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UNITED STATES - DEFINITIVE SAFEGUARD MEASURES
The report of the Panel on United States - Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line Pipe from Korea is being
circulated to all Members, pursuant to the DSU. The report is being circulated
as an unrestricted document from 29 October 2001 pursuant to the Procedures for
the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are
reminded that in accordance with the DSU only parties to the dispute may appeal
a panel report. An appeal shall be limited to issues of law covered in the Panel
report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under
consideration by the Panel or Appellate Body.
Note by the Secretariat: This Panel Report shall be adopted by the Dispute
Settlement Body (DSB) within 60 days after the date of its circulation unless a
party to the dispute decides to appeal or the DSB decides by consensus not to
adopt the report. If the Panel Report is appealed to the Appellate Body, it
shall not be considered for adoption by the DSB until after the completion of
the appeal. Information on the current status of the Panel Report is available
from the WTO Secretariat.
LIST OF ANNEXES
ANNEX A
Third Party Submissions and Oral Statements
Contents Page
ANNEX B
Parties' Answers to Written Questions
Comments to the Other Party's Written Questions
Contents
Page
C-2
C-16
I. INTRODUCTION
A. COMPLAINT OF KOREA
1.1 On 15 June 2000, Korea requested consultations with the United States
pursuant to Article 4 of the Dispute Settlement Understanding (the "DSU"),
Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (the "GATT
1994") and Article 14 of the Agreement on Safeguards1 (also the "Safeguards
Agreement", or "SA") with regard to a definitive safeguard measure imposed by
the United States on imports of circular welded carbon quality line pipe (the
"line pipe measure").2
1.2 On 28 July 2000, Korea and the United States held the requested
consultations, but failed to resolve the dispute.
1.3 On 14 September 2000, Korea requested the establishment of a panel to
examine the matter.3
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL
1.4 At its meeting of 23 October 2000, the Dispute Settlement Body (the "DSB")
established a Panel pursuant to the request made by Korea in document
WT/DS202/4.4
1.5 At that meeting, the parties to the dispute also agreed that the Panel
should have standard terms of reference, as follows:
"To examine, in the light of the relevant provisions of the covered agreements
cited by Korea in document WT/DS202/4, the matter referred to the DSB by Korea
in that document, and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements".
1.6 On 12 January 2001, Korea requested the Director-General to determine the
composition of the Panel, pursuant to Article 8.7 of the DSU. On 22 January
2001, the Director-General composed the Panel as follows:
1.7 Australia, Canada, the European Communities, Japan and Mexico, reserved
their rights to participate in the panel proceedings as third parties.
II. FACTUAL ASPECTS
2.1 This dispute concerns a measure imposed by the United States on imports of
circular welded carbon quality line pipe ("line pipe"). This measure was imposed
following an investigation conducted by the United States International Trade
Commission ("ITC") in response to a petition filed on 30 June 1999 and amended
on 2 July 1999, alleging that imports of line pipe were causing serious injury
to the US manufacturers of line pipe.
2.2 The ITC initiated the investigation on 4 August 1999.
2.3 The ITC held a public "voice" vote on the issue of serious injury on 28
October 1999. Commissioner Crawford voted "no serious injury" and "no threat of
serious injury" while Commissioners Bragg and Askey found "threat of serious
injury", but no "present serious injury". Three Commissioners found "present
serious injury." On this basis the ITC determined that line pipe was being
imported into the United States in such increased quantities as to be a
substantial cause of serious injury to the domestic industry producing an
article like or directly competitive with the imported article.
2.4 On 8 December 1999, the ITC announced its remedy recommendation.
Commissioner Crawford, who had voted that the industry was not seriously injured
or threatened with serious injury by imports, recommended against the imposition
of any remedy. Commissioner Askey and Commissioner Bragg recommended a four-year
remedy with an ad valorem tariff of 12.5 per cent for the first year, 11 per
cent for year two, 9.5 per cent for year three, and 8 per cent for year four.
The remaining three Commissioners, Commissioners Miller, Koplan and Hillman,
constituting the majority, recommended:
(1) That the President impose a tariff-rate quota for a 4-year period on imports
of line pipe, with the in-quota amount set at 151,124 tons in the first year,
and with that amount to be increased by 10 per cent in each of the second,
third, and fourth years; with over-quota imports to be subject to a duty of 30
per cent ad valorem in addition to current US tariffs;
(2) That the President, if he determines to allocate the overall quota,
recognize the disproportionate growth and impact of the imports from Korea;
(3) That the President initiate international negotiations with Korea to address
the underlying cause of the import surge and the serious injury to the domestic
industry;
(4) Having made negative findings with respect to imports of line pipe from
Canada and Mexico under section 311(a) of the NAFTA Implementation Act, that
such imports be excluded from the tariff-rate quota; and
(5) That the tariff-rate quota not apply to imports of line pipe from Israel, or
to any imports of line pipe entered duty-free from beneficiary countries under
the Caribbean Basin Economic Recovery Act or the Andean Trade Preference Act.
2.5 The President announced the measure on 11 February 2000. The action would
take the form of a duty increase for three years and one day. The first 9,000
short tons of imports from each country were excluded each year, with annual
reductions in the rate of duty in the second and third years. In the first year,
imports above 9,000 short tons would be subject to a 19 per cent duty. In the
second year, the duty would be reduced to 15 per cent and in the third year the
duty would be 11 per cent. Mexico and Canada were excluded from the remedy. The
United States notified the WTO of its action on 23 February 2000.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1 Korea requests the Panel to find that:
(1) The US measure does not comply with Article XIII or Article XIX of the GATT
1994 nor does it comply with the requirements of Article 5 of the Agreement on
Safeguards;
(2) Regardless of the type of measure, the measure violates Article XIX:I of the
GATT 1994 and Articles 5.1 and 7.1 of the Agreement on Safeguards because the
measure was not limited to the extent and the time necessary to remedy the
injury and allow adjustment;
(3) The United States violated Article 2 of the Agreement on Safeguards, as well
as Article I, Article XIII:1 and Article XIX of the GATT 1994 by exempting
Mexico and Canada from the measure;
(4) The US measure did not respect the provisions of Article 9.1 of the
Agreement on Safeguards regarding the exclusion of developing countries;
(5) The US measure is inconsistent with Article XIX of the GATT 1994 and Article
2 of the Agreement on Safeguards because imports did not increase suddenly,
sharply and recently;
(6) The United States failed to demonstrate that the US line pipe industry was
suffering serious injury as required by Article XIX of the GATT 1994 and
Articles 3.1 and 4 of the Agreement on Safeguards;
(7) The United States failed to demonstrate a causal relationship between
increased imports and serious injury in violation of Article XIX of the GATT
1994 and Article 4 of the Agreement on Safeguards;
(8) The ITC's threat of serious injury determination violated Articles 2 and 4
of the Agreement on Safeguards and Article XIX of the GATT 1994;
(9) The United States failed to demonstrate the unforeseen developments which
led to the increased imports which caused serious injury;
(10) The US decision did not satisfy the requirements of emergency action of
Article 11 of the Agreement on Safeguards or Article XIX of the GATT 1994;
(11) The United States violated the obligation in Article 12.3 of the Agreement
on Safeguards to consult concerning the measure before the measure is imposed;
and
(12) The United States violated the compensation provisions of Article 8.1 of
the Agreement on Safeguards.
3.2 Therefore Korea requests that the Panel find that the US safeguard measure
should be lifted immediately and the ITC safeguard investigation on line pipe
terminated.
3.3 The United States requests the Panel to reject Korea's claims.
1 Unless otherwise indicated, all references to Arabic numbered Articles are to
the Agreement on Safeguards, and all references to Roman numeral Articles are to
GATT 1994.
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