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WORLD TRADE
ORGANIZATION

WT/DS202/R
29 October 2001
(01-5229)
 
  Original: English

UNITED STATES - DEFINITIVE SAFEGUARD MEASURES
 ON IMPORTS OF CIRCULAR WELDED CARBON QUALITY
 LINE PIPE FROM KOREA


Report of the Panel
 



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.


TABLE OF CONTENTS

  1. INTRODUCTION
  1. COMPLAINT OF KOREA
     
  2. ESTABLISHMENT AND COMPOSITION OF THE PANEL 
  1. FACTUAL ASPECTS
     
  2. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS 
     
  3. ARGUMENTS OF THE PARTIES 
  1. FIRST WRITTEN SUBMISSION OF KOREA
  1. Factual Background
     
  2. Preliminary Legal Issues
     
  3. The Safeguard Measure Is Inconsistent With the WTO
     
  4. The ITC Investigation Was Not in Compliance With WTO Requirements
     
  5. Procedural Legal Arguments
     
  6. Conclusion
  1. FIRST WRITTEN SUBMISSION OF THE UNITED STATES
  1. Factual Background
     
  2. Substantive Argument
     
  3. Procedural Arguments
  1. FIRST ORAL STATEMENT OF KOREA
  1. Factual Background
     
  2. Preliminary Issues
     
  3. Legal Arguments
  1. FIRST ORAL STATEMENT OF THE UNITED STATES
  1. Increased imports
     
  2. Serious Injury
     
  3. Causation
     
  4. Threat
     
  5. Putting the Safeguard Measure in Context
     
  6. Korea has Failed to Establish that the Measure was Applied Beyond the Extent Necessary
     
  7. Korea has Failed to Justify Application of Quota Disciplines to the Line Pipe Safeguard
     
  8. Exclusion of Canada and Mexico from the Line Pipe Safeguard
     
  9. Korea's Request for Confidential Information
  1. SECOND WRITTEN SUBMISSION OF KOREA
  1. Preliminary Legal Issues
     
  2. Legal Arguments
     

  3. Procedural Legal Arguments
     
  4. Conclusion
  1. SECOND WRITTEN SUBMISSION OF THE UNITED STATES
  1. Introduction
     
  2. The Increased Imports Requirements of Articles 2.1 and 4.2(a) Were Satisfied
     
  3. The ITC's Serious Injury Finding Fully Complies with Articles 3 and 4 of the Safeguards Agreement
     
  4. The ITC's Causation Finding Fully Complied with Article 4 of the Safeguards Agreement
     
  5. The United States Applied the Safeguard Measure on Terms Consistent with Articles 5 and 9 of the Safeguards Agreement and Articles I, XIII, and XIX
  1. SECOND ORAL STATEMENT OF KOREA
  1. Introduction
     
  2. The Safeguard Measure
     
  3. The ITC Serious Injury Investigation
  1. SECOND ORAL STATEMENT OF THE UNITED STATES
  1. Burden of Proof and Standard of Review
     
  2. Increased Imports
     
  3. Serious Injury
     
  4. Causation
     
  5. There is no Requirement to Explain how Application of a Safeguard Measure Satisfies the Requirements of Article 5.1
     
  6. Korea's Claim that the Line Pipe Safeguard Itself Does not Comply with Article 5.1
  1. ARGUMENTS OF THE THIRD PARTIES
     
  2. INTERIM REVIEW
  1. THE UNITED STATES' REQUESTS FOR INTERIM REVIEW
     
  2. KOREA'S REQUESTS FOR INTERIM REVIEW
  1. FINDINGS
  1. PRELIMINARY ISSUES
  1. Release of confidential record information to the Panel
     
  2. The admissibility of evidence not submitted to the ITC, or addressing events after the decision to take a safeguard measure
  1. CLAIMS RELATING TO THE LINE PIPE MEASURE
  1. The nature of the measure
     
  2. Claims under Article XIII
     
  3. Claims under Articles 5 and 7 of the Safeguards Agreement and Article XIX of GATT 1994
     
  4. Claims under Articles 3.1 and 4.2(c)
     
  5. The exclusion of Canada and Mexico - Articles I, XIII and XIX, and Article 2.2
     
  6. The exclusion of Canada and Mexico - Parallelism
     
  7. The exclusion of developing countries under Article 9 of the Safeguards Agreement
  1. CLAIMS RELATING TO THE INVESTIGATION
  1. Increased imports
     
  2. Serious injury
     
  3. Threat of serious injury
     
  4. Causal link between increased imports and serious injury or threat of serious injury
     
  5. Unforeseen developments
     
  6. Emergency action
     
  7. Procedural Issues
  1.  CONCLUSIONS AND RECOMMENDATION
     

LIST OF ANNEXES

ANNEX A

Third Party Submissions and Oral Statements

Contents

Page

Annex A-1       Third Party Submission of Canada   A-2
Annex A-2       Third Party Submission of the European Communities A-5
Annex A-3       Third Party Submission of Japan A-12
Annex A-4       Oral Statement by Canada A-18
Annex A-5       Oral Statement by the European Communities A-20
Annex A-6       Oral Statement by Japan A-29
Annex A-7       Oral Statement by Mexico A-30

ANNEX B

Parties' Answers to Written Questions

Contents Page
Annex B-1       Korea's answers to questions from the Panel B-2
Annex B-2       United States' answers to questions from the Panel and Korea B-17
Annex B-3       Canada's answers to questions from the Panel to third parties B-61
Annex B-4       European Communities' answers to questions from the Panel to
                      third parties
 B-64
Annex B-5       Japan's answers to questions from the Panel to third parties B-77
Annex B-6       Mexico's answers to questions from the Panel to third parties B-82
Annex B-7       Korea's answers to questions from the Panel at the second
                      meeting with the parties
B-85
Annex B-8       United States' answers to questions from the Panel at the
                      second meeting with the parties
B-91



ANNEX C

Comments to the Other Party's Written Questions

Contents

Page

Annex C-1      Korea's comments on questions from the Panel to the United
                     States

C-2

Annex C-2      Korea's comments on United States' Response to Questions from
                     the Panel at the second meeting with the parties

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: 

    Chairman: Mr. Dariusz Rosati
       
    Members: Mr. Roberto Azevedo
      Mr. Eduardo Bianchi

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.

2 WT/DS202/1.

3 WT/DS202/4.

4 See, WT/DSB/M/91 at para. 67.


 

Continuation: IV. Arguments of the Parties