Transcript U.S. – Steel Safeguards - International Trade Relations

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UNITED STATES — DEFINITIVE
SAFEGUARD MEASURES ON
IMPORTS OF CERTAIN STEEL
PRODUCTS
Stu Carroll
Hatice Cellik
Erika Chiang
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Statement by the President
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March 5, 2002
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“Today I am announcing my decision to impose temporary safeguards to help give America's steel industry
and its workers the chance to adapt to the large influx of foreign steel. This relief will help steel workers,
communities that depend on steel, and the steel industry adjust without harming our economy. These
safeguards are expressly sanctioned by the rules of the World Trade Organization, which recognizes that
sometimes imports can cause such serious harm to domestic industries that temporary restraints are
warranted. This is one of those times.
I take this action to give our domestic steel industry an opportunity to adjust to surges in foreign imports,
recognizing the harm from 50 years of foreign government intervention in the global steel market, which
has resulted in bankruptcies, serious dislocation, and job loss. We also must continue to urge our trading
partners to eliminate global inefficient excess capacity and market-distorting practices, such as subsidies.
The U.S. steel industry must use the temporary help today's action provides to restructure and ensure its
long-term competitiveness. Restructuring will impact workers and the communities in which they live, and we
must help hard-working Americans adapt to changing economic circumstances. I have proposed a major
expansion of the National Emergency Grants program to assist workers affected by restructuring with
effective job training and assistance. I have also proposed direct assistance with health insurance costs that
will be available to workers and retirees who lose their employer-provided coverage. And I support
coordinated assistance for communities and a strengthened and expanded trade adjustment assistance
program. America's workers are the most highly skilled in the world, and with effective training and
adjustment assistance we will help them find better, higher paying jobs to support their families and boost
our economy.”
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History
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The U.S. adopted safeguard measures on imports
from most countries of certain steel products on March
5, 2002, in the form of additional tariffs ranging
from 8, 13, 15 and up to 30% for a 3-year period
starting on March 20, 2002.
The international community was surprised at this
development because of the U.S.’s commitment to free
trade
The USTR later admitted that these tariffs were
implemented because of domestic pressures
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Complaint
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U.S. imposing definitive safeguard measures on a wide
range of steel products :
1.
Increase in duties on imports of certain flat steel, hotrolled bar, cold-finished bar, rebar, certain welded
tubular products, carbon and alloy fittings, stainless
steel bar, stainless steel rod, tin mill products and
stainless steel wire as well as Tariff rate quota on
imports of slabs
2.
Safeguard measures were effective as of March 20,
2002
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Flat Steel
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Used in major appliances, magnetic cores, and the
construction of automobiles, trains, and ships
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Hot-rolled & Cold-rolled bar
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Carbon Fittings
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Stainless Steel Bar
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Stainless Steel Wire
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Steel Slab
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U.S. - Steel Safeguards Complainants
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Brazil
Canada
Chinese Taipei
Cuba
European Union
China
Japan
Republic of Korea
Mexico
New Zealand
Norway
Switzerland
Thailand
Turkey
Venezuela
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Basic Question To Be Answered
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Did U.S. definitive safeguard measures
on a wide range of steel products
violate its obligations to the WTO?
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"Although all complaints made by the eight cocomplainants were considered in a single panel
process, the United States requested the issuance of
eight separate panel reports, claiming that to do
otherwise would prejudice its WTO rights, including
its right to settle the matter with individual
complainants.”
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Case Dates
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Initial complaint filed by EU: March 7, 2002
Complaint filed by China: March 26, 2002
Panel Established: June 24, 2002
Panel Report: May 2, 2003
Appellate Body Report: November 10, 2003
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Principal WTO Agreements and
Articles Involved
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Agreement on Safeguards 2.1, 2.2, 3.1, 3.2, 4.1,
4.2, 5.1, 5.2, 7.1, 8.1, 9.1 and 12 of the
GATT of 1994 Articles I:1, II, X:3, XIX:1 and XIX:2
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Article 2: Conditions
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2.1 A Member may apply a safeguard measure to a
product only if that Member has determined, pursuant to
the provisions set out below, that such product is being
imported into its territory in such increased quantities,
absolute or relative to domestic production, and under
such conditions as to cause or threaten to cause serious
injury to the domestic industry that produces like or
directly competitive products.
2.2 Safeguard measures shall be applied to a product
being imported irrespective of its source.
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Article 3: Investigation
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3.1 A Member may apply a safeguard measure only
following an investigation by the competent authorities
…This investigation shall include reasonable public
notice to all interested parties and public hearings or
other appropriate means in which importers, exporters
and other interested parties could present evidence
and their views…
3.2 Any information which is by nature confidential or
which is provided on a confidential basis shall, upon
cause being shown, be treated as such by the
competent authorities…
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Article 4: Determination of Serious Injury of
Threat Thereof
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4.1.
For the purposes of this Agreement:
(a) serious injury” shall be understood to mean a significant overall impairment in
a domestic industry;
the position of
(b) threat of serious injury” shall be understood to mean serious injury that is clearly imminent, in
accordance with the provisions of paragraph 2. A determination of the existence of a threat of
serious injury shall be based on facts and not merely on allegation, conjecture or remote
possibility; and
(c) in determining injury or threat thereof, a “domestic industry” shall be understood to mean the
producers as a whole of the like or directly competitive products operating within the territory of
a Member, or those whose collective output of the like or directly competitive products constitutes
a major proportion of the total domestic production of those products.
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4.2. (a) In the investigation to determine whether increased imports have caused or are threatening
to cause serious injury to a domestic industry under the terms of this Agreement, the competent
authorities shall evaluate all relevant factors of an objective and quantifiable nature having a
bearing on the situation of that industry, in particular, the rate and amount of the increase in imports
of the product concerned in absolute and relative terms, the share of the domestic market taken by
increased imports, changes in the level of sales, production, productivity, capacity utilization, profits
and losses, and employment”
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Article 5: Application of Safeguard Measures
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5.1 A Member shall apply safeguard measures only to
the extent necessary to prevent or remedy serious injury
and to facilitate adjustment...
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Article 7: Duration and Review of Safeguard
Measures back to top
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7.1 A Member shall apply safeguard measures
only for such period of time as may be necessary to
prevent or remedy serious injury and to facilitate
adjustment. The period shall not exceed four years,
unless it is extended under paragraph 2.
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Article 8
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8.1 A Member proposing to apply a safeguard
measure or seeking an extension of a safeguard
measure shall endeavor to maintain a substantially
equivalent level of concessions and other obligations to
that existing under GATT 1994 between it and the
exporting Members which would be affected by such a
measure, in accordance with the provisions of
paragraph 3 of Article 12. To achieve this objective, the
Members concerned may agree on any adequate
means of trade compensation for the adverse effects of
the measure on their trade.
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Article 9
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9.1 Safeguard measures shall not be applied
against a product originating in a developing
country Member as long as its share of imports of
the product concerned in the importing Member
does not exceed 3 per cent, provided that
developing country Members with less than
3 per cent import share collectively account for not
more than 9 per cent of total imports of the product
concerned
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Article 12: Notification and Consultation
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A Member shall immediately notify the Committee on
Safeguards upon:
(a) initiating an investigatory process relating to
serious injury or threat thereof and the reasons for it;
(b) making a finding of serious injury or threat
thereof caused by increased imports; and
(c) taking a decision to apply or extend a safeguard
measure.
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GATT 1943 Article XIX 1 (a)
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Unforeseen Developments: an investigating
authority must provide a "reasoned conclusion" in
relation to "unforeseen developments" for each
specific safeguard measure at issue;
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Four Issues
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Unforeseen Development – those things that “resulted in increased imports
causing or threatening to cause serious injury to the relevant domestic
producers” (GATT 1994 Art. XIX:1(a))
Increased Imports - such increased quantities and under such conditions as
to cause or threaten serious injury to domestic producers in that territory of
like or directly competitive products (SA Arts. 2.1 and 3.1)
Parallelism – safeguard measures must meet both requirements of both
paragraphs 1 and 2 of Article 2 and include all factors in analysis leading
up to safeguard(SA Arts. 2 and 4)
Causation – demonstration of causal link between “increased imports” and
serious injury or threaten of serious injury to the domestic industry that
produces like or directly competitive products (SA Arts. 2.1, 3.1 and 3.2(b))
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Prevailing Party and Final
Determination (Part I)
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GATT Article XIX:1(a) (“Unforeseen Developments”): The
Appellate Body upheld the Panel's findings that an
investigating authority must provide a "reasoned conclusion"
in relation to "unforeseen developments" for each specific
safeguard measure at issue; and that the USITC's relevant
explanation was not sufficiently reasoned and adequate and
thus inconsistent with GATT Art. XIX:1(a).
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“Unforeseen Development”
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Panel and AB found that USITC's relevant explanation for the
safeguard was not sufficiently reasoned and adequate and thus
inconsistent with GATT Art. XIX:1(a)
 If, as a result of unforeseen developments and of the effect of the
obligations incurred by a contracting party under this Agreement,
including tariff concessions, any product is being imported into the
territory of that contracting party in such increased quantities and
under such conditions as to cause or threaten serious injury to domestic
producers in that territory of like or directly competitive products, the
contracting party shall be free, in respect of such product, and to the
extent and for such time as may be necessary to prevent or remedy
such injury, to suspend the obligation in whole or in part or to withdraw
or modify the concession.
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Prevailing Party and Final
Determination (Part II)
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SA Arts. 2.1 and 3.1 (“Increased Imports”): Recalling the relevant legal
standard that it elaborated in Argentina – Footwear Safeguards and
rejecting the US argument (comparison of end-points), the Appellate Body
upheld the Panel's conclusions that the measures on CCFRS, hot-rolled bar
and stainless steel rod were inconsistent with Arts. 2.1 and 3.1 because the
United States failed to provide a "reasoned and adequate" explanation of
how the facts (i.e. downward trend at the end of the period of
investigation) supported the determination with respect to "increased
imports" of these products. However, the Appellate Body, reversing the
Panel's finding with respect to "tin mill products and stainless steel wire",
found that the ITC determination containing "alternative explanations" was
not inconsistent with Arts. 2.1 and 4, as the Safeguards Agreement does not
necessarily "preclude the possibility of providing multiple findings instead
of a single finding in order to support a determination” under Arts. 2.1 and
4.
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“Increased Imports”
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Safeguard measures on CCFRS, hot-rolled bar and
stainless steel rod were inconsistent with Arts. 2.1 and
3.1
 U.S. failed to provide a "reasoned and adequate"
explanation of how the facts (i.e. downward trend
at the end of the period of investigation) supported
the determination with respect to "increased
imports" of these products.
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“Increased Imports”
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Panel found ITC’s determination for "tin mill
products and stainless steel wire” did not
reasonably prove increased imports
AB reversed the decision saying that having
"alternative explanations" was consistent with Arts.
2.1 and 4 as the Safeguards Agreement
 Safeguards
Agreement does not necessarily "preclude
the possibility of providing multiple findings instead of
a single finding in order to support a determination”
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Prevailing Party and Final
Determination (Part III)
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SA Arts. 2 and 4 (“Parallelism”): The Appellate Body upheld
the Panel's finding that the USITC did not satisfy the
"parallelism" requirement, as it should have considered any
imports excluded from the application of the measure as an
"other factor" in the causation and non-attribution analysis
under Art. 4.2(b) and it should have provided one single joint,
rather than two separate, determination[s] (i.e. excluding either
Canada and Mexico, or, alternatively, Israel and Jordan)
based on a reasoned and adequate explanation on whether
imports from sources other than the FTA partners (i.e. Canada,
Israel, Jordan, and Mexico), per se, satisfied the conditions for
the application of a safeguard measure
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“Parallelism”
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USITC did not satisfy the "parallelism" requirement,
as it should have considered any imports excluded
from the application of the measure as an "other
factor" in the causation and non-attribution analysis
under Art. 4.2(b) and it should have provided one
single joint, rather than two separate, determination
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Prevailing Party and Final
Determination (Part IV)
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SA Arts. 2.1, 3.1 and 4.2(b) (“Causation”): As regards the
Panel's findings of violations for the USITC's causation
analyses concerning all products other than stainless steel
rod, the Appellate Body (i) reversed the Panel's findings
with respect to tin mill and stainless steel wire based on its
reversal of the Panel's decision on increased imports, and
(ii) declined to rule on the issue of causation for all the
other seven products based on its findings of violations in
respect of previous claims discussed above.
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“Causation”
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Panel found that the USITC did not prove
“causation”
AB reversed the decision specific to tin mill and
stainless steel rod
AB declined to rule on causation relating to the
other products due to its findings of violations in the
previous issues
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APPELLEE SUBMISSION OF
THE UNITED STATES
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The Complainants’ conditional appeals on like product
Article 5.1, and Article 9.1 do not satisfy the
prerequisites for the appellate body to complete the
panel’s analysis.
There is no basis for the Appellate Body to complete
the analysis of complainants’ claims pertaining to like
product issues.
Completing the analysis regarding complainants’ Article
5.1 arguments would require the Appellate Body to
make findings of Fact.
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APPELLEE SUBMISSION OF
THE UNITED STATES – II
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The Panel did not make any findings of fact and the
record does not contain undisputed facts sufficient
to complete the analysis of the complainants’ Article
5.1 claims
Article 9.1 and the qualification of members as
developing countries are novel issues that there is no
need to address if it makes findings in favor of the
United States.
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According to USA
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China failed at every point during the Panel
proceedings to present any evidence that it was
entitled to treatment as a developing country for
purposes of Article 9.1.
Thus, it failed to present a prima facie case that the
U.S. decision not to exclude it from the steel
safeguard measures was inconsistent with Article
9.1.
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USA Decision
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For the reasons set forth above, the United States
asked the Appellate Body to reject each of the
requests set forth by China
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STATEMENT BY THE PRESIDENT
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December 4, 2003
 “Today, I signed a proclamation ending the temporary steel
safeguard measures I put in place in March 2002. Prior to
that time, steel prices were at 20-year lows, and the U.S.
International Trade Commission found that a surge in imports
to the U.S. market was causing serious injury to our domestic
steel industry. I took action to give the industry a chance to
adjust to the surge in foreign imports and to give relief to
the workers and communities that depend on steel for their
jobs and livelihoods. These safeguard measures have now
achieved their purpose, and as a result of changed
economic circumstances it is time to lift them.”
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Implementation
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At the December 10, 2003 DSB meeting, U.S.
informed Members that on December 4, 2003, the
President of the United States issued a proclamation
that terminated all of the safeguard measures subject
to this dispute, pursuant to section 204 of the US
Trade Act of 1974.
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Significance
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Primary violation: the USITC's failure to provide a
reasoned and adequate explanation of unforeseen
developments, increased imports, and nonattribution
Will impact how USITC argues in future cases:
 Provide
more reasoned, detailed explanation and
analyses
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