively on the producers of a very specific group of products. Producers of products that are not "like or directly competitive products" do not, according to the text of the treaty, form part of the domestic industry.

85. This definition of "domestic industry" in Article 4.1(c) of the Agreement on Safeguards is further supported by Article 2.1 of that Agreement, which forms part of the relevant context and which establishes the basic "conditions" for the imposition of a safeguard measure. According to Article 2.1:

A Member may apply a safeguard measure to a product only if that Member has determined, pursuant to the provisions set out below, that such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. (emphasis added)

86. Thus, a safeguard measure is imposed on a specific "product ", namely, the imported product. The measure may only be imposed if that specific product ("such product") is having the stated effects upon the "domestic industry that produces like or directly competitive products." (emphasis added) The conditions in Article 2.1, therefore, relate in several important respects to specific products. In particular, according to Article 2.1, the legal basis for imposing a safeguard measure exists only when imports of a specific product have prejudicial effects on domestic producers of products that are "like or directly competitive" with that imported product. In our view, it would be a clear departure from the text of Article 2.1 if a safeguard measure could be imposed because of the prejudicial effects that an imported product has on domestic producers of products that are not "like or directly competitive products" in relation to the imported product.

87. Accordingly, the first step in determining the scope of the domestic industry is the identification of the products which are "like or directly competitive" with the imported product. Only when those products have been identified is it possible then to identify the "producers" of those products.

88. There is no dispute that in this case the "like product" is "lamb meat", which is the imported product with which the safeguard investigation was concerned. The USITC considered that the "domestic industry" producing the "like product", lamb meat, includes the growers and feeders of live lambs. The term "directly competitive products" is not, however, at issue in this dispute as the USITC did not find that there were any such products in this case.⁵⁰

89. The United States argues, nevertheless, that it is permissible, on the facts and circumstances of this case, to include in the "domestic industry" the growers and feeders of live lambs because, as the USITC has found: (1) there is a "continuous line of production" from the raw product, live lambs, to the end-product, lamb meat; and (2) there is a "substantial coincidence of economic interests" between the producers of the raw product and the producers of the end-product.

90. This interpretation may well have a basis in the USITC case law, but there is no basis for this interpretation in the Agreement on Safeguards. The text of Article 4.1(c) defines the "domestic industry" exclusively by reference to the "producers � of the like or directly competitive product". There is no reference in that definition to the two criteria relied upon by the United States. In our view, under Article 4.1(c), input products can only be included in defining the "domestic industry" if they are "like or directly competitive" with the end-products. If an input product and an end-product are not "like" or "directly competitive", then it is irrelevant, under the Agreement on Safeguards, that there is a continuous line of production between an input product and an end-product, that the input product represents a high proportion of the value of the end-product, that there is no use for the input product other than as an input for the particular end-product, or that there is a substantial coincidence of economic interests between the producers of these products. In the absence of a "like or directly competitive" relationship, we see no justification, in Article 4.1(c) or any other provision of the Agreement on Safeguards, for giving credence to any of these criteria in defining a "domestic industry".

91. In this respect, we are not persuaded that the words "as a whole" in Article 4.1(c), appearing in the phrase "producers as a whole", offer support to the United States' position. These words do not alter the requirement that the "domestic industry" extends only to producers of "like or directly competitive products". The words "as a whole" apply to "producers" and, when read together with the terms "collective output" and "major proportion" which follow, clearly address the number and the representative nature of producers making up the domestic industry. The words "as a whole" do not imply that producers of other products, which are not like or directly competitive with the imported product, can be included in the definition of domestic industry. Like the Panel, we see the words "as a whole" as no more than "a quantitative benchmark for the proportion of producers � which a safeguards investigation has to cover."⁵¹ (emphasis added)

92. The Panel examined in some detail the GATT panel reports in United States - Wine and Grapes, Canada - Beef, and New Zealand - Transformers. We agree largely with the Panel's analysis that these cases support the Panel's interpretation, with which we have also recorded our agreement, of Article 4.1(c) of the Agreement on Safeguards. We do, however, have one reservation worth mentioning. In the course of examining the panel report in Canada � Beef, the Panel considered the importance to be attached to the degree of integration of the production process for a product. Based on statements of the panel in Canada - Beef, the Panel made the following observation:

We agree that the factors of vertical integration or common ownership are not in themselves determinative or even particularly relevant for the scope of the domestic industry. Rather, the issue is (i) whether the products at various stages of production are different forms of a single like product or have become different products; and (ii) whether it is possible to separately identify the production process for the like product at issue, or whether instead common ownership results in such complete integration of production processes that separate identification and analysis of different production stages is impossible.⁵² (underlining added)

93. The Panel went on to examine whether the production process of lamb meat involved separate products or different forms of a single like product. The Panel took the view that the USITC itself had found that live lambs and lamb meat were separate products, and that it was possible to identify separate stages of their production processes.⁵³

94. Although we do not disagree with the Panel's analysis of the USITC Report, nor with the conclusions it drew from that analysis, we have reservations about the role of an examination of the degree of integration of production processes for the products at issue.⁵⁴ As we have indicated, under the Agreement on Safeguards, the determination of the "domestic industry" is based on the "producers � of the like or directly competitive products". The focus must, therefore, be on the identification of the products, and their "like or directly competitive" relationship, and not on the processes by which those products are produced.⁵⁵

95. We recall that, in this case, the USITC determined that the like products at issue were domestic and imported lamb meat and that the USITC did not find that live lambs or any other products were directly competitive with lamb meat. On the basis of this finding of the USITC, we consider that the "domestic industry" could only include the "producers" of lamb meat. By expanding the "domestic industry" to include producers of other products, namely, live lambs, the USITC defined the "domestic industry" inconsistently with Article 4.1(c) of the Agreement on Safeguards.

96. As a result, the imposition of the safeguard measure at issue was based on a determination of serious injury caused to an industry other than the relevant "domestic industry". In addition, that measure was imposed without a determination of serious injury to the "domestic industry", which, properly defined, should have been limited only to packers and breakers of lamb meat. Accordingly, we uphold the Panel's finding, in paragraph 7.118 of the Panel Report, that the safeguard measure at issue is inconsistent with Articles 2.1 and 4.1(c) of the Agreement on Safeguards.

To continue with VI. Threat of Serious Injury

Return to Index

28 Panel Report, para. 7.31.

29 Panel Report, paras. 7.42 and 7.43.

30 Ibid., paras. 7.44 and 7.45.

31 United States' appellant's submission, para. 11.

32 Ibid., paras. 17 and 18.

33 In making its principal finding under Article XIX:1(a), the Panel also made certain other findings, for example, that Article XIX:1(a) does not require a "two-step" causation approach (Panel Report, paras. 7.13-7.16 and 7.31). It also made a finding regarding the meaning of "unforeseen", as opposed to "unforeseeable", developments (Panel Report, paras. 7.22 and 7.24). As none of these other findings are appealed, we will not address them.

34 Appellate Body Report, Argentina - Footwear Safeguard, supra, footnote 15, para. 81; see, also, Korea - Dairy Safeguard, supra, footnote 16, para. 75.

35 Appellate Body Report, Korea - Dairy Safeguard, supra, footnote 16, para. 77; see, also, Appellate Body Report, Argentina - Footwear Safeguard, supra, footnote 15, para. 83.

36 Appellate Body Report, Korea - Dairy Safeguard, supra, footnote 16, para. 85; see, also, Appellate Body Report, Argentina - Footwear Safeguard, supra, footnote 15, para. 92. As we noted in those Reports, the "conditions" set forth in the second clause of Article XIX:1(a) are precisely the conditions reiterated in Article 2.1 of the Agreement on Safeguards.

37 Appellate Body Report, Korea - Dairy Safeguard, supra, footnote 16, para. 85; see, also, Appellate Body Report, Argentina - Footwear Safeguard, supra, footnote 15, para. 92.

38 At the oral hearing before us, all participants agreed that the fulfilment of these three conditions must feature in the report of the competent authorities.

39 USITC Report, pp. I-11, I-22, and I-23.

40 At the oral hearing, the United States indicated that it is no longer of the view that it is unnecessary to demonstrate the existence of unforeseen developments.

41 Appellate Body Report, Korea - Dairy Safeguard, supra, footnote 16, paras. 64 - 66; see, also, Appellate Body Report, Argentina - Footwear Safeguard, supra, footnote 15, paras. 60 - 63.

42 Both Australia and New Zealand identified Article 3 in their request for the establishment of a panel. However, in their arguments on unforeseen developments, they did not assert an inconsistency with Article 3.1 of the Agreement on Safeguards. Instead, they claimed solely under Article XIX:1(a) of the GATT 1994. At the oral hearing before us, Australia and New Zealand confirmed that their claim regarding unforeseen developments was made under Article XIX:1(a) and not Article 3.1 of the Agreement on Safeguards, although they indicated that they had made arguments under Article 3.1 in developing their claim under Article XIX.

43 USITC Report, pp. I-12 - I-14.

44 Panel Report, paras. 7.67 and 7.68.

45 Ibid., para. 7.74.

46 The GATT panel reports examined by the Panel were: United States - Definition of Industry Concerning Wine and Grape Products ("United States - Wine and Grapes"), adopted 28 April 1992, BISD 39S/436; Canada - Imposition of Countervailing Duties on Imports of Manufacturing Beef from the EEC ("Canada - Beef "), 13 October 1987, unadopted, SCM/85; and New Zealand - Imports of Electrical Transformers from Finland ("New Zealand - Transformers"), adopted 18 July 1985, BISD 32S/55.

47 Panel Report, para. 7.118.

48 USITC Report, p. I-12.

49 Panel Report, para. 7.69.

50 We note that two Commissioners (Askey and Crawford) did not join in the findings of the USITC on this point. These two Commissioners both found that live lambs, produced by growers and feeders, are directly competitive with lamb meat and that, accordingly, the "domestic industry" includes the producers of these competing products. USITC Report, pp. I-8 and I-9, footnotes 7 (Commissioner Askey) and 8 (Commissioner Crawford). The United States has not argued, before the Panel or before us, that live lambs are directly competitive with lamb meat, and that issue as we stated earlier, does not form part of this appeal.

51 Panel Report, para. 7.74.

52 Ibid., para. 7.95. We note that the dispute in Canada - Beef involved claims under the Tokyo Round Agreement on Interpretation and Application of Articles VI, XVI and XXII of the General Agreement on Tariffs and Trade. The panel, in that dispute, was called upon to interpret Article 6.6 of that Agreement, which explicitly required "the separate identification of production" in assessing the effects of subsidized imports on the domestic industry. Accordingly, in that dispute, it was appropriate for the panel to examine the separate production processes. However, there is no such provision in the Agreement on Safeguards.

53 Panel Report, para. 7.96.

54 Ibid., para. 7.95.

55 We can, however, envisage that in certain cases a question may arise as to whether two articles are separate products. In that event, it may be relevant to inquire into the production processes for those products.