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


Report of the Panel
 

(Continuation)

H. SECOND ORAL STATEMENT OF THE UNITED STATES

4.289 The following is the United States' own executive summary second oral statement:

1. Burden of Proof and Standard of Review

4.290 There is no question that the burden of proof in a WTO dispute lies with the complaining party. This burden is part and parcel of the assumption that Members act in good faith to conform with their obligations under the WTO Agreement. Contrary to Korea's arguments, the actions of the responding party do not lower that hurdle.

4.291 The standard of review should also not be in doubt. Article 11 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") covers all obligations under the WTO Agreement, and requires an objective assessment of the matter before the Panel. In Lamb Meat, the Appellate Body enunciated a legal test for applying that standard to the obligations under Article 4. By its terms, this test applies only to Article 4 and not to other provisions of the Safeguards Agreement, such as Article 5. Any application of DSU Article 11 to claims under Article 5 must proceed in accordance with the terms of that Article.

2. Increased Imports

4.292 There can be no question that the increased imports requirement was met in this investigation. Imports nearly tripled in the last two full years of the period of investigation. Korea claims erroneously that the Appellate Body in Argentina - Footwear established a legal standard requiring an examination of import data only for the last 12 months of the period of investigation. In fact, the Appellate Body's decisions in Argentina - Footwear and United States - Lamb Meat make clear that there is no such rule.

4.293 Korea attempts to justify its reliance on a comparison of the last six months of 1998 with the first six months of 1999 by claiming that "the ITC itself looked at 1998 as two six-month periods with very distinct trends for purposes of its injury determination." Korea's characterization of the ITC's analysis is simply untrue. The fact that the ITC collected and examined data on the basis of full years and comparable interim periods - and not for the first and second halves of 1998 - is clear from a review of the discussion of the serious injury factors in the ITC Report and of virtually every table with numerical data in the entire report. The ITC acted consistently with the "objectivity" requirement of Article 4.2 of the Safeguards Agreement by evaluating the data in this case in the same neutral and unbiased manner that it conducts all of its safeguards investigations.

4.294 Even if the Safeguards Agreement required that the period for analyzing imports be limited to the last 12 months of the period investigated - and clearly it does not - Korea's theory that imports declined does not hold up. There was a sharp increase in imports in May and June of 1999.

3. Serious Injury

4.295 Commissioner Crawford's views are not part of the determination of the ITC. The Safeguards Agreement does not require competent authorities to respond to the views of a particular Commissioner who is not a part of the competent authorities for purposes of the serious injury determination.

4.296 Korea's assertion that Geneva's decision to close a blast furnace was entirely due to conditions in the hot-rolled sheet and plate markets, and had nothing to do with line pipe conditions, is clearly at odds with the evidence in the record that Geneva lost half of its line pipe volume, and that line pipe production was essential to running the second blast furnace.

4.297 Korea builds its entire argument concerning Lone Star on an unfounded assumption that Lone Star "mis-allocated" part of a SG&A expense to line pipe operations. There is no evidence to support this assumption. ITC accountants conducted a verification of Lone Star's data, which included the partial SG&A allocation to line pipe operations.

4.298 The United States has shown that Korea's theory that the financial performance of the line pipe industry was affected by declining OCTG production is unsupportable. Korea's contention that the decline in OCTG shipments in 1998 was much more severe than for line pipe is simply not correct. In addition, the United States has shown that the effect that this could have had on average unit costs for line pipe would have been nominal because the majority of average unit costs were variable. The United States notes that Korea keeps shifting the time period when this alleged effect of declining OCTG sales occurred.

4.299 None of Korea's arguments concerning alleged financial improvements at the end of the period investigated detract from the hard evidence showing a significant overall impairment in the US line pipe industry in 1998 and interim 1999. The ITC recognized that capital investment projects in this industry have long lead times. Decisions by two firms to begin producing line pipe were likely to have been made years before the 1998 and interim 1999 downturn in the industry. Nor do the statements by ITC Commissioners in their views on remedy detract from the serious injury finding. The Commissioners simply noted, when writing these views in December 1999, that oil and gas prices had increased since early 1999. Announcements by three producers of intended price increases are of little probative value. As two of the three producers explicitly stated in their price increase announcements, these were due to increases in raw material costs.

4. Causation

4.300 Korea's attempts to discredit the evidence of adverse price effects by imports are unpersuasive. Korea is incorrect in claiming that the average import unit values on which the ITC relied are inaccurate because they are based on "public data." Korea's argument that the quarterly pricing data do not prove that imports "led prices down" in the second half of 1998 and the first half of 1999 is irrelevant because the ITC did not make any finding that "imports led prices down" only in this period. Questionnaire responses from industry participants stated that imports played a "very important" or "important" role in causing price declines. There is no support for Korea's suggestion that the observations of those with intimate knowledge of the industry are not objective.

4.301 Korea argues that the "only" means to ensure that injury from other factors is not attributed to imports is to "cumulatively" consider all of the other factors. There is absolutely no such requirement in the Safeguards Agreement. The Appellate Body's report in Lamb Meat contradicts Korea's argument that the Safeguards Agreement requires a cumulative causation analysis. In that report the Appellate Body accepted the ITC's separate identification of individual causal factors, but suggested that to meet the requirements of Article 4.2(b) the ITC should have explained the nature of the injurious effects of each of these other factors.

4.302 Korea is also incorrect in asserting that the Agreement requires a finding that the domestic industry would still have suffered serious injury irrespective of the crisis in oil and gas. In Wheat Gluten, the Appellate Body stated that, under the Safeguards Agreement, competent authorities should determine whether the increase in imports, not alone, but in conjunction with the other relevant factors, causes serious injury. In its Lamb Meat report, the Appellate Body again confirmed that Article 4.2 of the Safeguards Agreement does not require that increased imports "alone", "in and of themselves" or "per se" must be capable of causing serious injury. Rather, the Agreement contemplates that other factors may be contributing at the same time to the situation in the domestic industry. Where there are several causal factors, the Agreement, as interpreted by the Appellate Body, requires competent authorities to identify and distinguish the effects of the different causal factors by whatever reasonable methodology the Member chooses.

4.303 Distinguishing the effects of the various causal factors is not the same as finding that the imports by themselves would have caused serious injury irrespective of the presence of other causes. The question for the competent authorities is not whether the increased imports would have caused serious injury absent those other factors, but whether there is a "substantial and genuine" causal link between the increased imports and serious injury that occurs as a result of the entry of those imports into the market as it exists.

4.304 In addressing whether each other alleged cause was a greater cause of injury to the domestic line pipe industry than the increased imports, the ITC provided the type of analysis outlined by the Appellate Body in Lamb Meat, and thus ensured that there was a "genuine and substantial relationship of cause and effect" between increased imports and serious injury. The ITC explained the injurious effects of all other causal factors.

4.305 The ITC determined that there were mainly two circumstances responsible for the decline in the domestic industry - the increased imports and the decline in oil and natural gas prices. The ITC carefully identified, distinguished and explained the effects of each of those two causes. After distinguishing the effects of the oil and gas declines from those of the increased imports and then examining the effects of each of these two principal causes, the ITC found that the increased imports were the predominant cause of the declining condition of the domestic industry. The ITC then also examined the minor causes of injury, and found either that any injury caused by these other factors was too small to account for the injurious effects attributed to the increased imports, or that the nature of the other cause was such that it had always been a factor in the market in good times as well as bad, and therefore could not be linked to the declines attributed to the increased imports.

5. There is no Requirement to Explain how Application of a Safeguard Measure Satisfies the Requirements of Article 5.1

4.306 Korea claims that the United States violated the Safeguards Agreement by failing to explain in 2000 how it complied with the Article 5.1 requirement to apply the line pipe safeguard only to the extent necessary to remedy serious injury and facilitate adjustment. However, the Appellate Body already considered exactly this argument and rejected it in Korea - Dairy Safeguard.¹⁸

4.307 Korea contends that Articles 3.1 and 4.2(c) independently oblige a Member to explain at the time it takes a safeguard measure how that measure is consistent with Article 5.1. However, Articles 3.1 and 4.2(c) require the competent authorities to publish a report on "all pertinent issues of law and fact." In those same Articles, the competent authorities are charged solely with the investigation and determination of serious injury. Neither Articles 3.1 and 4.2(c) nor Article 5.1 give the competent authorities a role in the decision whether and to what extent to apply a safeguard measure. Thus, there is no basis to conclude that there report need explain how the measure complies with Article 5.1.

4.308 Korea's argument is also inconsistent with the framework established by the Safeguards Agreement. Under Article 2.1, a Member may apply a safeguard measure only after the determination of serious injury. Under Articles 3.1 and 4.2(a), the competent authorities make that determination only after conducting an investigation. They are also charged with issuing a report containing "findings and conclusions on all pertinent issues of fact and law" and "a detailed analysis of the case under investigation. Article 5 establishes the condition of the domestic industry, as revealed in that investigation, as the benchmark for a Member's application of the safeguard measure. Since the investigation, determination, and report are a necessary precursor to a Member's decision under Article 5 on the extent to which it applies a safeguard measure, they cannot themselves explain how the measure complies with Article 5.

4.309 This approach does not prevent review by a panel. As with any other measure taken by a Member, another Member may claim in a dispute that application of a safeguard measure is inconsistent with the WTO Agreement. It then bears the burden of presenting a prima facie case of inconsistency. That is only appropriate since in a safeguard measure, as with any other measure, the imposing Member is presumed to have complied in good faith with its obligations.

6. Korea's Claim that the Line Pipe Safeguard Itself Does not Comply with Article 5.1

4.310 Throughout this dispute, Korea has based its claims of inconsistency with Article 5.1 on allegations that the US line pipe safeguard was somehow more restrictive than recommended measures that the ITC had identified. In its rebuttal submission, for the first time, it attempted to analyze whether the United States actually applied its safeguard measure beyond the extent necessary.

4.311 Its analysis was deeply flawed. The record indicated that up to 19 customs territories would enjoy access at MFN rates, rather than just the seven identified by Korea. The ratio of the supplemental tariff to the MFN rate is irrelevant, and is high simply because the MFN rate is so low. Finally, data on actual line pipe imports does not demonstrate the "result of the measure." The panel has no information on market conditions after imposition of the line pipe safeguard, and the observed import patterns could result from a number of factors unrelated to the safeguard. Therefore, Korea has presented no basis for the Panel to conclude that the United States applied the line pipe safeguard beyond the extent necessary.

4.312 Korea has also failed to identify any flaw in the US explanation of how the line pipe safeguard was consistent with Article 5.1. Korea assumes that US producers would be able to increase their prices by the full extent of the 19 per cent duty and increase their volume of sales at the same time. This is obviously impossible. If the relative price difference between domestic and imported line pipe remains unchanged, there is no reason to expect the volume of domestic products to increase. Korea also assumes that demand was improving rapidly, but the information before the ITC does not support this conclusion. Therefore, Korea provides no basis for the Panel to conclude that the line pipe safeguard was inconsistent with the requirements of Article 5.1.

V. ARGUMENTS OF THE THIRD PARTIES

5.1 The arguments of the third parties, Canada, the European Community, Japan, and Mexico are set out in their submissions to the Panel, as attached to this Report in Annex A (see List of Annexes, page iv). Australia did not make a written submission or an oral statement.

VI. INTERIM REVIEW

6.1 Our interim report was sent to the parties on 31 August 2001. On 14 September 2001, the parties requested review of precise aspects of the interim report, in accordance with DSU Article 15.3. On 21 September 2001, in accordance with paragraph 17 of the Working Procedures of this Panel, we received written comments from the United States on some sections of Korea's request for interim review. Korea did not submit any comments on the US request for interim review. The various issues raised by the parties are addressed below.

A. THE UNITED STATES' REQUESTS FOR INTERIM REVIEW

6.2 The United States requested us to delete paragraphs 7.15 through 7.17 of the interim report. Since these paragraphs addressed a procedural issue of limited significance, we see no reason not to delete them.

6.3 The United States requested the Panel to delete paragraph 7.59 of the interim report, in which some comments were made regarding the US position on Article XIII:2 as reflected in a "US General Counsel Memorandum" submitted by Korea. We have accepted the US request to delete that paragraph.

6.4 The United States asked the Panel to delete footnote 217 of the interim report, on the basis that it took a US comment out of context. We have deleted the relevant footnote.

6.5 The United States directed our attention to an error in paragraph 8.1 of the report, which we have corrected.

B. KOREA'S REQUESTS FOR INTERIM REVIEW

6.6 Korea requests a technical correction to what is now paragraph 7.166 of the report, which we have made.

6.7 Korea asks the Panel to delete the US argument set forth in what is now paragraph 7.167 of the report. Korea asserts that this argument was not made in writing by the United States, and therefore does not constitute part of the record of the dispute. To the extent that the United States made this argument orally, Korea asserts that no written version of that oral argument was provided, contrary to paragraph 9 of the Panel's Working Procedures. In addressing Korea's request, we note that the US argument at issue was made orally, in response to an oral question from the Panel. Paragraph 9 of the Panel Working Procedures provides in relevant part that "[T]he parties to the dispute shall make available to the Panel and the other party a written version of their oral statements not later than the day after the oral statement is presented". Paragraph 9 does not refer in any way to a party's oral answer to an oral question from the Panel. In our view, therefore, paragraph 9 does not require that a party's oral response to an oral question from the Panel can only form part of the record of the Panel proceedings if it has been reduced in writing. Accordingly, we reject Korea's request to delete the US argument set forth in paragraph 7.167 of the report.

6.8 Korea asserts that the Panel's finding on parallelism (set forth in what is now paragraphs7.164 - 7.171- of the interim report) is flawed. Korea asserts that the Panel neglected its duty of making an objective assessment of facts and assessing the applicability of and conformity with the relevant covered agreements with respect to Korea's claim. Korea also submits that the Panel imposed an exorbitant burden of proof on the party making the claim, while it completely ignored the fact that the other party did not make any efforts to refute the claim. According to Korea, it made sufficient arguments to establish a prima facie case in support of its parallelism claim, especially in light of the fact that the United States did not defend that claim.

6.9 Korea focuses on the Panel's treatment of note 168 of the ITC report. Korea asserts that it "does not understand why the establishment of prima facie case can be done only through the refutation of the footnote 168, which is a conditional statement. Korea's confusion grows even deeper given the fact that Korea's assessment of the footnote, to the effect that it does not have legal significance, was not challenged by any party, including the Panel, throughout the whole proceedings. � In the absence of any refutation from the U.S. and in the absence of any related query from the Panel on the issue, in fact against total silence on the footnote 168 other than Korea's assessment that it does not have any legal significance, it is surprising for the Panel report to take one footnote out of the voluminous final report of the ITC and state that the Panel fails to see why the footnote has no legal significance."

6.10 As Korea itself explains, its parallelism claim is based on the argument that "there is a gap in the scope of the investigation and the scope of the measure". In examining Korea's claim, we considered note 168 because it is relevant to the alleged "gap" identified by Korea. Indeed, it is arguably the only part of the ITC report that addresses this issue. During the proceedings, Korea asserted that note 168 "has no legal significance", without explaining why. At the interim review stage, Korea asserted that note 168 has no legal significance "because of the contents of the footnote", and because the first sentence of note 168 "begins with a conditional statement". In our view, however, it is precisely because of the contents of note 168 that it is relevant to the "gap" issue identified by Korea. We do not consider that note 168 is any less relevant in this regard simply because it is allegedly conditional in nature. Whether conditional or not, it addresses the "gap" issue at the heart of Korea's parallelism claim.¹⁹ We fail to see how Korea can establish a prima facie case that there is a "gap" between the scope of the ITC investigation and the scope of the line pipe measure without addressing the very part of the ITC report that addresses that issue.

6.11 Regarding the alleged absence of any refutation by the United States of Korea's claim, we refer to paragraph 6.7 above. Regarding the fact that the Panel failed to "challenge[]" Korea's assessment of the footnote, we consider that it was Korea's burden as a complainant to establish a prima facie case of violation.²⁰ We note that in the case of Japan - Measures Affecting Agricultural Products the Appellate Body further elaborated that:

Article 13 of the DSU and Article 11.2 of the SPS Agreement suggest that panels have a significant investigative authority. However, this authority cannot be used by a panel to rule in favour of a complaining party which has not established a prima facie case of inconsistency based on specific legal claims asserted by it. A panel is entitled to seek information and advice from experts and from any other relevant source it chooses, pursuant to Article 13 of the DSU and, in an SPS case, Article 11.2 of the SPS Agreement, to help it to understand and evaluate the evidence submitted and the arguments made by the parties, but not to make the case for a complaining party.²¹

Thus, the onus was clearly on Korea to make its own case in support of its parallelism claim. It would appear that Korea may have chosen not to do so because "it d[id] not consider that 'parallelism' resolves the issue in this case given the interpretation by the USITC in its implementation of US- Wheat Gluten, that it can exclude NAFTA members from the serious injury determination and then exclude them from the measure."²²

6.12 We therefore reject Korea's request to review our findings regarding its parallelism claim.

6.13 Korea requests us to make a technical change to what is now paragraph 7.116 of the report, which we have done.

6.14 Korea requests us to clarify what is now paragraph 7.124 of the report. In this regard, we would note that we do not refer to the Appellate Body report in Thailand - Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland²³ in support of our statement that "there is no question of whether or not the legal basis of the claim, or the claim itself, was set forth with sufficient clarity in the Request for Establishment".

6.15 Korea requests a minor change in the last sentence of what is now paragraph 7.136 of the report, in order to better reflect Korea's argument. We have made the change requested by Korea.

6.16 Korea requests that the Panel identify the evidence referred to in the second sentence of what is now paragraph 7.145 of the report. We have included a cross-reference accordingly.

6.17 Korea asks the Panel to clarify certain aspects of what is now paragraph 7.148 of the report. We confirm that this paragraph refers to the nature of the line pipe measure (compared to the nature of the measure at issue in Turkey - Textiles), and not the US justification for that measure.

6.18 Korea argues that the Panel was incorrect to state in paragraph 7.157 of the interim report that in Argentina - Footwear Safeguard ²⁴ the Appellate Body "was not required to consider the last sentence of footnote" 1 of the Safeguards Agreement. As a result, we have amended the relevant part of what is now paragraph 7.153 of the report.

6.19 Korea asserts that the Panel mischaracterized its arguments in what is now paragraph 7.202 of the report. We have changed the last sentence of paragraph 7.202 accordingly.

6.20 Korea takes issue with the Panel's observation in what are now footnotes 164 and 184 of the report that Korea failed to argue that the ITC could not properly have found that the increase in imports was sudden and sharp enough. In support Korea cites to paragraph 205 of its first submission. We believe that the paragraph cited by Korea confirms our view that the focus of Korea's argument is on the fact that there was no increase at all, and not on the sharpness or suddenness of the increase found by the ITC. We therefore make no changes to footnotes 164 and 184.

6.21 Korea disagrees with the Panel's characterization of Korea's argument on the issue of cost allocation in what is now paragraph 7.228 of the report. In order to better present Korea's argument, we have made a minor amendment in the fourth sentence of that paragraph.

6.22 Korea argues that, contrary to what is expressed by the Panel in what is now footnote 203 of the report, Commissioner Crawford did not rely on testimony by the Geneva Steel executive but rather refuted it. We believe that Korea is not correct in its view that Commissioner Crawford did not rely on testimony by the Geneva Steel executive. In our view, Commissioner Crawford clearly was citing to that testimony to substantiate her statement regarding Geneva Steel. We see no other reason why Commissioner Crawford would have referred to that testimony. We therefore leave footnote 203 unchanged.

VII. FINDINGS

A. PRELIMINARY ISSUES

7.1 In the course of our proceedings both parties raised certain preliminary issues and requested preliminary rulings by the Panel on those issues. The issues raised concerned:

(1) The 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; and

(3) Information submitted in footnotes to the written version of Korea's second oral statement and not read out loud during the meeting with the parties.

1. Release of confidential record information to the Panel

7.2 On 30 January 2001 we received a letter from Korea requesting the Panel to seek from the United States certain confidential information.²⁵ Korea claimed that this information was necessary in order for Korea to prepare its first written submission. Korea requested the Panel to seek the following information:

• The confidential version of the complete ITC decision;
   
• The Addendum to the dissenting views of Commissioners Crawford's opinion on injury;
   
• The data concerning imports of subject merchandise, as defined by the ITC, by each country supplier;
   
• The confidential economic memorandum on which the ITC based its remedy recommendation;
   
• Any other economic memoranda or other written analysis by the US President to support the President's remedy recommendation; and
   
• The record of the confidential proceeding before the ITC.

7.3 The Panel provided the United States with an opportunity to respond to Korea's request. On 1 February 2001, we received a letter from the United States commenting on Korea's letter. In short, the US position is that it is neither necessary nor appropriate for the Panel to obtain the information requested by Korea.

7.4 On 8 February 2001, we sent the following letter to the parties:

We are mindful that, in order to make an objective assessment of the matter before us, we may need to view certain confidential information not in the public record of the ITC. However, we are equally aware that the protection of confidential information is an important systemic consideration recognised by Article 3.2 of the Safeguards Agreement. Given these considerations, we consider that a panel should show appropriate restraint in the exercise of its authority under Article 13.1 of the DSU to seek confidential information from a party.

In our view, Korea's request that we seek from the United States the full confidential record of the investigation is unduly broad and could encompass confidential information that is without relevance to the claims advanced by Korea in this dispute and which is not necessary in order for us to perform an objective assessment of the matter before us. Thus, we decline Korea's request in this regard. For the same reasons, we decline to seek from the United States the confidential version of the complete ITC decision.

Regarding Korea's requests that we seek (a) the confidential economic memoranda on which the ITC based its remedy recommendation and (b) any economic memoranda or other written analysis by the US President to support the President's remedy recommendation, we are not in a position at this time to assess the need for access to this information. Accordingly, we will give further consideration to this request at the first meeting of the Panel.

We do, however, grant Korea's request that we seek from the United States (a) the Addendum to the dissenting views of Commissioner Crawford's opinion on injury; and (b) data concerning imports of subject merchandise, as defined by the ITC, by each country supplier. Korea has established to our satisfaction that these more targeted requests involve information which is relevant to the claims advanced by Korea and which may prove necessary in order for us to perform an objective assessment of the matter. We request that the United States provide this information to the Panel and to Korea not later than close of business on 16 February.

Our ruling is without prejudice to any further specific requests from Korea that we seek confidential information from the United States. Any such requests should be supported by an explanation as to why the information sought is relevant to Korea's claims and is necessary in order for the Panel to perform an objective assessment of the matter. Moreover, this ruling is also without prejudice to the Panel's establishment of the facts which will be relied upon for purposes of its findings.

7.5 In a letter dated 16 February 2001, the United States responded to our ruling and request for information. In that letter the United States provided us with a table containing indexed figures for the Addendum to Commissioner's Crawford dissenting opinion. It also provided the Panel with indexed data regarding imports of subject merchandise from Japan.²⁶

7.6 In its first written submission Korea reiterated its request for certain confidential information, including:

• The confidential staff report;
   
• Information regarding the relative import trends;
   
• Price data trends between imports and domestic prices for each quarter;
   
• Financial information on a per producer basis;
   
• The ITC's recommendation on remedy, the supporting economic memorandum, and the confidential report sent to the President;
   
• All papers used in the deliberative process by the President regarding the safeguard measure imposed; and
   
• Other confidential information which may bear on arguments subsequently raised by the United States.

7.7 The United States responded to Korea's further request for information in its first written submission. In its submission the United States agreed that additional data on prices of imported and domestic line pipe may be necessary and appropriate to the Panel's consideration of the dispute. Therefore, the United States offered to explore ways in which such data could be summarized for use by the Panel.

7.8 At the first meeting of the Panel with the parties, we consulted extensively with Korea and the United States on which information was still considered necessary for a proper evaluation of the issues before us, and ways in which this information could be provided. In a letter dated 19 April 2001, we requested further information as follows:

In order to assist the Panel in making an objective assessment of the matter before it, the Panel considers that it is necessary and appropriate for the United States to provide aggregate weighted average price data for all imports and domestic products covered by the ITC's Line Pipe investigation. This data must be broken down product-by-product, and quarter-by-quarter. The Panel is not requesting confidential data at this stage. Thus, the United States may use asterisks when there was only one supplying company for a given product in a given quarter. The information requested should be made available to the Panel by close of business Monday, 23 April 2001. In order to assist the Panel in determining whether it is necessary and appropriate to request additional data from the United States, the Panel asks that the United States also reply to questions 6, 7 and 8 from the Panel by close of business on Monday, 23 April 2001.

Furthermore, at the first substantive meeting of the Panel with the parties, the United States tentatively proposed that it provide the Panel with two outputs of a computerized model used by the ITC to evaluate the impact of imports on the domestic industry. One output would include imports from Japan, while the other output would exclude imports from Japan. The United States indicated that these outputs would demonstrate that there is very little difference in results, whether imports from Japan are included or not. The Panel looks forward to receiving these outputs by close of business on Monday, 23 April 2001.

The United States also tentatively proposed that it provide the Panel with an output of the aforementioned computerized model based on the measure implemented by the President (using the data before the ITC). The Panel looks forward to receiving this additional output by close of business on Monday, 23 April 2001.

7.9 The United States replied to our request in its letter of 23 April 2001. In that communication the United States provided us with a table containing imports of the subject merchandise both in absolute and in relative terms excluding all imports from Japan. It also provided tables containing quarterly pricing information for imports and domestic production for all types of line pipe covered by the investigation. However, the United States did not provide the computerized models it had tentatively proposed to provide to the Panel. The United States asserted that, with respect to the computerized models evaluating the impact of the ITC proposed measure, the ITC did not rely on, consider nor have available any output from such computerized model. With respect to the computerized models evaluating the impact of the measure implemented by the President, the United States concluded that it could not provide such information.

7.10 In its second written submission Korea reacted to the US letter and stated that it considered that the following additional information was needed:

• The confidential economic memoranda used to evaluate the remedy proposals and the impact of the various alternatives on the US industry;
   
• The papers used in the deliberative process by the President in reaching the determination regarding the safeguard; and
   
• The confidential version of the ITC staff report.

7.11 After reviewing the information provided to us in the parties' submissions and communications, we did not consider that it was necessary and/or appropriate to issue further requests for information in response to Korea's second written submission. We are of the view that the information before the Panel allows an objective assessment of the matter before us.

2. The admissibility of evidence not submitted to the ITC, or addressing events after the decision to take a safeguard measure

7.12 The United States requested that the Panel issue a preliminary ruling that certain information included or referenced in Korea's first written submission is inadmissible. The US request relates to information not on the ITC record, and information concerning events that took place after the decision to apply the line pipe measure. The United Sates considers that this information is irrelevant to the Panel's deliberative process. The United States requested that the Panel: declare the new information to be inadmissible; request Korea to remove the new information from its first written submission and to delete any arguments based on that information; and instruct the parties that the new information, and any arguments based on that information, will not be considered by the Panel.

7.13 Korea requested the Panel to reject the US request for a preliminary ruling that certain information included or referenced in Korea's first written submission is inadmissible. Korea argues that the US request, if granted, would unduly limit the Panel's ability to collect and assess facts and diminish the rights conferred on Members by the WTO Agreement. Furthermore, the US request, if granted, would serve as an ominous precedent for the effective functioning of the WTO dispute settlement system.

7.14 At the first meeting of the Panel with the parties, the Chairman of the Panel issued the following ruling concerning the US request that certain evidence be declared inadmissible:

The United States has asked the Panel to issue a preliminary ruling on the admissibility of certain information submitted by Korea. The relevant information is identified in para. 279 of the US first written submission.

The Panel has decided not to exclude from the Panel's record any information submitted by Korea on the grounds that it is inadmissible. Our decision not to exclude the information does not prejudge in any way the issue of whether the Panel will use the information, nor whether the information is relevant to the matter at hand.