Why the USA ‘lost’ the steel case

meta-creation_date: 11 November, 2003
Here’s the nub of the matter. If you’d like to wade through the full decision, you’ll “find it(download pdf file from WTO, 1043kb)”:http://www.wto.org/english/tratop_e/dispu_e/248_259_abr_e.pdf on the WTO site (document number WT/DS248/AB/R of 10 November, 2003) The WTO Appellate Body upheld the principal finding of the dispute panel: that the United States authorities did not justify their decision to impose temporary, ’emergency’ tariff increases (‘safeguards&#8217)on imported steel. In brief, they failed to show that the emergency described in their decision actually led to an unforeseen increase in steel imports that was harming the US steel industry. The US identification of the ‘unforeseen circumstances’ was not at issue between the parties in the case. The US said they were: bq. the Russian crisis, the Asian crisis and the continued strength of the United States’ market together with the persistent appreciation of the US dollar—as well as the confluence of those events The Appellate body—which did not accept all of the Panel’s reasoning—said that the Panel had correctly interpreted the WTO requirements of Members who invoke the ‘safeguards’ provisions: bq. Together, Article XIX [of GATT] and the Agreement on Safeguards confirm the right of WTO Members to apply safeguard measures when, as a result of unforeseen developments and of the effect of obligations incurred, including tariff concessions, a product is being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. They said that the Panel was also correct in its view that bq. the USITC [US International Trade Commission] had not provided a reasoned and adequate explanation of how the “unforeseen developments” resulted in increased imports of the products on which the United States imposed the safeguard measures The USA objected that the USITC report shows that it did, in fact, conduct a sufficient investigation to reach a ‘reasoned and adequate’ case for the safeguards. But the Appellate Body found that, in the absence of an explicit statement of reasoning related to each safeguard action, a disputes Panel is justified in determining that the standard for decisions on safeguards has not been met. The Panel is not required, said the Appellate Body, to review the evidence de novo to determine whether it provided the basis for a reasoned and adequate conclusion. The adequate reasoning must be explicit in the safeguards decision.

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