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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