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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
 

(Continuation)


(i) The methodology used by the United States in its analysis of increased imports

7.194 Turning first to the appropriateness of the methodology used by the ITC in evaluating the increase in the imports, we note that the US - Wheat Gluten panel stated that the standard of review for an increased imports determinations is:

[W]hether the published report on the investigation contains an adequate, reasoned and reasonable explanation of how the facts in the record before the ITC support the determination made with respect to increased imports.166

We concur with the standard of review established by that panel. However, the standard of review was formulated for the purpose of examining the factual, rather than the methodological, issues in an increased imports determination. Since the question immediately before us concerns the methodology chosen by the ITC, it is necessary to expand on the standard formulated by the panel in US - Wheat Gluten, in order to identify the appropriate standard for reviewing the methodological issue before us. Therefore, in determining whether the US methodology for the analysis of the existence of increased imports complied with its obligations under the Agreement on Safeguards and the GATT 1994, our review will consist of an objective assessment, pursuant to Article 11 of the DSU, of whether the methodology selected is unbiased and objective, such that its application permits an adequate, reasoned and reasonable explanation of how the facts in the record before the ITC support the determination made with respect to increased imports.

7.195 The ITC describes the methodology applied to evaluate the increased imports in the line pipe investigation in the following terms:

The Commission considers imports from all sources in determining whether imports have increased over the most recent 5 full years, and partial data for the most recent current year if available. There is no minimum amount by which imports must have increased. A simple increase is sufficient.167 168

7.196 Korea argues that the ITC's period of investigation of five years is in conflict with the requirements of Article 2.1 and Article XIX:1(a). We note that the Agreement contains no requirements as to how long the period of investigation in a safeguards investigation should be, nor how the period should be broken down for purposes of analysis. Thus, the period of investigation and its breakdown is left to the discretion of the investigating authorities.

7.197 In the case before us, the ITC, consistent with its past practice, examined a five-year period covering 1994-1998, and also collected data for the first semester of 1999. In order to evaluate the existence of increased imports, the ITC compared the figures for each full year with the preceding year, and the figures for interim 1999 with those of the first semester of 1998.

7.198 Regarding the length of the period of investigation, Korea argues that the period selected by the ITC did not meet the requirements of Article 2.1 and/or Article XIX:1(a). Korea relies on the following findings of the Appellate Body in Argentina - Footwear Safeguards:

[W]e do not agree with the Panel that it is reasonable to examine the trend in imports over a five-year historical period. In our view, the use of the present tense of the verb phrase "is being imported" in both Article 2.1 of the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994 indicates that it is necessary for the competent authorities to examine recent imports, and not simply trends in imports during the past five years - or, for that matter, during any other period of several years.130

_____________________

130The Panel, in footnote 530 to para. 8.166 of the Panel Report, recognizes that the present tense is being used, which it states "would seem to indicate that, whatever the starting-point of an investigation period, it has to end no later than the very recent past." (emphasis added) Here, we disagree with the Panel. We believe that the relevant investigation period should not only end in the very recent past, the investigation period should be the recent past.

7.199 In the case before us the period selected by the ITC was five years and six months, which is a period similar in length to the one used by the Argentine investigating authority in Argentina - Footwear Safeguards. However, we note that the Appellate Body, in the findings relied upon by Korea to argue the question of the length of the period of investigation, emphasized not the length of the period per se, but that there should be a focus on recent imports and not simply trends over the period examined. In the case of the line pipe investigation the ITC did not merely compare end points, or look at the overall trend over the period of investigation, (as Argentina had done in the investigation at issue in Argentina - Footwear Safeguard). It analysed the data regarding imports on a year-to-year basis for the 5 complete years, and also considered whether there was an increase in interim 1999 as compared with interim 1998.169 In the absence of any specific obligation in the Agreement regarding the period of investigation, we are not prepared to make a ruling of inconsistency based merely on the length of the period of investigation actually used. Of course, the analysis and determination based on the information for that period of investigation may be inconsistent with the requirements of the Agreement, but for reasons other than or additional to the length of the period of investigation per se.

7.200 The Appellate Body has recently stated, regarding its findings in Argentina - Footwear Safeguard cited above, that:

We note that, at footnote 130 of our Report in Argentina - Footwear Safeguard, [ ], we said that "the relevant investigation period should not only end in the very recent past, the investigation period should be the recent past." In this Report, we comment on the relative importance, within the period of investigation, of the data from the end of the period, as compared with the data from the beginning of the period. The period of investigation must, of course, be sufficiently long to allow appropriate conclusions to be drawn regarding the state of the domestic industry.170 (emphasis added)

We concur with the Appellate Body's finding regarding the length of the period of investigation. Although this finding refers to the period of investigation for a serious injury determination, it appears that the Appellate Body does not distinguish between the factors governing the appropriate length of the period of investigation with respect to increased imports and the length of the period of investigation for the serious injury factors. Our conclusion is based on the fact that, although the quote pertains to "the state of the domestic industry", it refers to a footnote in the Argentina - Footwear Safeguard report that pertains to the period of investigation for the increased imports.

7.201 We are of the view that by choosing a period of investigation that extends over 5 years and six months, the ITC did not act inconsistently with Article 2.1 and Article XIX. This conclusion is based on the following considerations: first, the Agreement contains no specific rules as to the length of the period of investigation; second, the period selected by the ITC allows it to focus on the recent imports; and third, the period selected by the ITC is sufficiently long to allow conclusions to be drawn regarding the existence of increased imports.

7.202 Regarding the breakdown of the period of investigation for purposes of analysing trends in the level of imports, Korea questions the appropriateness of comparing the first semester of 1999 to the first semester of 1998, rather than to the second semester of 1998. The United States argues that the ITC was not required to compare the second half of 1998 with the first half of 1999, and it could not do so as it did not collect data for the second half of 1998 in isolation (it collected data for 1998 as a whole). Korea responds that data for the second half of 1998 could have been easily derived from subtracting the figures for the first half of 1998 from the yearly total for 1998. Korea further argues that not only could the ITC have easily done a second half of 1998 to first half of 1999 comparison, but that it did so for the purpose of its injury analysis.171 According to Korea this inconsistency in the analysis of data for serious injury/threat thereof and increased imports violates the requirements of Articles 2.1 and 4.2(b).

7.203 We recall that there are no provisions in the Safeguards Agreement which give any guidance on how the period of investigation should be broken down for purpose of analysis by the investigating authorities. In the case before us the period selected by the ITC would have allowed it to find that there was a decrease in the imports if the facts in the case supported such a finding. We do not believe that the methodology chosen by the ITC for the purposes of analysing whether or not there was an increase in imports was inherently biased or would have precluded it from performing a reasonable evaluation of the facts in the investigation. The United States asserts that the ITC acted according to its past practice, and that this shows that the methodology was objective and unbiased. We agree with the United States. The United States responds that a comparison of matching interim periods, in this case January-June, of different years, is the standard ITC practice.172 According to the United States this standard practice helps eliminate the possible effect of any seasonal or cyclical distortions which may affect the comparison. Although the ITC concedes that line pipe is not a seasonal product, we are of the view that the methodology applied in the comparison was not chosen in order to manipulate the data and show a particular result. Nor is there any evidence of manipulation or bias resulting from an alleged inconsistency with the ITC's serious injury analysis. Although the ITC did make some observations that include or make reference to the second half of 1998 in its determination on serious injury or threat of serious injury, we do not consider that the ITC was comparing the situation in the first half of 1999 to that in the second half of 1998. The ITC was simply describing factual circumstances that existed in the second half of 1998 and the first half of 1999. The ITC was not drawing conclusions based on a comparison of those periods.

7.204 Korea further questions whether an analysis that compares interim 1999 with the first half of 1998, as opposed to the second half of 1998, permits a finding that there was a recent increase in imports, as it considers the "recent period" to be the last one-year period, with particular emphasis on the last six months. In this regard, we note that the Appellate Body in Argentina-Footwear Safeguard found that "the phrase 'is being imported' implies that the increase in imports must have been sudden and recent". According to Korea, the phrase "is being imported … in such increased quantities" refers to "the period immediately preceeding the authority's decision".173 The word "recent" - which was used by the Appellate Body in interpreting the phrase "is being imported" - is defined as "not long past; that happened, appeared, began to exist, or existed lately".174 In other words, the word "recent" implies some form of retrospective analysis. It does not imply an analysis of the conditions immediately preceeding the authority's decision. Nor does it imply that the analysis must focus exclusively on conditions at the very end of the period of investigation. We consider that an analysis that compares the first semester of 1998 with the first semester of 1999 is not inconsistent with the requirement that the increase in imports be "recent".

7.205 Based on the above considerations, we uphold the methodology applied by the ITC as being unbiased and objective, such that its application permitted an adequate, reasoned and reasonable explanation of how the facts in the record before the ITC support the determination made with respect to increased imports. Having upheld the methodology applied by the ITC for determining the existence of increased imports, we shall review the ITC's findings on absolute and relative import increase in light of that methodology.

(ii) Absolute imports

7.206 With respect to absolute imports, the ITC found that when comparing import volumes on a yearly basis, imports rose steadily from 1996 to 1998. When the ITC compared import volumes for the first semester of 1998 and first semester of 1999, it found that imports had declined. Although there was a decline in imports for interim 1999 when compared to interim 1998, the ITC still found that there were increased imports, on the basis that imports remained at "a very high level".175 Korea claims that given that absolute imports declined as of first semester of 1998 there was no recent increase in the volume of imports.

7.207 We have already found that the methodology applied by the ITC was appropriate. However, there remains the question of whether the finding of increased imports can be maintained in light of the decline in absolute imports from the first semester of 1998 to the first semester of 1999. In order to answer this question we recall our discussion regarding the meaning of "recent", and our finding that "recent" does not imply an analysis of the present. We are also of the view that the fact that the increase in imports must be "recent" does not mean that it must continue up to the period immediately preceeding the investigating authority's determination, nor up to the very end of the period of investigation. We find support for our view in Article 2.1, which provides "that such product is being imported … in such increased quantities". The Agreement uses the adjective "increased", as opposed to "increasing". The use of the word "increased" indicates to us that there is no need for a determination that imports are presently still increasing. Rather, imports could have "increased" in the recent past, but not necessarily be increasing up to the end of the period of investigation or immediately preceeding the determination. Provided the investigated product "is being imported" at such increased quantities at the end of the period of investigation, the requirements of Article 2.1 are met.176

7.208 Korea, on the question of the use of the word "recent" in the Argentina - Footwear Safeguard Appellate Body report, argues that "'[r]ecent imports' are those that occurred in the last year of the period with the most recent trends being the most significant trends".177 However, we are of the view that it is not necessarily the case that "the most recent trends [are] the most significant trends", since this would imply that a decrease in imports in the most recent period is necessarily of greater significance than a prior increase in imports. As noted above, the word "recent" need not require that imports be increasing right up to the date of the determination. There can still be a "recent" increase even if that increase has ceased prior to the date of the determination, provided imports remain at a sharply increased level. Under Korea's approach, which would afford greater significance to the decrease at the time of the determination than to the earlier increase evidenced in the yearly comparison, the earlier increase would cease to be "recent" for the purpose of Article 2.1, even though imports remain at an increased level. We therefore reject Korea's interpretation of the Argentina - Footwear Safeguard Appellate Body report. We find support for our views in the Appellate Body's report in US - Lamb Meat where the following finding was made with respect to which part of the period of investigation was the most relevant in evaluating the state of the industry when making a threat of serious injury determination:

The likely state of the domestic industry in the very near future can best be gauged from data from the most recent past. Thus, we agree with the Panel that, in principle, within the period of investigation as a whole, evidence from the most recent past will provide the strongest indication of the likely future state of the domestic industry.

However, although data from the most recent past has special importance, competent authorities should not consider such data in isolation from the data pertaining to the entire period of investigation.178

We believe that the same considerations apply when it comes to which part of the period of investigation is the most relevant in a determination of increased imports.

7.209 In a safeguard investigation, the period of investigation for examination of the increased imports tends to be the same as that for the examination of the serious injury to the domestic industry. This contrasts with the situation in an anti-dumping or countervailing duty investigation where the period for evaluating the existence of dumping or subsidization is usually shorter than the period of investigation for a finding of material injury. We are of the view that one of the reasons behind this difference is that, as found by the Appellate Body in Argentina - Footwear Safeguard, "the determination of whether the requirement of imports "in such increased quantities" is met is not a merely mathematical or technical determination."179 The Appellate Body noted that when it comes to a determination of increased imports "the competent authorities are required to consider the trends in imports over the period of investigation".180 The evaluation of trends in imports, as with the evaluation of trends in the factors relevant for determination of serious injury to the domestic industry, can only be carried out over a period of time. Therefore, we conclude that the considerations that the Appellate Body has expressed with respect to the period relevant to an injury determination also apply to an increased imports determination.

7.210 In view of the considerations expressed above we do not believe that the analysis of data for the first semester of 1999 should be considered in isolation. We find the analysis of whether imports had increased on a yearly basis from 1994 to 1998 very relevant to the question of whether there were increased imports. Although we are aware that imports decreased for the first semester of 1999 when compared to the first semester of 1998, we note that regardless of the decrease for the first half of 1999, the ITC in their report found that imports of line pipe "remained at a very high level in interim 1999".181 This high level of imports for 1999 supports a finding that imports were still entering the United States "in such increased quantities" as prescribed in Article 2.1.182 In other words, although Korea may be correct in arguing that absolute imports declined, this does not preclude a finding of imports "in such increased quantities" for the purpose of Article 2.1. Based on the above considerations we conclude that the ITC was correct in its finding of an absolute increase in imports of line pipe.183 184

7.211 Even if we had found that the United States was not correct in finding an absolute increase in imports, we note that Article 2.1 provides that a Member may apply a safeguard measure on a product after a determination that such product is "being imported … in such increased quantities, absolute or relative to domestic production … as to cause or threaten to cause serious injury" (emphasis supplied). Therefore, a determination of either an absolute or relative increase in imports causing serious injury is sufficient to authorize a Member to adopt safeguard measures. We conclude in the next section of our report that, on the basis of the methodology applied by the ITC, there was a clear increase in imports relative to domestic production. Accordingly, the increased imports requirement would have been met regardless of whether there was or there was not an absolute increase in imports.

(iii) Relative imports

7.212 Regarding relative imports, the ITC found that the ratio of imports to domestic production rose steadily from 1996 to 1998. It also found that this ratio rose to its highest level in interim 1999 as compared to interim 1998.

7.213 Korea's basic argument is that the ITC was precluded from finding that there was a "recent" increase in imports relative to domestic production because relative imports decreased in the last six months of the period of investigation (Jan-Jun 1999), as compared to the previous six-month period (July-Dec 1998). This comparison put forward by Korea was not performed by the ITC in their analysis of the relative increase in the imports. Therefore to uphold Korea's view, we would have to find either, 1) that such a comparison would be obligatory as a legal matter, or 2) that it was unreasonable to reach the conclusion that relative imports increased based on a comparison of the first half of 1998 with the first half of 1999. We have already found that the ITC's methodology of making a comparison between the first semester of 1999 and the first semester of 1998 is consistent with the Agreement on Safeguards. Application of that methodology led the ITC to the conclusion that there was an increase in the ratio of imports to domestic production, not only on a year-to-year basis from 1996 to 1998, but also between interim 1998 and interim 1999. It is indisputable that the data supports the finding by the ITC that there was an increase in imports relative to domestic production from the first half of 1998 to the first half of 1999. Having upheld the methodology, and in the absence of a challenge by Korea to the conclusion drawn by the ITC from its methodology, we also uphold such a conclusion. Therefore, we uphold the ITC's finding that there were increased imports relative to domestic production.185

(iv) Conclusion

7.214 For the above reasons, we reject Korea's claim that the United States' finding of increased imports was inconsistent with Article 2.1 and Article XIX.

2. Serious injury

7.215 Korea asserts that the USITC serious injury determination is inconsistent with Article XIX, and Articles 3 and 4. In particular, Korea submits that the injury data on which the ITC relied was flawed because it contained data from other industries; the US domestic industry was experiencing only a one-year downturn from a historical high and the condition of the domestic industry was improving at the end of the period of investigation; and the ITC's decision does not contain an adequate demonstration of factors and conclusions of law and fact to support its serious injury determination.

7.216 In addressing these claims, we take careful note of the standard of review to be applied by panels when reviewing claims under Article 4.2(a). In particular, we note that

in examining a claim under Article 4.2(a), a panel can assess whether the competent authorities' explanation for its determination is reasoned and adequate only if the panel critically examines that explanation, in depth, and in the light of the facts before the panel. Panels must, therefore, review whether the competent authorities' explanation fully addresses the nature, and, especially, the complexities, of the data, and responds to other plausible interpretations of that data. A panel must find, in particular, that an explanation is not reasoned, or is not adequate, if some alternative explanation of the facts is plausible, and if the competent authorities' explanation does not seem adequate in the light of that alternative explanation. Thus, in making an "objective assessment" of a claim under Article 4.2(a), panels must be open to the possibility that the explanation given by the competent authorities is not reasoned or adequate.186

(a) The injury data on which the ITC relied was flawed because it contained data from other industries

(i) Declines in the sale and production of OCTG; collective operating leverage

(1) Arguments by Korea

7.217 Korea claims that the US violated Article 4.1(c) and Article 4.2(a), (b) and (c) because the data relied on by the ITC was flawed since it contained data from other industries. In particular, certain performance factors for the line pipe industry (especially regarding capacity utilisation and profitability) were severely distorted by a disproportionately large decline in the production and sales of oil country tubular goods ("OCTG").

7.218 Korea notes that 14 of the 15 welded line pipe producers that responded to ITC questionnaires also produced other types of pipe (such as OCTG) in their line pipe production facilities. Korea argues that this resulted in a collective operating leverage effect, in the sense that when sales of one type of pipe are down, a manufacturer's production levels and capacity utilization overall are directly affected unless increases in the production of other pipe products can fully compensate for the reduction in that product. If the other products cannot fully compensate, then production levels fall, capacity utilization falls and all fixed costs on a per unit basis rise and net revenue declines.187 In this way, negative profitability for one segment of production, if the product and the decline in this product are significant enough, can negatively affect overall profitability. Declines in overall profitability necessarily affect the profitability of each product. Korea claims that the US failed to take this into account when allocating overall production (including OCTG) costs to line pipe. Korea asserts that the declines in OCTG were much more severe than line pipe, and had a greater impact on the producers' profitability. Furthermore, Korea notes that the Staff Report itself refers to the existence of collective operating leverage:

"[c]hanges in operating income during the period of investigation generally followed sales revenue, but also reflected the presence of some form of collective operating leverage. For example, the 101-per cent increase in operating income in 1997 significantly exceeded the 26-per cent increase in 1997 sales revenue. In the opposite direction, the 1998 14-per cent decline in sales revenue was accompanied by a 69-per cent drop in operating income. In the first half of 1999, operating income declined even further to a loss of $12.8 million."188

(2) Arguments by the United States

7.219 The United States submits that Korea has provided neither a legal nor a factual basis that would compel the Panel to conclude that Article 4.2(a) requires the use of data that excludes all products other than line pipe.189 As a legal matter, the provision requires the consideration of "factors" - that is, categories of data like import volume and profitability - and requires that they be "relevant" as well as "objective and quantifiable." However, it does not speak to how the competent authorities may quantify these factors. It certainly does not prevent the use of statistics that reflect, in part, products other than those under investigation, as long as they serve to quantify the factor in question with respect to the product in question.

7.220 In collecting and evaluating the injury data with respect to line pipe, the USITC recognized that most of the producers of this product also made other types of pipe, including OCTG, standard pipe, and structural pipe.190 Some allocation issues will always be present in a safeguards investigation involving a product that is made in productive facilities also used to produce other products. The fact that certain allocations are necessary does not imply that a Member has failed to evaluate industry-specific factors "of an objective and quantifiable nature," as required by Article 4.2(a) of the Safeguards Agreement. As noted above, the USITC carefully evaluated company allocation methods and verified the allocations of two of the largest US producers.

7.221 The United States also argues that the ITC specifically addresses Korea's arguments that low production quantities and sales of OCTG distorted the profitability data on the line pipe industry. The USITC explained:

We are satisfied that increases in per-unit allocated overhead and SG&A resulting from declines in the production of other pipe products such as OCTG were not mistakenly or disproportionately attributed to line pipe. Increases in per-unit overhead and SG&A were allocated by the domestic producers in proportion to their sales of end products or based on other acceptable allocation methodologies. As indicated above, the Commission verified the data furnished by two of the largest domestic producers of line pipe and found the allocations made to be reasonable.191

7.222 The United States also argues that Korea's claim rests entirely on the faulty premise that OCTG shipments declined much more severely than shipments of line pipe and other pipe products made by the US firms.192 These disproportionate declines in OCTG shipments were significant, according to Korea, because US producers allocated fixed costs to the various products they produced in proportion to their sales of the end-product. In other words, if sales of OCTG declined to a much greater degree than sales of line pipe, a disproportionate share of costs would be attributed to line pipe.193

7.223 According to the United States, Korea's only evidence for the proposition that OCTG sales fell disproportionately is Commissioner Crawford's statement (which is not part of the determination of the competent authorities of the United States) that net shipments of welded OCTG products "collapsed altogether between September 1998 and March 1999."194  In fact, the US argues, line pipe shipments declined precipitously, at the same time and virtually to the same degree as OCTG shipments, in late 1998 and early 1999.195 OCTG shipments stayed at depressed levels for slightly longer than line pipe shipments, but the two products showed similar and nearly simultaneous trends. There is thus no basis for Korea's argument that a disproportionate share of fixed costs were allocated to line pipe, thereby distorting the financial results of the line pipe industry. Furthermore, Korea's argument assumes that the largest component of average unit costs consisted of fixed costs. Operating leverage (as discussed on p. II-26 of the USITC Report) generally refers to the ability to increase profitability by an amount that is more than proportionate to the increase in sales volume. This is achieved by spreading fixed costs over a larger volume of products. Because raw material and direct labour are generally variable costs, the most significant contributors to operating leverage are the fixed portions of factory overhead and selling, general, and administrative expenses. Despite operating leverage explaining a portion of the changes in profitability during the period examined, the majority of average unit costs (raw material and direct labour) were ultimately variable and therefore could not be directly influenced by changes in production volume.196 Thus, even if there had been a disproportionately large decline in OCTG sales - and Korea has produced no record evidence of this - the effect that this could have had on average unit costs for line pipe was nominal.


166 US - Wheat Gluten at para. 8.5.

167 ITC Report, p. I-14.

168 We are not convinced that the standard applied by the ITC whereby "[a] simple increase [in imports] is sufficient", complies with the requirements of the Agreement. However, we do not have to decide this issue in this case as Korea provides no argumentation on the question of whether the increase in imports was sudden and sharp enough for purposes of Article 2.1 and Article XIX. (see footnote 164 above).

169 We will deal with the appropriateness of this "matched" semester analysis infra.

170 US-Lamb Meat (AB) at footnote 88.

171 In support of their argument Korea cites certain paragraphs in pages I-19, I-22 and I-28 of the serious injury and causation analysis sections of the ITC Report. Korea also refers to pages I-38-41, I-43-44, and I-46 in the separate views on injury by Commissioners Bragg and Askey section of the ITC Report.

172 The fact that the ITC conformed to its previous practice does not necessarily mean that the methodology used, or that such past practice, is in conformity with the Agreement. Nevertheless, it has not been established that the usual ITC practice regarding the period of investigation was not appropriate for the line pipe investigation.

173 Korea's reply to Question 1 from the Panel at the first substantive meeting (see Annex B-1).

174 The Compact Edition of the Oxford English Dictionary, Volume 1 (Oxford University Press, 1971).

175 ITC Report at p. I-14.

176 We observe that an increase in imports before the date of a determination, but not sustained at the date of the determination, could still cause actual serious injury at the time of the determination.

177 Korea's reply to Question 1 from the Panel at the first substantive meeting.

178 US-Lamb Meat (AB), at paras. 137-138.

179 Argentina - Footwear Safeguard (AB) at para. 131.

180 Id. at 129.

181 ITC Report, p. I-14.

182 Additionally, we are of the view that a temporary change in the behaviour of the imports may not be sufficient to reverse an overall trend indicating existence of increased imports. Indeed, regarding the temporary nature of the interim 1999 decrease we note the US argument that "monthly import data show that imports actually increased toward the end of interim 1999". However, we wish to clarify that this increase in imports towards the end of interim 1999 is not determinative of our finding that there was an overall trend indicating increased imports.

183 In its second submission Korea mentions that data for interim 1999 is public data, which includes imports of Arctic-grade line pipe, a product not subject to the safeguards investigation. The United States responds by asserting that there were no imports of Arctic-grade line pipe during interim 1999. At the second meeting, the Panel requested confirmation from the United States on this assertion. The United States reiterated their assertion that there were no imports of Arctic-grade line pipe for interim 1999, and regretted that they could not provide the Panel with a letter from the Japanese respondents from which the ITC inferred this information, as it had been designated as confidential by those respondents (we note that the only imports of Arctic grade line pipe during the period of investigation came from Japan). Korea later questioned why the fact that there were no exports of Arctic-grade line pipe was not itself confidential, and if this was not the case why was all data concerning imports of Arctic-grade line pipe not non-confidential as well.

The Panel notes that the United States has effectively provided the Panel with public information which would be no different than the confidential data on imports of line pipe for interim 1999. The fact that the United States has failed to provide the Panel with the confidential letter confirming the absence of imports of Arctic-grade line pipe in interim 1999, is of no consequence to a finding of whether on the basis of the data relied upon by the ITC there were absolute increased imports. Rather, the provision of the letter is pertinent only to a question of whether the data relied upon by the ITC is accurate. We do not understand Korea to be arguing that the data relied upon by the ITC on the issue of increased imports is inaccurate. Therefore, we consider that it is not necessary for us to draw any conclusions from the refusal of the United States to provide the documentary support for their assertion that there were no imports of Arctic-grade line pipe for interim 1999.

184 As noted above in footnote 164, Korea provides no argumentation on the question of whether the absolute increase in the imports was sudden enough and sharp enough for the purposes of Article 2.1 and Article XIX. Korea focuses its arguments on whether or not there was an increase in imports and if so whether this increase was recent. Therefore, we do not need to consider whether the absolute increase in imports found by the ITC was sudden enough and sharp enough.

185 As previously noted in footnote 164, Korea provides no argumentation on the question of whether the relative increase in imports was sudden enough and sharp enough for the purposes of Article 2.1 and Article XIX, focusing instead only on whether there was or there was not an increase. Therefore we do not need to pronounce ourselves as to whether the relative increase in imports found by the ITC was sudden enough and sharp enough.

186 US - Lamb Meat (AB), at para. 106.

187 See ITC Report, Crawford Dissenting Views on Injury, at I-69 n.68 ("Despite only a modest ($5, or 0.9 per cent) decrease in per-ton net sales in fiscal year 1998, per-ton operating income fell by $26, as unit labour, factory overhead, and SG&A expenses increased by 10-20 per cent.").

188 ITC Report, p. II-26

189 Korea's first written submission paras. 226-236.

190 ITC Report, p. II-25.

191 ITC Report, p. I-31.

192 Korea's first written submission para. 229 (quoting from USITC Report, Crawford Dissenting Views on Injury, p. I-69 n.67) (footnote omitted).

193 Korea's first written submission, para. 234.

194 ITC Report, p. I-69 n.67.

195 US shipments of welded line pipe declined from 752,824 tons in 1997 to 640,061 tons in 1998, and from 388,844 tons in interim 1998 as compared to 265,757 tons in interim 1999. ITC Report, p. C-4, Table C-1.

196 ITC Report, p. II-28, Table 10.


Continuation: Evaluation by the Panel Return to Index of WT/DS202/R