DISPUTE SETTLEMENT
DS: United States — Safeguard Measure on Imports of Fresh, Chilled or Frozen Lamb from New Zealand
This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.
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Summary of the dispute to date
The summary below was up-to-date at
Consultations
Complaint by New Zealand.
On 16 July 1999, New Zealand requested consultations with the US in respect of a safeguard measure imposed by the US on imports of lamb meat from New Zealand (WT/DS177). New Zealand alleged that by Presidential Proclamation under Section 203 of the US Trade Act 1974, the US imposed a definitive safeguard measure in the form of a tariff-rate quota on imports fresh, chilled, or frozen lamb meat effective from 22 July 1999. New Zealand contended that this measure is inconsistent with Articles 2, 4, 5, 11 and 12 of the Agreement on Safeguards, and Articles I and XIX of GATT 1994.
On 23 July 1999, Australia requested consultations with the US in respect of a definitive safeguard measure imposed by the US on imports of lamb (WT/DS178). Australia alleged that by Presidential Proclamation under Section 203 of the US Trade Act 1974, the US imposed a definitive safeguard measure in the form of a tariff-rate quota on imports of fresh, chilled, or frozen lamb meat from Australia effective from 22 July 1999. Australia contended that this measure is inconsistent with Articles 2, 3, 4, 5, 8, 11 and 12 of the Agreement on Safeguards, and Articles I, II and XIX of GATT 1994.
On 14 October 1999, New Zealand and Australia requested the establishment of a panel. At its meeting on 27 October 1999, the DSB deferred the establishment of the panels.
Panel and Appellate Body proceedings
Further to the second requests to establish a panel by New Zealand and Australia, at its meeting on 19 November 1999, the DSB established, pursuant to Article 9.1 of the DSU, a single panel to examine the complaints WT/DS177 and WT/DS178. Canada, the EC, Iceland and Japan reserved their third-party rights. Australia reserved its third-party rights in relation to the complaint by New Zealand, while New Zealand reserved its third-party rights in relation to the complaint by Australia. On 21 March 2000, the Panel was composed. The Panel circulated its report on 21 December 2000. The Panel concluded that:
- the US has acted inconsistently with Article XIX:1(a)
of GATT 1994 by failing to demonstrate as a matter of fact the existence
of “unforeseen developments”;
- the US has acted inconsistently with Article 4.1(c) of
the Agreement on Safeguards because the USITC, in the lamb meat
investigation, defined the domestic industry as including input producers
as producers of the like product at issue (i.e. lamb meat);
- the complainants failed to establish that the USITC’s
analytical approach to determining the existence of a threat of serious
injury, in particular with respect to the prospective analysis and the
time-period used, is inconsistent with Article 4.1(b) of the Agreement on
Safeguards;
- the complainants failed to establish that the USITC’s
analytical approach to evaluating all of the factors listed in Article
4.2(a) of the Agreement on Safeguards when determining whether increased
imports threatened to cause serious injury with respect to the domestic
industry as defined in the investigation is inconsistent with that
provision;
- the US has acted inconsistently with Article 4.1(c) of
the Agreement on Safeguards because the USITC failed to obtain data in
respect of producers representing a major proportion of the total domestic
production by the domestic industry as defined in the investigation;
- the US has acted inconsistently with Article 4.2(b) of
the Agreement on Safeguards because the USITC’s determination in the lamb
meat investigation in respect of causation did not demonstrate the
required causal link between increased imports and threat of serious
injury, in that the determination did not establish that increased imports
were by themselves a necessary and sufficient cause of threat of serious
injury, and in that the determination did not ensure that threat of
serious injury caused by “other factors” was not attributed to
increased imports;
- by virtue of the above violations of Article 4 of the Agreement on Safeguards, the US also has acted inconsistently with Article 2.1 of the Agreement on Safeguards.
On 31 January 2001, the US notified the DSB of its intention to appeal certain issues of law covered in the Panel Report and legal interpretations developed by the Panel. The Appellate Body circulated its report on 1 May 2001. The Appellate Body:
- upheld the Panel’s finding that the US acted
inconsistently with Article XIX:1(a) of the GATT 1994 by failing to
demonstrate, as a matter of fact, the existence of “unforeseen
developments”;
- upheld the Panel’s finding that the United States acted
inconsistently with Articles 2.1 and 4.1(c) of the Agreement on
Safeguards because the USITC defined the relevant “domestic
industry” to include growers and feeders of live lambs;
- upheld the Panel’s finding that the USITC made a
determination regarding the “domestic industry” on the basis of
data that was not sufficiently representative of that industry; but
modified the Panel’s ultimate finding that the US thereby acted
inconsistently with Articles 2.1 and 4.1(c) of the Agreement on
Safeguards by finding, instead, that the United States thereby acted
inconsistently with Articles 2.1 and 4.2(a) of that Agreement;
- found that the Panel correctly interpreted the standard
of review, set forth in Article 11 of the DSU, which is appropriate to its
examination of claims made under Article 4.2 of the Agreement on
Safeguards; but concluded that the Panel erred in applying that
standard in examining the claims made concerning the USITC’s determination
that there existed a threat of serious injury; and found, moreover, that
the US acted inconsistently with Articles 2.1 and 4.2(a) of the Agreement
on Safeguards because the USITC Report did not explain adequately the
determination that there existed a threat of serious injury to the
domestic industry;
- reversed the Panel’s interpretation of the causation
requirements in the Agreement on Safeguards but,
for different reasons, upheld the Panel’s
ultimate finding that the US acted inconsistently with Articles 2.1 and
4.2(b) of the Agreement because the USITC’s determination that
there existed a causal link between increased imports and a threat of
serious injury did not ensure that injury caused to the domestic industry,
by factors other than increased imports, was not attributed to those
imports;
- upheld the Panel’s exercise of
judicial economy in declining to rule on the claim of New Zealand under
Article 5.1 of the Agreement on Safeguards; and
- declined to rule on the respective conditional appeals of Australia and New Zealand relating to Articles I, II and XIX:1(a) of the GATT 1994, and to Articles 2.2, 3.1, 5.1, 8.1, 11.1(a) and 12.3 of the Agreement on Safeguards.
The DSB adopted the Appellate Body Report and the Panel Report, as modified by the Appellate Body Report, on 16 May 2001.
Implementation of adopted reports
At the DSB meeting of 20 June 2001, the US recalled that on 14 June 2001 it had submitted in writing to the DSB its intentions with respect to the implementation in this case and said that it intended to implement the DSB’s recommendations in a manner that would respect its °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ obligations. The US further stated that it would need a reasonable period of time for implementation and, for that reason, it would enter into discussions with the complaining parties. On 27 September 2001, the US informed the DSB that on 31 August 2001 it had reached a decision to end the safeguard measure on imports of lambs, effective 15 November 2001 and that they were beginning the necessary legal steps to implement the decision. On 28 September 2001, Australia and New Zealand informed the DSB that they had agreed that the reasonable period of time for implementation would expire on 15 November 2001. At the DSB meeting on 21 November 2001, the United States informed the DSB that on 14 November 2001 it had completed the necessary legal steps to implement the decision and considered that it had implemented the DSB's recommendations and rulings.
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