Transcript Foreign Aid: Good or Bad? - International Trade Relations

China-U.S. (Steel
Safeguards) (DS252)
Galya Brown
Katarzyna Conolly
Lauren Cisek
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Dispute Settlement WT/DS252
U.S. – Definitive Safeguard Measures on
Imports of Certain Steel Products
Complainant: China
Respondent: United States
Third Parties: Brazil, Canada, Chinese Taipei, Cuba, European Union, Japan, Korea,
Mexico, New Zealand, Norway, Switzerland; Thailand; Turkey; Venezuela,
Bolivarian Republic
Claims made by China with regard to violation of:
 Agreement on Safeguards: Art. 2,2.1, 2.2, 3, 3.1, 3.2, 4, 4.1, 4.2, 5, 5.1, 5.2, 7,

7.1, 8, 8.1, 9, 9.1, 12,
GATT 1994: Art. I:1, II, X:3, XIII, XIX:1, XIX:2
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Key facts of China-US Steel Safeguards Dispute
5 March 2002
President George W. Bush announces the imposition of
safeguard measures on imports of certain steel products under
proclamation NO 7529
26 March 2002
China requests for consultations under the DSU (WT/DS252) in
regard with the imposition of definitive safeguard measures by
the U.S. on imports of certain steel products. (China was one of
eight complainants among: The EU, Japan, Korea, Switzerland,
Norway, New Zealand, and Brazil)
11-12 April 2002
Consultations with parties in Geneva
7 May 2002
China’s first request for the establishment of a Panel since none
of the dispute settlement consultations succeeded in resolving
the dispute
7 June 2002
The United States opposes China's first panel request at the DSB
meeting
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Key facts of China-US Steel Safeguards
Dispute (cont’d.)
25 July 2002
A single Panel is composed under Article 9.1 of the DSU
11 July 2003
WTO Panel issues the report on Definitive Safeguard Measures
on Steel Imports and rules in favor of complainants that
the US steel safeguards are inconsistent with WTO regulations
11 August 2003
The U.S. appeals to the Appellate Body
10 November 2003
The Appellate Body issues the report on Definitive Safeguard
Measures on Steel Imports and upholds the Panel report that the US
failed to provide a reasoned and adequate explanation regarding
unforeseen developments, increased imports, and exclusion of imports
from certain sources
4 December 2003
President George W. Bush terminates the remaining steel tariffs
that were the subject to this dispute, pursuant to section 204 of
the US Trade Act of 1974.
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Factual Background
On The 2002 U.S. Steel Safeguard Action
22 June 2001
The USTR requests from the USITC to initiate a safeguard
investigation under Section 201 of the Trade Act of 1974 to
verify whether certain steel products are being imported to the US
territory in such increased quantities as to cause or threaten to
cause of serious injury to the domestic industry.
Four groups of products are being investigated:
 certain carbon and alloy flat products;
 certain carbon and alloy long products;
 certain carbon and alloy pipe and tubes;
 stainless steel and alloy tool steel products.
28 June 2001
The USITC initiates its investigation
4 July 2001
The United States reports the initiation of the safeguard
investigation to the Committee on Safeguards
19 December 2001
The USITC notifies the President about affirmative
determinations of serious injury to the domestic industry.
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Factual Background
On The 2002 U.S. Steel Safeguard Action
(cont’d.)
Key findings of the USITC investigation:
 It covered more than half of total US imports of steel in 2001 (approximate
value of imports was $17 billion);
 It determined that 85% of the imported certain steel products cause or
threaten to cause serious injury to the domestic industry;
 It found out that the US steel prices were at 20-year lows because of the
cheap surge of imports;
 It concluded that a significant part of steel industry, accounted for about 30%
of crude steel making capacity, is in bankruptcy;
 Poor steel industry condition in spite of strong demand.
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President George W. Bush’s action in response
to the USITC report

The US President decided to impose the definitive safeguard measures on imports of
certain steel products under Proclamation No. 7529

The emergency safeguard measures were adopted in the form of temporary tariff
quotas and tariffs ranging from 8, 13, 15 and up to 30 percent and for a 3-year
period, starting on 20 March 2002

President Bush in his statement argued that the imposition of those safeguards
would “give America's steel industry and its workers the chance to adapt to the large
influx of foreign steel”

Nonetheless, definitive safeguard measures were imposed not only on products for
which the USITC established affirmative determinations, but also on two of the four
products for which the USITC made divided determinations

The President imposed tariffs that were notably higher than the USITC
recommendation (approximately 10 percent higher in the first and second group of
certain steel products).
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The Business and Political Context of the US
Action on Steel Products
 The US action on definitive safeguard measures can be considered more as “the political
economy of protection” rather than the prevention of domestic harm as a consequence
of a surge of imports
 In the absence of adequate evidence in support of the Article XIX of GATT and the
Articles 2,3,4 of SA, the introduction of emergency safeguard measures can be seen as
the response to:
 the poor international competitiveness of the US steel industry;
 the decline of the US economy at the end of the 1990s;
 the strength of the US dollar in the 1990s that lowered the prices of imported steel
products and thus increased its amount, reaching a peak of 34 million tonnes in
2000 (30%);
 the strength of the steel industry lobby;
 political expediency, President Bush and the Republican Party needed to win the key
steel-producing states of Ohio and Pennsylvania in the November 2002 mid-term
elections if they wanted to have a majority in both Houses of Congress;
 the U.S. counteraction to a high degree of government intervention and the wide
use of unfair trading practices by Chinese steel exporters to the United States e.g.
Chinese subsidies to the domestic steel industry was estimated as $6 billion in 2001.
.
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US Action Contested
 March 5, 2002 President Bush announced that
beginning March 20th Article 201 of the Trade Act
of 1974 would be implemented for the next three
years.

Article 201: The President has the authority to
take action if ““an article is being imported into
the United States in such increased quantities as
to be a substantial cause of serious injury, or
threat thereof, to the domestic industry producing
an article like or directly competitive with the
imported article.”
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Uruguay Round Agreement on Safeguards
 Article 2- Conditions
 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.”
 Article 3-Investigation
 3.1: “A Member may apply a safeguard measure only following an
investigation by the competent authorities of that Member
pursuant to procedures previously established and made public…”
 Article 5-Application of Safeguard Measures
 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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Uruguay Round Agreement on Safeguards
(cont’d.)
 Article 8- Level of Concessions and Other Obligations
 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…”
 Article 9-Developing Country Members
 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 percent…”
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GATT 1994
 Article I: General Most-Favored-Nation Treatment
 1.1- “With respect to customs duties and charges
of any kind imposed on or in connection with
importation or exportation or imposed on the
international transfer of payments for imports or
exports…any advantage, favour, privilege or
immunity granted by any contracting party to any
product originating in or destined for any other
country shall be accorded immediately and
unconditionally to the like product originating in
or destined for the territories of all other
contracting parties.”
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GATT 1994 (cont’d.)
 Article XIII: Non-discriminatory Administration of
Quantitative Restrictions

8.1: “No prohibition or restriction shall be applied
by any contracting party on the importation or any
product of the territory of any other contracting
party or on the exportation of any product
destined for the territory of any other contracting
party, unless the importation of the like product of
all third countries or the exportation of the like
product to all third countries is similarly prohibited
or restricted.”
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GATT 1994 (cont’d.)
 Article XIX: Emergency Action on Imports of Particular
Products

19.1a: “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, to suspend the obligation in whole or in part
or to withdraw or modify the concession.”
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Position of the main parties
 Regarding “unforeseen development,” GATT Article XIX:1(a), SA
Article 3.1
The United States’ arguments:
 The USITC determined the unforeseen developments that led to increased
imports of certain steel products in a manner that was consistent with the GATT
Article XIX and SA Article 3.1;
 The Russian crisis, the Asian crisis, the increased strength of the United States'
economy, and the appreciation of the US dollar, each amounted to unforeseen
developments and thus increased imports.
China’s arguments:
 The United States acted inconsistently with SA Article 3.1 and GATT Article
XIX:1(a) by not providing an adequate and reasoned explanation of unforeseen
developments and their logical connections to increased imports;
 None of the events, cited by the U.S. above, amounted to unforeseen
developments, nor did any combination of them;
 A lack of adequate explanation of the link between those events and the
increase in imports.
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Position of the main parties (cont’d.)
 Regarding “increased imports,” SA Article 2.1, 3.1,
The United States’ arguments:
 The USITC determined harmful effects of the increased imports of certain steel
products in a manner that was consistent with the SA Article 2.1, 3.1;
 The United States emphasized that the wording of Article 2.1 does not consists
any reference to the terms "recent", "sudden", "significant" and "sharp."
China’s argument:
 United States acted inconsistently with SA Articles 2.1 and 3.1 by failing to
provide a reasoned and adequate explanation of how the facts support the
determination on "increased imports;“
 The increased imports should be recent enough, sudden enough, sharp
enough, and significant enough, both quantitatively and qualitatively, to cause
or threaten to cause serious injury.
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Position of the main parties (cont’d.)

Regarding “parallelism,” SA Article 2, 4
The United States’ arguments:

Imports from developing countries of the WTO, whose share of total imports
does not exceed 3% individually and 9% collectively, should be exempted
from the safeguard measures;

“When the volume of FTA imports is extremely small, the authority's
conclusions with respect to all imports are applicable to imports from all
sources other than FTA sources, with no need for additional explanation."
China’s arguments:

The U.S. acted inconsistently with SA Articles 2.1 and 4.2 by failing to establish
that “imports from sources not excluded from the scope of the measures
alone satisfy the conditions required for the application of the measures;”

The USITC did not "establish explicitly that non-FTA imports are able to cause
serious injury distinctively from injury possibly caused, at the same time, by
other sources of imports;“

There should not be “a double standard,” depending on the level of imports.
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Position of the main parties (cont’d.)
 Regarding “causation,” SA Article 2.1, 3.1, 4.2(b)
The United States’ arguments:
 The United States argued that it had a "genuine and substantial" causal link
between imports and serious injury before imposing affirmative safeguard
measures;
 The USITC argued that it did not have to conduct a non-attribution analysis of
factors - analysis of factors other than increased imports, making only a
"minor" contribution to injury.
China’s arguments:
 The United States acted inconsistently with SA Articles 2.1, 3.1 and 4.2(b) by
failing to establish a causal connection between increased imports and serious
injury;
 The USITC did not assess the cumulative effect of factors other than increased
imports while determining injury to the domestic industry; a lack of nonattribution analysis;
 The USITC had not provided a reasoned and adequate explanation that factors
other than imports made only a minor contribution.
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The Panel
 The single panel was established by the Dispute
Settlement Body on July 25, 2002 to examine the
consistency of ten safeguard measures applied by the
United States on imports of certain steel products.
 The Panel issued 8 Panel Reports to the Members of
the WTO on 11 July 2003 stating that all ten
safeguard measures imposed by the U.S. were
inconsistent with the Agreement on Safeguards and
the GATT 1994.
 The United States decides to Appeal certain findings
by the Panel.
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China’s Recommendations
 Find that the United States safeguard measures on certain steel products,
imposed by Proclamation No. 7529 of 5 March 2002, entitled "To Facilitate
Positive Adjustment to Competition from Imports of Certain Steel Products"
and explained in a Memorandum of 5 March 2002, entitled "Action Under
Section 203 of the Trade Act of 1974 Concerning Certain Steel Products by
the President of the United States of America” are inconsistent with:
 Article XIX:1 of the GATT 1994, Articles 2.1, 4.2(a) and 4.2(b) in
conjunction with Article 4.1(c) , Article 5.1 , Article 5.2 of the Agreement
on Safeguards and Article XIII of the GATT 1994, Article 9.1 , Article I:1 of
the GATT 1994, Article 3.8
 Recommend that the DSB request that the United States bring its safeguard
measures into conformity with the WTO Agreement; and
 Suggest to the DSB that in order to conform, the United States must
terminate the measure.
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The Appellate Body Decisions
 GATT 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.
Therefore the USITC's relevant explanation is
inconsistent with GATT Art. XIX:1(a)
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SA Articles 2.1, & 3.1
Increased Imports
 Appellate Body upheld the Panel's conclusions that
the measures on CCFRS, hot-rolled bar and stainless
steel rod were inconsistent with these articles
because the U.S failed to provide reasonable
explanation and support.
 However, they reversed the Panel's finding with
respect to "tin mill products and stainless steel wire.”

The International Trade Commission (ITC) contained
alternative explanations for these that are valid
determination support under the Safeguards
Agreement.
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SA Articles 2 & 4 Parallelism
 The Appellate Body upheld the Panel's finding
that the USITC did not satisfy the "parallelism.”
 Determined it should have considered imports
excluded from the application of the measure as
an "other factor" in the causation and nonattribution analysis based on a reasoned and
adequate explanation on whether imports from
sources OTHER than the FTA partners (Canada,
Israel, Jordan, and Mexico), satisfied the
conditions for the application of a safeguard
measure.
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SA Articles 2.1, 3.1 and 4.2(b) Causation
 Appellate Body 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 declined to rule on the
issue of causation for all the other seven
products.
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Implementation
 At the DSB meeting of 10 December 2003, the US
informed Members that, on 4 December 2003, the
President of the United States had 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.
 "These safeguard measures have now achieved their
purpose, and as a result of changed economic
circumstances, it is time to lift them”
--- George, W Bush. December 4, 2003
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Dispute in Context of Global Trading System
 Defined and clarified what the US was allowed to do




through Article 201
Removed trade restrictions imposed by the United
States, not just for China but for all countries
Gave other developing countries confidence to bring
actions against larger, developed countries
Bringing certain cases before the WTO allows
governments to rationalize unpopular actions that
needed to be made to be able to comply with WTO
regulations
Bush did not remove safeguards until EU threatened
to impose tariffs on Florida oranges and Harley
Davidson’s.
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Resources
Bush, George W. Temporary Safeguards for Steel Industry. The White House Archives. http://georgewbushwhitehouse.archives.gov/infocus/steel/
European Commission. Trade, Documents and Publications.
http://trade.ec.europa.eu/doclib/docs/2004/april/tradoc_114162.pdf
Perdikis, Nicholas, and Read, Robert. “Chapter 7: The EU–US WTO Steel Dispute: the Political Economy of Protection and the
Efficacy of the WTO Dispute Settlement Understanding.”The WTO and the regulation of international trade: recent trade
disputes between the European Union and the United States. Edward Elgar Publishing,2001.
The World Trade Organization. Dispute Settlement: Dispute DS252. United States - Definitive Safeguard Measures on Imports
of Certain Steel Products. http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds252_e.htm
The World Trade Organization. Dispute Settlement: WTDS248-259. United States - Definitive Safeguard Measures on Imports
of Certain Steel Products.
http://docsonline.wto.org/imrd/gen_searchResult.asp?RN=0&searchtype=browse&q1=%28%40meta%5FSymbol+WT%F
CDS252%FC%2A%29&language=1
The World Trade Organization. Uruguay Round Agreements, Agreement on Safeguards.
http://www.wto.org/english/docs_e/legal_e/25-safeg.doc
The World Trade Organization. The General Agreement on Tariffs and Trade (GATT 1947), LEGAL TEXTS: GATT 1947.
http://www.wto.org/english/docs_e/legal_e/gatt47_e.doc
The World Trade Organization. “One-page summary of key findings of this dispute,” WTO’s Legal Affairs Division, 2010.
http://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds252sum_e.pdf
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Resources (cont’d.)
"Steel Tariffs Ended -- December 4, 2003." PBS: Public Broadcasting Service. 04 Dec. 2003. Web. 01 Oct. 2011.
<http://www.pbs.org/newshour/bb/international/july-dec03/steel_12-4.html>.
Tran, Mark. "Bush Lifts Steel Tariffs to Avert Trade War | World News | Guardian.co.uk." The Guardian. 04 Dec. 2003. Web. 05
Oct. 2011. http://www.guardian.co.uk/world/2003/dec/04/usa.wto1
"International Trade Administration." Safeguards. International Trade Administration, 19 05 2011. Web. 2 Oct 2011.
http://trade.gov/mas/ian/tradedisputes-enforcement/tg_ian_002099.asp.
China Trade Remedy Information, . "Global Times." 2002 US Steel Safeguard Measures. N.p., 26 08 2011. Web. 2 Oct 2011.
http://www.globaltimes.cn/NEWS/tabid/99/ID/672784/2002-US-Steel-Safeguard-Measures.asp&xgt;
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