WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 884
10.553  In conclusion, the Panel considers that the USITC's conditions of competitions analysis
provided a compelling explanation that a causal link existed between increased imports and seriousinjury caused to the relevant domestic industry.
(ii) Non-attribution
USITC findings
10.554  The USITC's findings read as follows:
"In fact, the declines in the industry's production, shipment and market share levels
occurred despite the fact that the industry added significant amounts of capacity
during a period of reasonably strong growth in demand for stainless bar.  Even withthis increased capacity, the industry was unable to take advantage of the growth in
demand for stainless bar as imports obtained an increasingly larger share of the
domestic market for bar over the period of investigation.  In particular, while apparent
consumption of stainless bar grew by 48 thousand short tons between 1996 and 2000,
the quantity of imports grew at a more accelerated rate, increasing by nearly 53thousand short tons during this same period.  This growth in imports effectively
foreclosed the domestic industry from part icipating in the growth in demand during
the period of investigation.  In sum, the import increases that occurred during the
period clearly had a serious adverse impact on the production volumes, sales levels,
sales revenues, and market share of the industry during the period.
…
In sum, we find that increased quantities of imports of stainless bar during the period
were a substantial cause of the declines in the industry's trade and financial condition
during the period.  In making this finding, we considered the argument of the
respondents that the adverse changes in the industry's condition during the latter halfof the period were caused primarily by a downturn in the demand for stainless steel
bar in late 2000 and in interim 2001, as well as an increase in energy costs during the
same period.
5574  Although we agree with Euro fer that there was a downturn in
demand for stainless bar and an increase in energy costs in late 2000 and interim
2001, the record indicates that there were substantial declines in the industry's
production, sales, and profitability levels during the years prior to 2000 and 2001.  In
particular, we note that the industry's market share, production volumes, employmentlevels and profitability levels all declined considerably during the period from 1996
to 1999 in the face of increasing import volumes.  Given this, we find that imports
were a more important cause of the declines in the industry's condition in 2000 and
interim 2001 than demand declines and energy cost increases, especially given that
import volumes and market share both increased significantly in 2000.  In fact, wefind that the industry's inability to maintain  its operating profits in the face of these
demand and energy cost changes is a direct result of the increasing share of the
market obtained by imports and their consistent underselling of domestic
merchandise during the period.
In addition, we have considered respondents' argument that the industry's condition
during the period was affected significantly by the poor operations of the domestic
                                                     
5574 (original footnote) Eurofer Prehearing Brief on Injury at 3.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 885
producers AL Tech/Empire and Republic, whose stainless bar operations suffered
during the period of investigation -- they assert -- for reasons having little to do withimports.
5575  We note, however, that ***.5576  We further note that, even if these two
producers were excluded from our analysis, the record indicates that the remaining
domestic producers of stainless bar also experienced substantial declines in their
operating income levels, net commercial sales values, unit sales values, and
employment levels during the period.5577
Finally, we note that antidumping duty orde rs were put in place against imports of
stainless bar from Brazil, India, Japan, and Spain in 1995.5578  While these orders are
intended to offset dumping margins on sales of these imports, we note that the record
of this investigation indicates that the orders did not limit the ability of producers in
these countries to continue shipping substantial, and even increasing, volumes of
stainless bar to the United States during the period of investigation.5579
In light of the foregoing, we conclude that increased imports of stainless steel bar are
an important cause, and a cause not less important than any other cause, of serious
injury to the domestic industry producing stainless steel bar.  Accordingly, we find
that the increased imports are a substantial cause of serious injury to the domestic
industry."5580
Factors considered by the USITC
Downturn in demand
Claims and arguments of the parties
10.555  The arguments of the parties are set out in Section VII.H.3(b)(viii) supra .
Analysis by the Panel
10.556  The Panel considers that the USITC acknowledged that declines in demand played a role in
causing the injury that was suffered by the domestic industry.  In particular, the USITC stated that:
"Although we agree with Eurofer that there was a downturn in demand for stainless bar … in late
2000 and interim 2001, the record indicates that there were substantial declines in the industry's
production, sales, and profitability levels during the years prior to 2000 and 2001."  In our view, had
the decline in demand not been a cause of injury at all, the USITC would have stated as much.
Instead, it stated that: "we find that imports were a more important cause of the declines in the
industry's condition in 2000 and interim 2001 than demand declines."
                                                     
5575 (original footnote) Eurofer Prehearing Brief on Injury at 10-17.
5576 (original footnote) ***.
5577 (original footnote) Finally, we also note that, although the statute directs us to assess whether a
significant number of producers have been able to operate at reasonable levels of profits, it ultimately requiresus to assess whether increased imports have been a subs tantial cause of serious injury to the industry "as a
whole".  19 U.S.C. §2252(c)(6).
5578 (original footnote) CR and PR at Table OVERVIEW-1.  We also note that antidumping order were
put in place against imports of stainless steel angle from Japan, Korea, and Spain in May 2001.  We note that it
is too early to assess whether these orders will significantly reduce the level of imports from these countries.
5579 (original footnote) INV-Y-180 at G25 – Stainless Bar and Light Shapes.
5580 USITC Report, Vol. I, pp. 211-213.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 886
10.557  The Panel notes that the USITC considered demand trends during the period of investigation.
It noted that while demand increased between 1996 and 1997, it declined again in 1998 and 1999.Demand picked up again in 2000 but declined again during interim 2001.  More particularly, in the
section containing its analysis of the cond itions of competition, the USITC found that:
"First, demand for stainless bar fluctuated somewhat but grew overall during the five
full-years of the period of investigation.  Apparent US consumption of stainless bar
increased from 276.6 thousand short tons in 1996 to 294.4 thousand short tons in
1997 but then declined to 280.3 thousand short tons in 1998 and to 265.5 thousand
short tons in 1999.  In 2000, however, apparent consumption of bar increased by 22.2percent, growing to 324.2 thousand short tons.
5581  This level of consumption was
17.2 percent larger than in 1996.5582  As the overall economy declined in 2001,
apparent consumption of bar declined by 13 percent between interim 2000 and
interim 2001.5583"5584
10.558  Although the USITC acknowledged that declines in demand played a role in the injury that
was suffered by the domestic industry, it appeared to dismiss this factor in its non-attribution analysis
stating that "We find that the industry's inability to maintain its operating profits in the face of these
demand and energy cost changes is a direct result of the increasing share of the market obtained by
imports and their consistent underselling of domestic merchandise during the period."  In our view,
this is not a reasoned and adequate explanation.  While the Panel is reluctant to prescribe what mayamount to a reasoned and adequate explanation, the Panel considers that the USITC could have, for
example, demonstrated that there was no linkage between demand declines during the period of
investigation and injury suffered in this particular case.  More particularly, the USITC could have
explained that operating margin, perhaps the most relevant injury factor in this regard, declined
irrespective of demand trends.  This analysis could have been bolstered by an explanation thatdeclines in operating margin coincided with increases in imports rather than declines in demand.
10.559  We note that the USITC stated that "[a]lthough we agree with Eurofer that there was a
downturn in demand for stainless bar … in late 2000 and interim 2001, the record indicates that there
were substantial declines in the industry's production, sales, and profitability levels during the years
prior  to 2000 and 2001.  In particular, we note that the industry's market share, production volumes,
employment levels and profitability levels all declined considerably during the period from 1996 to
1999 in the face of increasing import volumes."  In our view, the fact that injury  occurred prior to the
point at which a factor comes into play does not detract from the conclusion that that factor may still
play a role in causing injury beyond that point.
10.560  By dismissing downturn in demand in its non-attribution analysis, the Panel finds that the
USITC failed to meet its obligation to establish explicitly, through a reasoned and adequate
explanation, that the injury caused by this factor, together with other factors, was properly separatedand distinguished and not attributed to increased imports.
                                                     
5581 (original footnote) CR and PR at Tables STAINLESS-67 and STAINLESS-C-4.
5582 (original footnote) CR and PR at Tables STAINLESS-67 and STAINLESS-C-4.
5583 (original footnote) CR and PR at Tables STAINLESS-67 and STAINLESS-C-4.
5584 See para. 10.538.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 887
Increases in energy costs
Claims and arguments of the parties
10.561  The arguments of the parties are set out in Section VII.H.3(b)(viii) supra .
Analysis by the Panel
10.562  The Panel considers that the USITC acknowledged that increases in energy costs played a
role in causing the injury that was suffered by the domestic industry.  In particular, the USITC stated
that:  "Although we agree with Eurofer that there was … an increase in energy costs in late 2000 and
interim 2001, the record indicates that there were substantial declines in the industry's production,
sales, and profitability levels during the years prior to 2000 and 2001".  In our view, had energy costsnot been a cause of injury at all, the USITC would have stated as much.  Instead, it stated that "we
find that imports were a more important cause of the declines in the industry's condition in 2000 and
interim 2001 than energy cost increases".
10.563  We note that the USITC discussed changes in energy costs during the period of investigation.
In particular, it stated that there was "an increase in energy costs in late 2000 and interim 2001".However, having acknowledged that this factor play ed a role in causing the injury that was suffered
by the domestic industry, the USITC appeared to dismiss this factor in its non-attribution analysis on
the basis of the assertion that "We find that the industry's inability to maintain its operating profits in
the face of these demand and energy cost changes is a direct result of the increasing share of the
market obtained by imports and their consistent underselling of domestic merchandise during theperiod."  As we stated in relation to declines in demand, the Panel considers that the USITC could
have demonstrated that there was no linkage between increases in energy costs during the period of
investigation and injury suffered in this particular case.  More particularly, the USITC could have
explained that operating margin declined irrespective of energy cost trends.  This analysis could have
been bolstered by an explanation that declines in operating margin coincided with increases in importsrather than increases in energy costs.
10.564  We note that the USITC stated that "[a]lthough we agree with Eurofer that there was … an
increase in energy costs in late 2000 and interim 2001, the record indicates that there were substantial
declines in the industry's production, sales,  and profitability leve ls during the years prior  to 2000 and
2001.  In particular, we note that the industry's market share, production volumes, employment levels
and profitability levels all declined considerably during the period from 1996 to 1999 in the face of
increasing import volumes."  In our view, the fact th at injury occurred prior to the point at which a
factor comes into play does not detract from the conclusion that that factor may still play a role in
causing injury beyond that point.
10.565  In our view, by dismissing increases in energy costs in its non-attribution analysis, the USITC
failed to meet its obligation to establish explicitly, through a reasoned and adequate explanation, that
the injury caused by this factor, together with other factors, was properly distinguished and notattributed to increased imports.
Conclusions
10.566  The Panel considers that, with respect to stainless steel bar, the USITC failed to comply with
its non-attribution obligation contained in the second sentence of Article 4.2(b).  In particular, we
consider that the USITC failed to properly separate, distinguish and assess the nature and extent of theinjurious effects of factors other than increased imports that were causing injury to the domesticWT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 888
industry.  This, to us, is clear from the fact th at the USITC dismissed a number of factors (namely,
downturn in demand and increases in energy costs) in its non-attribution analysis even though it
acknowledged that those factors were causing injury to the industry.
10.567  The Panel also recalls that the USITC disregarded the effect of downturn in demand and
increases in energy costs because "imports were a more important cause of the declines."  The Panel
considers that such an approach is problematic because the cumulative effect of individual other
factors was not analyzed or assessed despite the fact that the USITC had acknowledged that,
individually, each of the factors caused some injury to the relevant domestic industry.  Therefore, by
discarding factors that individually caused injury to the industry, the USITC failed to distinguish andassess the nature and extent of the injurious effects of these other factors taken together, as distinct
from the effects caused by increased imports.
(iii) Overall conclusion on USITC's determination of a causal link
10.568  In conclusion it is the Panel's view, that while the Panel was unable to come to a definitive
conclusion as to whether, overall, coincidence existed, we, nevertheless, found that the USITC'sconditions of competition analysis provided a compelleing explanation indicating that a causal link
existed between increased imports and serious injury subject to fulfilment of the non-attribution
requirement.  In this regard, the Panel found that the USITC's non-attribution analysis for stainless
steel bar failed to separate, distinguish and assess the nature and extent of the injurious effects of
declines in demand and increases in energy costs so that the injury caused by these factors, together
with other factors, was not attributed to increased imports. Thus, the USITC did not provide a
reasoned and adequate explanation supporting a determination that there was a genuine and
substantial relationship of cause and effect between increased imports and serious injury to the
relevant domestic producers.
10.569  Therefore, the Panel concludes that the USITC's finding that a causal link existed between
imports of stainless steel bar and injury caused to the relevant domestic producers is inconsistent with
Articles 4.2(b), 2.1 and 3.1 of the Agreement on Safeguards.
(i) Stainless steel wire
10.570  As we did in relation to our findings on causation for tin mill products (see paragraphs
10.420-10.422 above), the Panel needs to address the issue of divergent findings made by individual
commissioners for stainless steel wire.  The Panel notes that, in its defence, the United States relies
not only on the causation findings made by Commissioner Koplan, but also on those made byCommissioners Bragg and Devaney.  The former made affirmative findings on stainless steel wire as
a separate product whereas the latter two made affirmative findings with regard to a broader product
category than stainless steel wire, namely, stainless steel wire and rope.  In this regard, the situation is
equivalent to that encountered in the context of tin mill products, because the Commissioners who
defined stainless steel wire as a separate product, did not reach an affirmative result.
10.571  In the March Proclamation, the President did not select any of the various affirmative
determinations as the basis of the decision to impose the safeguard measure on stainless steel wire.
Rather, pursuant to domestic law, the President "decided to consider the determinations of the groups
of commissioners voting in the affirmative with regard to [tin mill products and stainless steel wire] to
be the determination of the USITC".
5585  It is, therefore, apparent that the President based his
determination on the findings of all three Commissioners (Bragg, Devaney and Koplan), although
                                                     
5585 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10553.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 889
those three Commissioners did not perform their respective analyses on the basis of the same like
product definition.
10.572  For the reasons set out above in relation to the USITC's determination(s) on tin mill5586, the
Panel believes that the Agreement on Safeguards does not permit the combination of findings reached
on the basis of differently defined products.  Such findings cannot be reconciled with each other and
they cannot simultaneously form the basis of a determination.  In conclusion, the Panel finds that an
explanation that consists of alternative explanations which, given the different products upon which
such explanations are based, cannot be reconciled as a matter of substance, amounts to a violation of
the obligations under Articles 2.1, 4.2(b) and 3.1 to provide a reasoned and adequate explanation ofhow the facts support the determination of causation.
10.573  Therefore, it is our view that the USITC Report did not contain a a reasoned and adequate
explanation of how the facts support the determination that increased imports of stainless steel wire
caused  serious injury to the relevant domestic industry as required by Articles 2.1, 4.2(b), and 3.1 of
the Agreement on Safeguards.
(j) Stainless steel rod
(i) Coincidence and conditions of competition
USITC findings
10.574  The USITC's findings read as follows:
"We find that the increased imports of stainless rod are an important cause, and a
cause not less than any other cause, of serious injury to the domestic industry.
Accordingly, we find that increased imports of stainless rod are a substantial cause of
serious injury to the domestic stainless rod industry.
a. Conditions of Competition
We have taken into account a number of factors that affect the
competitiveness of domestic and imported stainless rod in the US market, including
factors related to the product itself, the degree of substitutability between the
domestic and imported articles, changes in world capacity and production, market
conditions, and exchange rates.  These factors affect prices and other considerations
taken into account by purchasers in determining whether to purchase domestically-
produced or imported articles.
First, demand for stainless rod remained essentially stable during the period
of investigation.  Apparent US consumptio n of stainless rod was *** thousand short
tons in 1996, *** thousand short tons in 1997, *** thousand short tons in 1998 and
1999, and *** thousand short tons in 2000.5587  With the overall decline in the
economy in interim 2001, apparent consumption of stainless rod also declined, falling
by *** percent between interim 2000 and interim 2001.5588
                                                     
5586 See paras. 10.420-10.422 .
5587 (original footnote) CR and PR at Tables STAINLESS-68 and STAINLESS-C-5.
5588 (original footnote) CR and PR at Tables STAINLESS-68 and STAINLESS-C-5.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 890
Second, stainless rod is primarily used in the production of stainless steel
wire but may also be fabricated into various downstream products, like industrialfasteners, springs, medical and dental instruments, automotive parts, and welding
electrodes.
5589  The large majority of market participants indicate that there are no
known substitutes for stainless steel rod.5590
Third, the domestic stainless rod industry became increasingly concentrated
during the period of investigation.  Only four domestic firms reported producing
stainless steel rod in 2000.5591  In 1997, Carpenter Technology, the dominant
domestic producer of stainless rod in 20005592, purchased Talley, the *** largest
producer of stainless rod.5593  In addition, Empire Specialty Steel, the *** largest rod
producer in 2000, shut down its stainl ess rod operations in June 2001.5594  With the
acquisition of Talley by Carpenter in 1997 and the exit of Empire from the market,
Carpenter/Talley remains the only large domestic producer of stainless rod in the
market.
The industry's aggregate capacity level increased during the period of
investigation, growing by *** percent from 1996 to 2000.5595  Domestic capacity was
*** percent higher in interim 2001 than in interim 2000.5596  The industry's capacity
utilization rate declined from *** percent in 1996 to *** percent in 1999, and then to
*** percent in 2000.  Capacity utilization also declined between interim periods,dropping from *** percent to *** percent.
5597  Moreover, the stainless rod industry
captively consumes more than *** of its stainless rod production in the downstream
production of wire and other stainless products.5598
Fourth, price is an important factor in purchasing decisions for stainless rod.
Although quality was generally ranked by the majority of responding purchasers asthe most important factor in the purchasing decision for stainless rod, the large
majority of purchasers reported price as being one of the three most important factors
in the purchase decision.
5599
Fifth, like many stainless steel products, the price of stainless rod is related to
the price of nickel.5600  To account for fluctuations in the cost of nickel, stainless steel
rod producers impose a surcharge on the price of their products whenever the price of
nickel reaches a certain level.5601  Generally, after declining during the first three
                                                     
5589 (original footnote) CR and PR at STAINLESS-3.
5590 (original footnote) EC-Y-046 at Table STAINLESS-6.
5591 (original footnote) CR and PR at Table STAINLESS-1.
5592 (original footnote) Carpenter accounted for *** percent of reported domestic production of
stainless rod in 2000.  CR and PR at Table STAINLESS-1.
5593 (original footnote) Eurofer Prehearing Brief on Injury at 2.  Talley accounted for *** percent of
reported domestic production of stainless rod in 2000.  CR and PR at Table STAINLESS-1.
5594 (original footnote) Empire Specialty Steel, Inc. Questionnaire Response at August 6, 2001
Attachment.
5595 (original footnote) CR and PR at Tables STAINLESS-C-5 & STAINLESS-19.
5596 (original footnote) CR and PR at Tables STAINLESS-C-5 & STAINLESS-19.
5597 (original footnote) CR and PR at Tables STAINLESS-C-5 & STAINLESS-19.
5598 (original footnote) CR and PR at Table STAINLESS-19.
5599 (original footnote) INV-Y-212 at 95.
5600 (original footnote) CR at STAINLESS-95-96, PR at STAINLESS-70-71.
5601 (original footnote) CR at STAINLESS-95-96, PR at STAINLESS-70-71.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 891
years of the period of investigation, nickel prices increased significantly throughout
1999 and the first half of 2000.  Nickel prices fell thereafter, declining throughinterim 2001.
5602  The price of domestic stainless rod generally followed this trend
during the period of investigation, with the average unit values of domestic rod
shipments and sales declining through the end of 1999, recovering in 2000, and then
declining again in interim 2001.5603
Sixth, during the period of investigation, there were imports of stainless rod
from over 30 countries, although not every country exported stainless rod in every
year.5604  The quantity of imports of stainless steel rod from sources other than
Canada and Mexico increased by 36 percent from 1996 to 2000 but fell by 31 percent
between interim 2000 and interim 2001.5605  The record indicates that purchasers
generally perceive domestically-produced and imported stainless rod to be
comparable in most respects, which indicates that they are at least reasonably
substitutable.5606  The level of substitutability is reduced somewhat by the significant
degree of captive consumption of stainless rod by the domestic industry.5607
The aggregate capacity of foreign producers of stainless steel rod from
sources other than Mexico and Canada increased by 16.5 percent during the period of
investigation.  The capacity utilization rates of these producers increased from 70.8
percent in 1996 to 83.7 percent in 1997 and remained essentially stable thereafter,with capacity utilization being 84.3 percent in 2000 and 82.2 percent in interim
2001.
5608
Seventh, antidumping and countervailing duty orders were imposed against
imports of stainless rod from Brazil, France, India, Italy, Japan, Korea, Spain,
Sweden, and Taiwan in 1993, 1994, and 1998.5609
b. Analysis
We find that the increased quantities of stainless rod imports during the
period of investigation had a direct and serious adverse impact on the production
levels, shipments, commercial sales, and market share of the domestic industry.  With
demand remaining essentially flat during the period of investigation5610, the increases
in import volumes during the period (particu larly the surge that occurred in the last
year of the period) resulted in a dramatic increase in the market share of stainless rodimports.
5611  With the growth in the quantity and market share of imports during the
                                                     
5602 (original footnote) CR at STAINLESS-95-96, PR at STAINLESS-70-71.
5603 (original footnote) CR and PR at Tables STAINLESS-19, STAINLESS-88, & STAINLESS-C-5.
5604 (original footnote) INV-Y-180, Table G26- Stainless Steel Rod.
5605 (original footnote) CR and PR at Tables STAINLESS-6 & STAINLESS-C-4.
5606 (original footnote) EC-Y-046 at Table STAINLESS-25; see generally EC-Y-046 at
STAINLESS-14-28 ..
5607 (original footnote) EC-Y-046 at STAINLESS-31.
5608 (original footnote) CR and PR at Table STAINLESS-47.
5609 (original footnote) CR and PR at Table OVERVIEW-1.
5610 (original footnote) We note that apparent consumption fell by *** percent between interim periods.
5611 (original footnote) CR and PR at Tables STAINLESS-68 & STAINLESS-C-5.  The market share
of imports increased from *** percent in 1996 to *** percent in 1997, declined in 1998 to *** percent, but then
increased to *** percent in 1999 and *** percent in 2000.  Id.  It then declined slightly to *** percent in interim
2001.  Id.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 892
period of investigation, especially during the last year of the period, the industry's
production levels, shipment volumes, net commercial sales, and net commercial salesrevenues all fell considerably, especially in the last full-year of the period.  In
particular, the industry's production levels declined by *** percent during the period
from 1996 to 2000, its US shipment volumes fell by *** percent during the period, its
net commercial sales fell by *** percent during the period, and its net commercial
sales revenues fell by *** percent.
5612  Moreover, the industry's capacity utilization
rates were impacted as well, falling from *** percent in 1996 to *** percent in 2000,
and then to *** percent in interim 2001.5613  Further, as import quantity and market
share increased during the period of investigation, the share of the market held by the
domestic industry declined dramatically as well, falling from *** percent in 1996 to
*** percent in 1999 and to *** percent in 2000.5614
Indeed, the most serious adverse impact of imports in quantity terms occurred
during the last full-year of the period of investigation, when import quantities reachedtheir highest level during the period, growing by 25.0 percent from the previous
year.
5615  With growth in imports in that year, the market share of the industry fell by
*** percentage points, its production volumes fell by *** percent, its US shipment
levels fell by *** percent, and its net commercial sales quantities fell by *** percent
from the prior year's levels.5616  Moreover, partly as a direct result of these volume
declines5617, the industry's profitability levels declined by *** percentage points in
that year from the previous year's level.5618  In our view, the increases in import
quantities during the period of investigation, particularly its last full-year, have had a
serious and adverse impact on the sales revenue and production volumes of the
industry.
The record also indicates that imports had a negative effect on domestic
prices of stainless rod during the period of investigation.  Purchasers generally
consider domestic and imported stainless rod to be comparable in most respects, 5619
which indicates that there is a high degree of substitutability between the products.Moreover, the record shows that price is an important part of the purchasing
decision
5620 and that imports consistently and significantly undersold the domestic
merchandise throughout the period of investigation.5621  In addition to causing
                                                     
5612 (original footnote) CR and PR at Tables STAINLESS-19, STAINLESS-31 & STAINLESS-C-5.
Declines in these indicators continued in interim 2001, as well, when demand for stainless rod fell considerably
from its prior levels.  Id.
5613 (original footnote) CR and PR at Tables STAINLESS-19 and STAINLESS-C-5.  As noted earlier,
we are cognizant of the fact that the industry increased its capacity during the period.  Nonetheless, despite this
increase, the industry's production volumes fell by *** percent during the period from 1998 to 2000 and by anadditional *** percent in interim 2001.  Id.  Thus, the industry's capacity utilization rates would have declined
substantially even in the absence of these capacity increases.
5614 (original footnote) CR and PR at Tables STAINLESS-68 & STAINLESS-C-5.
5615 (original footnote) CR and PR at Tables STAINLESS-7, STAINLESS-68, & STAINLESS-C-5.
5616 (original footnote) CR and PR at Tables STAINLESS-19, STAINLESS-68, & STAINLESS-C-5.
5617 (original footnote) As we describe below, the decline in the industry's profitability was also the
result of price-suppression and depression by imports during the period of investigation.
5618 (original footnote) CR and PR at Tables STAINLESS-31 & STAINLESS-C-5.
5619 (original footnote) INV-Y-212 at 96.
5620 (original footnote) INV-Y-212 at 96.
5621 (original footnote) CR and PR at Tables STAINLESS-88, STAINLESS-100, & Figure
STAINLESS-11.  The price comparison data indicate that imports undersold the domestic merchandise in everyWT/DS248/R, WT/DS249/R,
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WT/DS258/R, WT/DS259/R
Page 893
purchasers to shift a significant volume of their purchases from domestic to imported
product, we find that this underselling also depressed and suppressed domestic pricesduring the period of investigation.
In this regard, although trends in the price of stainless rod are expected to
follow trends in the price of nickel, prices of domestic stainless rod failed to keep
pace with movements in the cost of nickel during the second half of the period of
investigation, particularly during the latter half 1999 and 2000, when the price of
nickel (and the nickel surcharge) increased substantially.
5622  For example, in 1999,
the average unit values of the industry's net commercial sales fell by *** percentalthough its unit cost of goods sold fell by only *** percent.
5623  Similarly, in 2000,
the average unit values of the industry's net commercial sales increased by ***
percent despite the fact that its unit cost of goods sold increased by *** percent.5624
Finally, in interim 2001, the unit value of the industry's net commercial sales fell by*** percent, despite the fact that its unit cost of goods sold increased by ***percent.
5625  In sum, during the latter half of the period, the record indicates that
consistent and significant price underselling by imports managed to suppress and
depress domestic prices.  This resulted in the inability of the industry to effectuate
changes in the price of its stainless rod sales that would cover increases (or keep pace
with declines) in the price of its raw materials.  Accordingly, the price-suppressionand depression caused by imports resulted in the continuing depression and
suppression of the industry's operating income levels.
5626
Finally, the record shows a clear and direct correlation between changes in
the volume of imports and the overall condition of the industry.  In particular, the
operating income margins of the industry declined in 1997, 1999, and 2000, all ofwhich were years in which import quantities increased from their level in the prior
year.
5627  The only full-year in which the industry's operating income margin actually
increased from the prior year's level was 1998, when import quantities decreased by
21.5 percent.5628
…
In light of the foregoing, we conclude that increased imports of stainless rod
are an important cause, and a cause no less important than any other cause, of seriousinjury to the domestic industry producing stainless rod.  Accordingly, we find that
                                                                                                                                                                    
possible price comparison, at margins ranging from 6.5 per cent to 23 percent.  Id.  These consistent underselling
figures are supported by an examination of the average unit value for domestic and imported merchandise,which also show imports being priced at consistently lower levels than domestic merchandise during the period.
CR and PR at Table STAINLESS-C-5.
5622 (original footnote) CR at STAINLESS-95-96, PR at STAINLESS-70-71 & Tables STAINLESS-7,
STAINLESS-19, STAINLESS-31, & STAINLESS-C-5.
5623 (original footnote) CR and PR at Table STAINLESS-C-5, STAINLESS-19, & STAINLESS-31.
5624 (original footnote) CR and PR at Table STAINLESS-C-5, STAINLESS-19, & STAINLESS-31.
5625 (original footnote) CR and PR at Table STAINLESS-C-5, STAINLESS-19, & STAINLESS-31.
5626 (original footnote) CR and PR at Table STAINLESS-31.
5627 (original footnote) CR and PR at Tables STAINLESS-7, STAINLESS-31, STAINLESS-68, &
STAINLESS-C-5.
5628 (original footnote) CR and PR at Tables STAINLESS-7, STAINLESS-31, STAINLESS-68, &
STAINLESS-C-5.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 894
imports of stainless rod are a substantial cause of serious injury to the domestic
industry producing stainless rod."5629
Claims and arguments of the parties
10.575  The arguments of the parties are set out in Section VII.H.2 (i) supra .
Analysis by the Panel
10.576  At the outset, the Panel notes that the USITC undertook a coincidence analysis for stainless
steel rod and concluded that coincidence existed.  However, the Panel notes that it is unable to assess
the complainants claims regarding the existence or otherwise of coincidence because of the redaction
of relevant confidential information.
10.577  The Panel also notes that the United States, in rebutting the European Communities claim in
this regard stated that:  "In addition, as the USITC clearly explained in its analysis (even with the
redaction of confidential data), imports undersold domestic merchandise in every period of the period
of investigation, including 1999, which resulted in the suppression and depression of domestic prices
during the last two-and-a-half years of the period of investigation, thus preventing the industry fromkeeping its prices at a level that would allow it to recoup its nickel costs during this period, including
1999."
10.578  We have examined the USITC's condition of competition analysis.  We understand that the
essential premise of the USITC's finding of a causal relationship between increased imports and
serious injury is that imports undersold domestic products.  In particular, the USITC stated that"imports consistently and significantly undersold the domestic merchandise throughout the period of
investigation.
5630  In addition to causing purchasers to shift a significant volume of their purchases
from domestic to imported product, we find that this underselling also depressed and suppressed
domestic prices during the period of investigation."
10.579  The Panel notes that the assertion that underselling depressed and suppressed domestic prices
is accompanied by the following analysis:
"In this regard, although trends in the price of stainless rod are expected to follow
trends in the price of nickel, prices of domestic stainless rod failed to keep pace with
movements in the cost of nickel during the second half of the period of investigation,
particularly during the latter half 1999 and 2000, when the price of nickel (and the
nickel surcharge) increased substantially.5631  For example, in 1999, the average unit
values of the industry's net commercial sales fell by *** percent although its unit costof goods sold fell by only *** percent.
5632  Similarly, in 2000, the average unit values
of the industry's net commercial sales increased by *** percent despite the fact that
                                                     
5629 USITC Report, Vol. I, pp. 217-222.
5630 (original footnote) CR and PR at Tables STAINLESS-88, STAINLESS-100, & Figure
STAINLESS-11.  The price comparison data indicate that imports undersold the domestic merchandise in everypossible price comparison, at margins ranging from 6.5 per cent to 23 percent.  Id.  These consistent underselling
figures are supported by an examination of the average unit value for domestic and imported merchandise,which also show imports being priced at consistently lower levels than domestic merchandise during the period.
CR and PR at Table STAINLESS-C-5.
5631 (original footnote) CR at STAINLESS-95-96, PR at STAINLESS-70-71 & Tables STAINLESS-7,
STAINLESS-19, STAINLESS-31, & STAINLESS-C-5.
5632 (original footnote) CR and PR at Table STAINLESS-C-5, STAINLESS-19, & STAINLESS-31.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 895
its unit cost of goods sold increased by *** percent.5633  Finally, in interim 2001, the
unit value of the industry's net commercial sales fell by *** percent, despite the factthat its unit cost of goods sold increased by *** percent.
5634  In sum, during the latter
half of the period, the record indicates that consistent and significant price
underselling by imports managed to suppress and depress domestic prices.  This
resulted in the inability of the industry to effectuate changes in the price of its
stainless rod sales that would cover increases (or keep pace with declines) in the price
of its raw materials.  Accordingly, the price-suppression and depression caused by
imports resulted in the continuing depression and suppression of the industry'soperating income levels.
5635"
10.580  We note that a footnote to the above excerpt from the USITC Report stated that "The price
comparison data indicate that imports undersold the domestic merchandise in every possible price
comparison, at margins ranging from 6.5 percent to 23 percent."  This statement seems to be
supported by Table STAINLESS-100.
10.581  In the Panel's view, although relevant data was redacted from the USITC Report, the USITC
nevertheless provided alternative information in Ta ble STAINLESS-100 that sought to substitute the
redacted data. In light of the foregoing, the Panel concludes that the facts that are available to us tend
to support the USITC's conclusion that there was import underselling during the period of
investigation.  We note that none of the complainants have challenged the USITC's data indicatingthat "in every possible price comparison, at margins ranging from 6.5 percent to 23 percent".  We
recall that it is contrary to our standard of review to reassess the quality of the data contained in the
USITC's Report. In our view, given the facts referred to above, the USITC provided a compelling
explanation indicating that, subject to the fulfilment of the non-attribution requirement, a causal link
existed between increased imports and serious injury.
Conclusions
10.582  In conclusion, the Panel is unable to assess the USITC's coincidence analysis given that
essential information has been redacted.  As stated above, the Panel agrees that, in some
circumstances, Members have the obligation to confidentialize certain information, pursuant to
Article 3.2 of the Agreement on Safeguards, although they can base their determination on such
confidentialized information but this obligation should not reduce Members' rights to take safeguard
actions.  Also as mentioned above, in cases where information has been confidentialized, the Panelwill examine whether the competent authority provided a reasoned and adequate explanation through
means other than full disclosure of that data.
5636  In light of our approach, we reviewed the USITC's
conditions of competition analysis and consider that it provided a compelling explanation, subject to
fulfillment of the non-attribution requirement, that  indicated the existence of a causal link between
increased imports of stainless steel rod and serious injury to the relevant domestic producers.
(ii) Non-attribution
USITC findings
10.583  The USITC's findings read as follows:
                                                     
5633 (original footnote) CR and PR at Table STAINLESS-C-5, STAINLESS-19, & STAINLESS-31.
5634 (original footnote) CR and PR at Table STAINLESS-C-5, STAINLESS-19, & STAINLESS-31.
5635 (original footnote) CR and PR at Table STAINLESS-31.
5636 See our discussions in para. 10.275.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 896
"The industry's aggregate capacity level increased during the period of investigation,
growing by *** percent from 1996 to 2000.5637  Domestic capacity was *** percent
higher in interim 2001 than in interim 2000.5638  The industry's capacity utilization
rate declined from *** percent in 1996 to *** percent in 1999, and then to ***
percent in 2000.  Capacity utilization also declined between interim periods, dropping
from *** percent to *** percent.5639  Moreover, the stainless rod industry captively
consumes more than *** of its stainless rod production in the downstream production
of wire and other stainless products.5640
…
In sum, we find that the increased quantities of imports of stainless rod during the
period of investigation were an important cause of the declines in the industry's trade
and financial condition during the period.  In making this finding, we note that we
have considered respondents' argument that adverse changes in the industry's
condition during the latter half of the period were caused primarily by a downturn inthe demand for stainless steel rod in late 2000 and in interim 2001, as well as an
increase in energy costs during the same period.
5641  Although the record does show a
downturn in demand for stainless bar [sic] and an increase in energy costs in late
2000 and interim 2001, there were substantial declines in the industry's production,
sales, and profitability levels during the years prior to 2000 and interim 2001.  Inparticular, the industry's market share, production volumes, employment levels and
profitability levels all declined considerably during the period from 1996 to 1999 in
the face of increased import volumes, despite the fact that there were only small
changes overall in the amount of stainless rod consumed in the US market and despite
the fact that there is little evidence that  energy costs were increasing substantially in
these periods.  Considering this, it is clear that imports had a greater impact on the
declines in the industry's condition in 2000 and interim 2001 than demand declines
and energy cost increases, especially given the substantial increase in import
quantities and market share during the last year-and-a half of the period.
In addition, we also have considered respondents' argument that the industry's
condition during the period was affected significantly by the poor operations of the
domestic producer AL Tech/Empire.
5642  However, ***.5643  Moreover, even if this
producer were excluded from our analysis, the remaining domestic producers of
stainless rod still experienced substantial declines in their operating income margins,
production levels, shipments, capacity utilization, and employment levels during the
period of investigation.5644
                                                     
5637 (original footnote) CR and PR at Tables STAINLESS-C-5 & STAINLESS-19.
5638 (original footnote) CR and PR at Tables STAINLESS-C-5 & STAINLESS-19.
5639 (original footnote) CR and PR at Tables STAINLESS-C-5 & STAINLESS-19.
5640 (original footnote) CR and PR at Table STAINLESS-19.
5641 (original footnote) Eurofer Prehearing Brief on Injury at 2.
5642 (original footnote) Eurofer Prehearing Brief on Injury at 2.
5643 (original footnote) Empire Specialty Steel, Inc. Questionnaire Response at August 6, 2001
Attachment; Republic Technologies International Questionnaire Response at p. 54.
5644 (original footnote) We also note that, although the statute directs us to assess whether a significant
number of producers have been able to operate at reasonab le levels of profits, it ultimately requires us to assess
whether increased imports have been a substantial cause  of serious injury to the industry "as a whole".  19
U.S.C. §2252(c)(6).WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 897
Finally, although antidumping and countervailing duty orders were imposed against
imports of stainless rod from Brazil, France, India, Italy, Japan, Korea, Spain,Sweden, and Taiwan in 1993, 1994, and 1998
5645, the imposition of these orders
appears not to have limited the ability of foreign producers in most of these countries
to increase their stainless rod exports to the United States in 1999 and 2000.5646
In light of the foregoing, we conclude that increased imports of stainless rod are animportant cause, and a cause no less important than any other cause, of serious injury
to the domestic industry producing stainless rod.  Accordingly, we find that imports
of stainless rod are a substantial cause of serious injury to the domestic industryproducing stainless rod."
5647
Factors considered by the USITC
Increases in capacity
Claims and arguments of the parties
10.584  The arguments of the parties are set out in Section VII.H.3(b)(x) supra .
Analysis by the Panel
10.585  The Panel notes that while the USITC discussed increases in capacity and declines in capacity
utilization in its Report, it did not go so far as to acknowledge that increases in capacity played a role
in causing the injury that was suffered by the domestic industry.  The United States submits that even
with the noted capacity increases, "the industry's actual production levels and shipments actuallydeclined during the period from 1996 through 2000, primarily because imports increased their
volumes and market share through price underselling during the period of investigation".  In light of
the Panel's conclusions above in relation to the USITC's conditions of competition analysis, the Panel
considers that the facts that are available to the Panel tend to support the USITC's conclusion that
import underselling, rather than capacity increases, caus ed injury to the industry.  Therefore, in the
Panel's view, capacity increase was not one of the "other factors" which the USITC should have
separated, distinguished and assessed in order to reach a finding that increased imports were causing
serious injury to the relevant domestic producers.
(iii) Overall conclusion on USITC's determination of a causal link
10.586  The facts that are available to the Panel tend to support the conclusions reached by the
USITC. Accordingly, the Panel finds that the USITC's causation analysis for stainless steel rod was
not inconsistent with the requirements of the Agreement on Safeguards.
F. C
LAIMS RELATING TO PARALLELISM
1. Claims and arguments of the parties
10.587  The complainants claim that the United States failed to meet the requirement of parallelism
with regard to all safeguards at issue.  The Unit ed States responds that the USITC's analysis in the
                                                     
5645 (original footnote) CR and PR at Table OVERVIEW-1.
5646 (original footnote) INV-Y-180 at G26 – Stainless Steel Rod.
5647 USITC Report, Vol. I, pp. 221-222.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 898
Second Supplementary Report, read in conjunction with the initial USITC Report, satisfies the
requirement of parallelism.
10.588  The arguments of the parties as regards the legal standard to be applied are set out in
Section VII.K.1-3 supra .
2. Relevant WTO provisions
10.589  The concept of parallelism has been derived from the parallel language in the first and second
paragraphs of Article 2 of the Agreement on Safeguards.  Article 2 provides as follows:
1. A Member1 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 beingimported 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. Safeguard measures shall be applied to a product being imported irrespective
of its source.
1 A customs union may apply a safeguard measure as a single unit or on
behalf of a member State.  When a customs union applies a safeguard measure as a
single unit, all the requirements for the determination of serious injury or threat
thereof under this Agreement shall be based on the conditions existing in the customs
union as a whole.  When a safeguard measure is applied on behalf of a member State,all the requirements for the determination of  serious injury or threat thereof shall be
based on the conditions existing in that member State and the measure shall be
limited to that member State.  Nothing in this Agreement prejudges the interpretation
of the relationship between Article XIX and paragraph 8 of Article XXIV of GATT
1994.
3. Analysis by the Panel
10.590  The requirement of parallelism was first relied upon by the panel, and endorsed by the
Appellate Body, in Argentina – Footwear (EC) .
5648  On the basis of the same phrase – "product …
being imported" – appearing in both paragraphs of Article 2 of the Agreement on Safeguards, the
Appellate Body found, in US – Wheat Gluten , that the phrase has the same meaning in both
Article 2.1 and Article 2.2.  The Appellate Body held, that the phrase would have two different
meanings in both paragraphs if imports from all sources were included in the determination thatincreased imports are causing serious injury, and imports not from all these sources were covered by
the measure. 
5649
10.591  The conclusion to be drawn from this is that the imports included in the determination and
those covered by the measure should correspond.5650  If they do not correspond, i.e. if there is a "gap"
between imports covered by the determination and imports falling within the scope of the measure,
                                                     
5648 Panel Report, Argentina – Footwear (EC) , para. 8.87; Appellate Body Report, Argentina –
Footwear (EC) , paras. 111-113.
5649 Appellate Body Report, US – Wheat Gluten , para. 96 . See also Appellate Body Report, US – Line
Pipe, para. 180.
5650 Appellate Body Report, US – Wheat Gluten , para. 96 . See also Appellate Body Report, US – Line
Pipe, para. 181.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 899
the competent authorities must establish explicitly that imports from sources covered by the measure
satisfy the conditions for a safeguard measure set out in Article 2.1 and elaborated in Article 4.2 of theAgreement on Safeguards.
5651
10.592  When the determination and the eventual measure do not correspond, the Panel believes that
Members can establish explicitly that imports from sources covered satisfy the conditions for
safeguard action, also when the decision to exclude certain sources from the safeguard measure is
made subsequent  to a determination, in the sense of Article 2.1.  In such cases, the importing Member
is entitled to make and publish these findings subsequent to the publication of the report setting out
the determination in the sense of Article 2.1.5652
10.593  On that basis, in the present case, both the findings made in the initial USITC Report and
those contained in the Second Supplementary Report issued in February 2002, are able to satisfy the
requirement of establishing explicitly that imports covered by the measure satisfy the conditions of
Articles 2.1 and 4.2.  This, of course, assumes that such findings are necessary because there is a gap
between sources covered by the ultimate measure and sources covered by the October 2001determination.  Conversely, however, that requirement must be fulfilled before the application of the
safeguard measure.  An explanation provided after the start of the application of the safeguard
measure on 20 March 2002
5653 is not capable of meeting the requirement to establish explicitly that
imports from sources covered by the measure meet the requirements for its application.
10.594  The Panel notes that there is some debate between the parties as to what amounts to a finding
that does indeed establish explicitly that imports from sources covered by the measure satisfy the
conditions for a safeguard measure.  The United States maintains that Articles 3 and 4 of the
Agreement on Safeguards do not require an "explicit" finding and that the Appellate Body has never
related such a requirement to the text of the Agreement on Safeguards.  According to the United
States, the Appellate Body's use of the term "explicit" is best understood as referring to the competentauthorities' formal conclusion as to whether non-FTA imports have caused serious injury, and does
not require an "explicit" recitation of the results of each step of the analytical process leading to that
conclusion.
5654  In contrast, New Zealand rejects the idea of reducing the requirement for a "reasoned
and adequate explanation" to a simple requirement for a conclusion by way of mere assertion that
even if FTA imports had not been included, the result would have been the same.5655  The European
Communities stresses that the "parallelism" requirement is clearly discernible from the text and the
Appellate Body has clarified that it entails that there must be an explicit finding and a reasonedexplanation that imports covered by a measure al one satisfy the requirements of Articles 2 and 4.
5656
10.595  The Panel recalls that the requirement of parallelism, as developed by panels and the
Appellate Body, is that the competent authorities must establish explicitly that imports covered by the
safeguard measure satisfy the conditions for its application.  This implies that the competent
                                                     
5651 Appellate Body Report, US – Wheat Gluten , para. 98 . See also Appellate Body Report, US – Line
Pipe, para. 181.
5652 The Panel notes that some of the complainants have argued that the Unites States has also violated
the principle of parallelism in that it has granted so-called "product exclusions" (see paras.7.1680 to 7.1698)Given that, for the reasons discussed below, the Panel has found a violation of the principle of parallelism, thereis no need for the Panel to specifically address this further argument.
5653 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5654 United States' first written submission, paras. 752-753.
5655 New Zealand's second written submission, para. 3.151.
5656 European Communities' second written submission, paras. 454-457.  Japan even argues in its
Interim Review comments that the parallelism obligation existed in the wording of Article XIX.  The Panel has,however, decided that it need not examine this claim pursuant to Article XIX of the GATT 1994.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 900
authorities must provide a reasoned and adequate explanation of how the facts support their
determination.5657  As the Appellate Body has also clarified, "to be explicit, a statement must express
distinctly all that is meant; it must leave nothing merely implied or suggested; it must be clear and
unambiguous."5658
10.596  The Panel believes that the requirement of parallelism also exists in the interest of the other
Members.  The other Members who are facing the safeguard measure should be able to assess its
legality on the basis of the determination and explanations provided by the competent authorities.
This function would not be fulfilled if the other Members were left with statements such as those to
the effect that the exclusion of subsets of all imports would not change the conclusions and, elsewherein the report, that certain imports are very small.
10.597  Finally, the Panel notes the dispute between the parties as to whether competent authorities
must consider imports from sources excluded by the measure as an "other factor" in the sense of
Article 4.2(b) of the Agreement on Safeguards, when they perform the exercise of establishing
explicitly that imports from sources covered by the measure satisfy the requirements set out inArticle 2.1 and elaborated in Article 4.2.
10.598  As clarified by the Appellate Body, if the scope of the measure does not match the scope of
the determination, competent authorities must "establish  explicitly   that increased imports from non-
[FTA] sources alone"
5659 caused serious injury or threat of serious injury.5660  Increased imports from
sources ultimately excluded from the application of the measure must hence be excluded from the
analysis.  The increase of these imports and their effect on the domestic industry cannot be used to
support a conclusion that the product in question "is being imported in such increased quantities so as
to cause serious injury".  This makes it necessary – whether imports excluded from the measure are an
"other factor" or not – to account for the fact that excluded imports may have some injurious impact
on the domestic industry.  As said, this impact must not be used as a basis supporting theestablishment of the Article 2.1 criteria.
4. Measure-by-measure analysis
(a) CCFRS
(i) The USITC's findings
10.599  In the Second Supplementary Report, the USITC reported "that its results would have been
the same had imports from Canada and Mexico been excluded from the analysis."  The USITC also
indicated, "in accord with its findings in the Views on Remedy, that exclusion of imports from Israel
                                                     
5657 Appellate Body Report, US – Line Pipe , para. 181.
5658 Appellate Body Report, US – Line Pipe , para. 194.
5659 In the view of the Panel, "alone", in this context means: "to the exclusion of increased imports from
other sources (i.e. sources excluded from the measure)"; it does not mean: "to the exclusion of other factors, i.e.non-increased imports factors in the sense of Article 4.2(b), second sentence".  The Appellate Body has clarifiedthat increased imports precisely need not, by themselves, cause serious injury (Appellate Body Report, US –
Wheat Gluten , paras. 70 and 79; Appellate Body Report, US – Lamb , para. 170).  There is no reason why this
latter aspect should be any different in the context of parallelism, where the same test of Articles 2 and 4 is
applied, only to a narrower base of imports.  See also Appellate Body Report, US – Wheat Gluten , para 98:
"establish explicitly that imports from these  same  sources, excluding Canada, satisfied the conditions for the
application of a safeguard measure".
5660 Appellate Body Report, US – Line Pipe , para. 194;WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 901
and Jordan would not change the conclusions of  the Commission or of individual Commissioners."5661
Specifically as regards CCFRS, the USITC made the following findings:
"We report that increased imports of certain carbon flat-rolled steel from non-NAFTA
countries are a substantial cause of serious injury to the domestic industry producing
certain carbon flat-rolled steel.
Non-NAFTA imports of certain carbon flat-rolled steel have increased.  Imports of
certain carbon flat-rolled steel from non-NAFTA sources increased from 14.5 million
short tons in 1996 to 21.2 million short tons in 1998, an increase of 46.8 percent.
Non-NAFTA imports were lower in 1999 and in 2000 but remained well above 1996levels.
5662
In addition, the increase in non-NAFTA imports as a share of domestic productionwas substantial.  Non-NAFTA imports were equivalent to 7.8 percent of domestic
production in 1996 and peaked at 11.1 percent of domestic production in 1998.  Such
imports were equivalent to 8.4 percent of domestic production in 2000, still above the1996 level.
5663
The average unit values of non-NAFTA imports followed the same pattern as theaverage unit values of imports from all sources.  The average unit value of non-
NAFTA imports peaked at $372 per short ton in 1997, then fell notably in both 1998
and in 1999.  The average unit value of non-NAFTA imports rose somewhat in 2000,although average unit values of non-NAFTA imports were lower in interim 2001 than
in interim 2000.
5664
Finally, excluding imports from Canada and Mexico from the database does notappreciably change import pricing trends during the period examined.  Our finding
that imports were generally priced below domestically-produced certain carbon flat-rolled steel, and that imports led to the decline in domestic prices, also applies to non-
NAFTA imports.
5665
Consequently, the same considerations that led us to conclude that increased importsof certain carbon flat-rolled steel are a substantial cause of serious injury to the
domestic industry
5666 are also applicable to increased imports of certain carbon flat-
rolled steel from all sources other than Canada and Mexico."5667
(ii) Claims and arguments of the parties
10.600  The arguments of the parties as regards the US ITC's findings are set out in Sections VII.K.2,
3(b) and 4(a) supra .
                                                     
5661 USITC Second Supplementary Report, p. 4 (footnote omitted).
5662 (original footnote) Non-NAFTA imports were lower in interim 2001 than in interim 2000.  See
INV-Y-209 at Table ALT7.
5663 (original footnote) Non-NAFTA imports were equivalent to a smaller share of domestic production
in interim 2001 than in interim 2000.  See INV-Y-209 at Table ALT7.
5664 (original footnote) See INV-Y-209 at Table ALT7.
5665 (original footnote) See USITC Pub. 3479, Vol. II at Table FLAT-77.
5666 (original footnote) See USITC Pub. 3479, Vol. I at 59-65.
5667 USITC Second Supplementary Report, pp. 4-5WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 902
(iii) Analysis by the Panel
10.601  The Panel notes that the safeguard action on CCFRS excludes imports from Canada, Mexico,
Israel and Jordan and that the determination made by the USITC in October 2001 covered imports
from all sources.  The question is, therefore, whether the competent authorities of the United States
have established explicitly, with a reasoned and adequate explanation, that imports from sources other
than Canada, Mexico, Israel and Jordan meet the conditions for the application of a safeguard measure
as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on Safeguards.
10.602  The Panel notes that the USITC has, in its Second Supplementary Report, made certain
findings on the exclusion of imports from Israel and Jordan and with regard to the question of whether
increased imports of CCFRS from non-NAFTA countries are a substantial cause of serious injury to
the domestic industry.5668  In these findings, the USITC established and explained that non-NAFTA
imports had increased.  The USITC also examined average unit values and pricing trends of imports
from non-NAFTA sources and concluded that the statem ents of underselling and of imports leading to
the decline in domestic prices made in relation to all imports (investigated in the USITC Report) wereequally applicable to non-NAFTA imports.
10.603  The Panel notes two legal flaws in these findin gs and, therefore, believes that they do not
establish explicitly, with a reasoned and adequate explanation, that imports from sources covered by
the measure satisfy the requirements for the imposition of a safeguard measure.  First, with regard to
the question of whether imports from non-NAFTA sources caused serious injury, the USITC foundthat the statements made on all imports as regards average unit values – the fact of underselling and
the result of a decline in domestic prices – could also be made with respect to non-NAFTA imports.
This is not a reasoned and adequate explanation because one cannot conclude that the fact that all
imports and non-NAFTA imports have the same characte ristic mean that they have identical effects.
This misses out on the important aspect that non-NAFTA imports are, at least in quantity, less than all
imports.  This smaller amount of imports, i.e. imports to the exclusion of Canadian and Mexican
imports, may well result in a different impact on the domestic industry than imports including
Canadian and Mexican imports.  An assessment of this difference was all the more necessary in the
present case, given that the USITC had previously established that imports from Canada and equally
imports from Mexico represented a substantial share of total imports, and that Mexican imports
contributed importantly to serious injury caused by imports.
5669  Therefore, the United States'
explanation does not address the possibility th at, unlike all imports, non-NAFTA imports are  not a
cause of serious injury in the sense of having a genuine and substantial relationship of cause and
effect.
10.604  More specifically, the requirement of causation in Articles 2.1 and 4.2(b) of the Agreement on
Safeguards, including the requirement of non-attribution, has not been satisfied.  In the Second
Supplementary Report, the USITC did not address factors other than increased imports whichcontributed to the causation of serious injury to the domestic CCFRS industry.  The United States
maintains that there was no need to do so since the "other factors", i.e. the non-import factors
remained the same, so that the non-attribution performed in the main USITC Report remains valid.
5670
10.605  In the view of the Panel, the fact that those other factors were the same, does not mean that
new findings on causation did not have to be made.  The obligation of non-attribution comprises theobligation to separate and distinguish the respective effects of increased imports and other factors to
                                                     
5668 USITC Second Supplementary Report, pp. 4-5.
5669 USITC Report, Vol. I, pp. 65-66.
5670 United States' first written submission, paras. 797-804.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 903
discern whether there is a genuine and substantial relationship of cause and effect between increased
imports and serious injury.  It may be unnecessary to repeat the exercise of separating anddistinguishing the effects of other factors.  However, the effects of increased imports  from all sources
and the effects of increased imports only from a subset of sources will not necessarily be the same.
Therefore, it potentially makes a difference whether one compares the effects of all increased imports
or the effects of only some increased imports with the effects of other factors.
10.606  Hence, a genuine and substantial relationship of cause and effect between all increased
imports and serious injury, if established, is not a sufficient basis for assuming the existence of such a
genuine and substantial link between increased imports from non-NAFTA sources and serious injury.The United States' proposition could be maintained only if those two groups of imports had the same
effects.  At least for quantitative reasons and the fact that increased NAFTA imports undoubtedly had
some  effect, this proposition cannot be upheld in this case.  The competent authority is under an
obligation to account for the fact that excluded  (FTA) imports contributed to the serious injury
suffered by the domestic industry in establishing whether imports from sources covered by themeasure satisfy the requirement of causing serious injury.
10.607  Second, the Panel notes that the sources excluded from the measure are not only Canada and
Mexico, but also Israel and Jordan.
5671  Accordingly, imports from sources covered by the measure are
not "non-NAFTA imports", but imports other than those from Canada, Mexico, Israel and Jordan.
With regard to such imports, the USITC did not establish explicitly that they satisfied therequirements of Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards, neither in the
USITC Report, nor in the Second Supplementary Report.
10.608  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports.  However, in the
view of the Panel, it would then still be necessary for the competent authorities to actually express thefindings required under parallelism with regard to increased imports other than those from Canada,
Mexico, Israel and Jordan.  The standard is that the Member must establish explicitly that imports
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding to be made, it is not sufficient to merely find that the exclusion of imports from Israel
and Jordan would not change the conclusions regarding the prerequisites for a safeguard measure.
5672
The Panel recognizes that if, as established elsewhere in the report of the competent authorities,imports from an excluded source were "small and sporadic" and those of another excluded source"virtually non-existent"
5673, it is very possible that the facts  allow a finding that imports from sources
covered by the measure do satisfy the conditions for the application of a safeguard measure.  This,
however, still needs to be established explicitly and supported with a reasoned and adequate
explanation.
(iv) Conclusion
10.609  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on CCFRS, after
including imports from all sources in its determination, and without establishing explicitly, with a
reasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right toapply a safeguard measure.
                                                     
5671 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5672 USITC Second Supplementary Report, p. 4.
5673 USITC Report, Vol. I, p. 366 and footnote 69.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 904
(b) Tin mill products
(i) Claims and arguments of the parties
10.610  The complainants assert that the determination made by the USITC in October includes all
imports.  Neither the initial USITC Report nor the Second Supplementary Report establishes
explicitly that imports from sources covered by the measure satisfy the conditions of Articles 2.1 and
4.2 of the Agreement on Safeguards.  The Second Supplementary Report does not even mention tin
mill products specifically.  The claims and arguments of the complainants as regards the USITC's
findings on tin mill products are set out in more detail in Sections VII.K.2, 3(b) and 4(b) supra .
10.611  The United States contends that, when performing the analysis of all imports, Commissioner
Miller made the necessary findings on non-NAFTA imports of tin mill products and Commissioner
Bragg on non-NAFTA imports of CCFRS, comprising tin mill products.  The claims and arguments
of the United States as regards the USITC's findings on tin mill products are set out in more detail in
Sections VII.K.2, 3(b) and 4(b) supra .
(ii) Analysis by the Panel
Split findings
10.612  The Panel first notes that imports from Canada, Mexico, Israel and Jordan have been
excluded from the safeguard measure on tin mill products.5674  Second, the October 2001
determination by the USITC covered imports from all sources.  The question is, therefore, whether the
competent authorities of the United States have established explicitly, with a reasoned and adequateexplanation, that imports from sources other than Canada, Mexico, Israel and Jordan meet the
conditions for the application of a safeguard measure as set out in Article 2.1 and elaborated in Article
4.2 of the Agreement on Safeguards.  In this regard, the United States relies, before the Panel, on
findings made by Commissioners Miller
5675 and Bragg5676 in the USITC Report.
10.613  The Panel recalls that Commissioner Bragg made her findings on a product category much
broader than, and comprising, tin mill products, as Commissioner Devaney did.5677  The Panel also
recalls that the United States has imposed a safeguard measure on tin mill products and this measure
has been challenged by the complainants.  Three Commissioners have made an affirmative
determination  with regard to tin mill products , as is apparent from the very first paragraph of the
actual USITC determination.5678  They  supported  this determination with findings that are based on
different product categories.  However, it remains that for the purpose of WTO law the USITC has
actually made a determination on tin mill as a separate product.  The Panel notes that this is confirmedby the Proclamation of the President of 5 March 2001, in which the President "decided to consider the
determinations of the groups of commissioners voting in the affirmative with regard to [tin mill
products and stainless steel wire] to be the determination of the [US]ITC".
5679
                                                     
5674 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5675 USITC Report, Vol. I, pp. 307-308 and footnotes 28 and 29 on p. 310.
5676 USITC Report, Vol. I, pp. 15-17.
5677 USITC Report, Vol. I, p. 71, footnote 368.  The Panel notes that the United States does not rely on
findings made by Commissioner Devaney in defence against the claim of violation of parallelism, possibly
because this Commissioner appears not to have reac hed any conclusions about imports other than excluded
imports.  See USITC Report, Vol. I, p. 317.
5678 USITC Report, Vol. I, p. 25.
5679 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10553.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 905
10.614  According to the Panel, this means that if there is a gap between the sources covered by a
measure on tin mill products and a determination  on tin mill products , the competent authority must,
pursuant to the requirement of parallelism, establish explicitly that  tin mill products from sources
covered by the measure satisfy the conditions of Articles 2.1 and 4.
10.615  The Panel does not believe that findings on a product category other than tin mill products are
able to support a measure relating to tin mill products as a separate product category, unless there is a
reasoned and adequate explanation relating the two product categories.  If it was necessary to
establish explicitly certain conditions with regard to tin mill products, then these conditions cannot be
established with findings on a different (broader) product category.  Such findings would not bespecific to the product to which the USITC determination and the United States' safeguard measure
related.  Hence, the views of Commissioners Bragg and Devaney, who reached no findings on tin mill
but reached findings on the broader category of CCFRS, do not meet the requirements of parallelism.
Therefore, the Panel will review the findings reached by Commissioner Miller who defined tin mill
products as a separate product.
Commissioner Miller's and the USITC's findings
10.616  In the initial USITC Report, in two footnotes, Commissioner Miller, the only Commissioner
making an affirmative determination with regard to tin mill products as a separately defined product,
made the following statements:
"I note that in my analysis of whether increased imports as a whole are a substantial
causes of serious injury, I would have reached the same result had I excluded imports
from Mexico.  The quantity of imports from Mexico was so minuscule – 57 tons in
1996, 21 tons in 1997, 286 tons in 1998, 156 tons in 1999, 39 tons in 2000, and no
imports in 2001 – that it accounted for zero percent of US market share in each year
of the period examined.  At their highest, in 1998, imports from Mexico represented0.1 percent of imports, and zero percent in all other years.  Therefore, the results with
respect to increases in imports, their share of apparent US consumption, and their
ratio to US production are virtually the same whether imports from Mexico are
included in total imports or not.  CR/PR at Table FLAT-10, Table FLAT-C-8.
5680
I further note that I would have found imports of tin mill products to be a substantialcause of serious injury had I excluded imports from Canada.  Imports from all other
sources increased by a significant amount – 22.4 percent – over the period, despite anoverall decline in consumption.  In addition, the US market share held by these
imports increased by 2.9 percentage points over the period, while imports from
Canada as a share of the US market increased by only 1.3 percentage points.  CR/PR
at Table-FLAT-C-8.  The pricing data collected by the Commission show no
underselling by imports from Canada.  CR/ PR at Table-FLAT-75.  Also, while the
AUVs of imports from Canada declined overall during the period, the rate of decline
– 3.5 percentage points – was significantly lower than that of all other imports – 13.1
percentage points, and toward the end of the period, in 1999, 2000, and interim 2001,
the AUVs of imports from Canada were higher than those of the other imports.
CR/PR at Table-FLAT-C-8."
5681
10.617  In her recommendation on remedy, Commissioner Miller stated:
                                                     
5680 USITC Report, Vol. I, p. 310, footnote 28.
5681 USITC Report, Vol. I, p. 310, footnote 29.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 906
"I also recommend that the President not include imports from Israel and from
beneficiary countries under the Caribbean Basin Economic Recovery Act and theAndean Trade Preference Act in any remedy action.
5  The only imports of tin mill
products from these countries during the period of investigation were small and
sporadic."5682
____________________________________________________________________
5 The U.S.-Jordan Free Trade Area Implementation Act became effective on
December 17, 2001, two days before submission of this report on our findings and
recommendations in investigation No. TA-201-73, Steel, to the President.  There have been noimports of tin mill products from Jordan during the period of investigation, and they aretherefore not a substantial cause of serious injury or threat of serious injury.  Therefore, to theextent that section 221(a) of the Jordan FTA applies to this investigation, I recommend that
such imports not be subject to the additional tariff described above."
10.618  On that basis, the USITC reported in the Second Supplementary Report, "in accord with its
findings in the Views on Remedy, that exclusion of  imports from Israel and Jordan would not change
the conclusions of the Commission or of individual Commissioners."5683
Panel's Assessment
10.619  The Panel is unable to identify in these statem ents any finding that establishes explicitly, with
a reasoned and adequate explanation, that imports from other sources than Canada, Mexico, Israel andJordan satisfy the conditions of Article 2.1 as elaborated by Article 4.2 of the Agreement on
Safeguards.  In particular, none of the footnotes relied upon by the United States addresses the
consequences of excluding imports from Canada, Mexico, Israel and Jordan.  They only address the
exclusion of imports from one Member, respectively.
10.620  Further, these findings do not account for the fact that imports other than those from an
excluded source are less than those from all sources and that the effects on the domestic producers
are, therefore, not the same.  Commissioner Miller did not address factors other than increased
imports which contributed to serious injury to the domestic tin mill industry.
10.621  In the view of the Panel, the fact that those other factors were the same, does not mean that
new findings on causation did not have to be made.  The non-attribution obligation comprises theobligation of separating and distinguishing the respective effects of increased imports and other
factors to discern whether there is a genuine and substantial relationship of cause and effect between
increased imports and serious injury.  It may be unnecessary to repeat the exercise of separating and
distinguishing the effects of other factors. However, the effects of increased imports from all sources
and the effects of increased imports only from a subset of sources will not necessarily be the same.
Therefore, it potentially makes a difference whether one compares the effects of all increased imports
or the effects of only some increased imports with the effects of other factors.  For that reason, a
genuine and substantial relationship of cause and effect between all increased imports and serious
injury, if established, is not a sufficient basis for assuming the existence of such a genuine and
substantial link between increased imports from non-Canadian sources and serious injury.
10.622  Second, it may well be that imports from Mexico, Israel and Jordan were so small that they
could not possibly affect the findings reached, whether about all imports or about non-Canadian
                                                     
5682 USITC Second Supplementary Report, p. 529
5683 USITC Second Supplementary Report, p. 4 (footnote omitted).WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 907
imports.  However, in the view of the Panel, it would then still be required for the competent
authorities to actually express the findings require d under parallelism with regard to increased imports
other than those from Canada, Mexico, Israel and Jordan.  The standard is that the Member must
establish  explicitly that imports from sources covered by the measure satisfy all conditions for the
right to apply a safeguard measure.  For this finding to be made it is not sufficient to merely find that
the exclusion of imports from Israel and Jordan would not change the conclusions regarding the
prerequisites for a safeguard measure.5684  The Panel recognizes that if imports from an excluded
source were "small and sporadic", "(virtually) non-existent"5685 or "miniscule"5686, it is very possible
that the facts  allow a finding that imports from sources covered by the measure do satisfy the
conditions for the application of a safeguard measure.  This, however, still needs to be established
explicitly and supported with a reasoned and adequate explanation.
10.623  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on tin mill products,after including imports from all sources in its determination, and without establishing explicitly, with
a reasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right
to apply a safeguard measure.
(c) Hot-rolled bar
(i) The USITC's findings
10.624  In the Second Supplementary Report, the USITC reported "that its results would have been
the same had imports from Canada and Mexico been excluded from the analysis."  The USITC also
indicated, "in accord with its findings in the Views on Remedy, that exclusion of imports from Israel
and Jordan would not change the conclusions of  the Commission or of individual Commissioners."
5687
Specifically as regards hot-rolled bar, the USITC made the following findings:
"We report that increased imports of carbon and alloy hot-rolled bar and light shapes
('hot-rolled bar') from non-NAFTA countries are a substantial cause of serious injury
to the domestic industry producing hot-rolled bar.
Non-NAFTA imports of hot-rolled bar have increased.  The quantity of these imports
rose from 584,126 short tons in 1996 to 644,577 short tons in 1997 and to 1.1 million
short tons in 1998.  Non-NAFTA imports then declined to 925,711 short tons in 1999
and increased to 1.2 million short tons in 2000.  Non-NAFTA imports increased by107.9 percent from 1996 to 2000, and had major increases from 1997 to 1998 (when
they increased by 70.4 percent) and from 1999 to 2000 (when they increased by 31.2
percent).  These were the same years that imports from all sources increased most
rapidly.  Non-NAFTA imports, however, increased at a greater rate than imports from
all sources.
5688
                                                     
5684 USITC Second Supplementary Report, p. 4.
5685 USITC Report, Vol. I, p. 529 and footnote 5;  United States' first written submission, para. 754.
5686 USITC Report, Vol. I, footnote 28 on p. 310.
5687 USITC Second Supplementary Report, p. 4 (footnote omitted).
5688 (original footnote) USITC Pub. 3479, vol. III at Table LONG-C-3.  The quantity of non-NAFTA
imports was lower in interim 2001, when it was 403,165 short tons, than in interim 2000, when it was 630,673short tons.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 908
The ratio of non-NAFTA imports of hot-rolled bar to domestic production also
increased significantly during the period examined, growing from 6.8 percent in 1996to 13.2 percent in 2000.  The ratio increased most notably from 1997 to 1998 and
from 1999 to 2000.
5689
In our analysis of causation with respect to imports from all sources, we observed thatincreased imports caused domestic hot-rolled bar producers to lose market share at
the same time prices were falling, leading to poor operating results and plant
closures.
5690  This is also applicable to non-NAFTA imports.
With respect to market share measured by quantity, hot-rolled bar imports from
sources other than Canada and Mexico declined from 5.8 percent in 1996 to 5.7
percent in 1997, increased to 9.4 percent in 1998, declined to 8.4 percent in 1999, and
then increased to 10.8 percent in 2000.  Like imports from all sources, non-NAFTA
imports posted their greatest increases in market share between 1997 and 1998 and
between 1999 and 2000.  Moreover, the bulk of the increased market share that allimports captured from the domestic industry during the period examined was
attributable to non-NAFTA imports.
5691
Average unit values of non-NAFTA imports declined during every full-year of theperiod examined, as did average unit values of imports from all sources.  However,
the average unit values of non-NAFTA imports declined by a greater proportion from1996 to 2000 than did imports from all sources.  The average unit values of non-
NAFTA imports fell from $679 in 1996 to $478 in 2000, a decline of 29.6 percent.
By contrast, the average unit value of imports from all sources fell 13.5 percent over
the same period.
5692
In our analysis of import competition, we placed particular emphasis on underselling
by imports from all sources during 1998 and the first half of 2000.5693  During these
periods, non-NAFTA imports undersold domestically produced hot-rolled bar by
substantial margins.5694  Indeed, non-NAFTA imports were priced lower than imports
from all sources during these periods.5695
Consequently, the same considerations that led us to conclude that increased importsof hot-rolled bar are a substantial cause of serious injury are also applicable to
increased imports of hot-rolled bar from all sources other than Canada andMexico."
5696
                                                     
5689 (original footnote) USITC Pub. 3479, vol. II at Table LONG-5.  The ratio was lower in interim
2001, at 10.4 percent, than it was in interim 2000, when it was 12.7 percent.
5690 (original footnote) USITC Pub. 3479, vol. I  at 96.
5691 (original footnote) USITC Pub. 3479, vol. III at Table LONG-C-3.  The market share of non-
NAFTA imports was lower in interim 2001, when it was 8.2 percent, than in interim 2000, when it was 10.4percent.
5692 (original footnote) USITC Pub. 3479, vol. III at Table LONG-C-3.  Average unit values of imports
from sources other than Canada and Mexico were higher in interim 2001 than in interim 2000.
5693 (original footnote) See USITC Pub. 3479, vol. I at 96-97.
5694 (original footnote) USITC Pub. 3479, vol. II at Table LONG-90
5695 (original footnote) Compare  USITC Pub. 3479, vol. II at Table LONG-90, with Confidential
Report (CR), Table LONG-ALT-90.
5696 USITC Second Supplementary Report, pp. 5-6.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 909
(ii) Claims and arguments of the parties
10.625  The arguments of the parties as regards the US ITC's findings are set out in Sections VII.K.2,
3(b) and 4(c) supra .
(iii) Analysis by the Panel
10.626  The Panel notes that the safeguard measure on hot-rolled bar excludes imports from Canada,
Mexico, Israel and Jordan5697 and that the determination made by the USITC in October 2001 covered
imports from all sources.  The question is, therefore, whether the competent authorities of the United
States have established explicitly, with a reasoned and adequate explanation, that imports from
sources other than Canada, Mexico, Israel and Jordan meet the conditions for the application of asafeguard measure as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on
Safeguards.
10.627  The Panel notes that the USITC has, in its Second Supplementary Report, made certain
findings on the exclusion of imports from Israel and Jordan and with regard to the question whether
increased imports of hot-rolled bar from non-NAFTA countries are a substantial cause of seriousinjury to the domestic industry.
5698  In these findings, the USITC established and explained that non-
NAFTA imports had increased.  The USITC also examined market shares, average unit values and
underselling of imports from non-NAFTA sources and found that non-NAFTA imports captured the
bulk of the market share lost by domestic producers, that their average unit values declined more
sharply and that they were priced lower than was the case for all imports.5699
10.628  The Panel notes two legal flaws in these findin gs and, therefore, believes that they do not
establish explicitly, with a reasoned and adequate explanation, that imports from sources covered by
the measure satisfy the requirements for the imposition of a safeguard measure.  First, the requirement
of causation in Articles 2.1 and 4.2(b) of the Agreement on Safeguards, including the requirement of
non-attribution, has not been satisfied.  In the Second Supplementary Report, the USITC did notaddress factors other than increased imports which contributed to the causation of serious injury to the
domestic hot-rolled bar industry.  The United States maintains that there was no need to do so since
the "other factors", i.e. the non-import factors either did not cause the serious injury or were unrelated
to the specific source of imports, so that the non-attribution performed in the main USITC Report
remains valid.
5700
10.629  In the view of the Panel, the fact that those other factors were the same, does not mean that
new findings on causation did not have to be made.  The obligation of non-attribution comprises theobligation of separating and distinguishing the respective effects of increased imports and other
factors to discern whether there is a genuine and substantial relationship of cause and effect between
increased imports and serious injury.  It may be unnecessary to repeat the exercise of separating and
distinguishing the effects of other factors. However, the effects of increased imports  from all sources
and the effects of increased imports  only from a subset of sources will not necessarily be the same.
Therefore, it potentially makes a difference whether one compares the effects of all increased imports
or the effects of only some increased imports with the effects of other factors.
                                                     
5697 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5698 USITC Second Supplementary Report, pp. 4-6.
5699 Second Supplementary Report, p. 6.
5700 United States' first written submission, para. 834.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 910
10.630  For that reason, a genuine and substantial relationship of cause and effect between all
increased imports and serious injury, if established, is not a sufficient basis for assuming the existenceof such a genuine and substantial link between increased imports from non-NAFTA sources and
serious injury.  The United States' proposition could be maintained only if those two groups of
imports had the same effects.  At least for quantitative reasons and the fact that increased NAFTA
imports undoubtedly had  some  effect, this proposition cannot be upheld in this case.  The competent
authority is under an obligation to account for the fa ct that excluded (FTA) imports contributed to the
serious injury suffered by the domestic industry in establishing whether imports from sources covered
by the measure satisfy the requirement of causing serious injury.
10.631  Second, the Panel notes that the sources excluded from the measure are not only Canada and
Mexico, but also those from Israel and Jordan.
5701  Accordingly, imports from sources covered by the
measure are not "non-NAFTA imports", but imports other than those from Canada, Mexico, Israel and
Jordan.  With regard to such imports, the USITC did not establish explicitly that they satisfied the
requirements of Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards, neither in theUSITC Report, nor in the Second Supplementary Report.
10.632  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports. However, in the
view of the Panel, it would then still be required for the competent authorities to actually express the
findings required under parallelism with regard to increased imports other than those from Canada,Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that imports
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding to be made it is not sufficient to merely find that the exclusion of imports from Israel
and Jordan would not change the conclusions regarding the prerequisites for a safeguard measure.
5702
The Panel recognizes that if imports from an excluded source were "small and sporadic" and
"virtually non-existent"5703 or, as the USITC found, "at very low levels" and non-existent5704, it is very
possible that the facts allow a finding that imports from sources covered by the measure do satisfy the
conditions for the application of a safeguard measure.  This, however, still needs to be established
explicitly and supported with a reasoned and adequate explanation.
10.633  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on hot-rolled barafter including imports from all sources in its determination and without establishing explicitly, with a
reasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right to
apply a safeguard measure.
(d) Cold-finished bar
(i) The USITC's findings
10.634  In the Second Supplementary Report, the USITC reported "that its results would have been
the same had imports from Canada and Mexico been excluded from the analysis."  The USITC also
indicated, "in accord with its findings in the Views on Remedy, that exclusion of imports from Israel
                                                     
5701 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5702 USITC Second Supplementary Report, p. 4.
5703 United States' first written submission, para. 754.
5704 USITC Report, Vol. I, p. 376 and footnote 117.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 911
and Jordan would not change the conclusions of  the Commission or of individual Commissioners."5705
Specifically, as regards cold-finished bar, the USITC made the following findings:
"We report that increased imports of carbon and alloy cold-finished bar ("cold-
finished bar") from non-NAFTA countries are a substantial cause of serious injury to
the domestic industry producing cold-finished bar.
Non-NAFTA imports of cold-finished bar have increased.  The quantity of these
imports rose from 137,834 short tons in 1996 to 167,256 short tons in 1997 and then
to 201,473 short tons in 1998.  Non-NAFTA imports then declined to 154,971 short
tons in 1999 and increased to 233,940 short tons in 2000.  Non-NAFTA imports had amajor increase from 1999 to 2000, when they rose by 51.0 percent.  This was the
same year that imports from all sources increased most sharply.  Non-NAFTA
imports, however, increased at a greater rate than imports from all sources both from
1999 to 2000 and over the entire period examined.
5706
The ratio of non-NAFTA imports of cold-finished bar to domestic production also
increased significantly during the period examined, growing from 11.8 percent in
1996 to 17.6 percent in 2000.  The ratio increased most notably from 1999 to 2000,
when it rose by 6.4 percentage points.5707
In our analysis of causation with respect to imports from all sources, we stated thataggressive pricing by imports during the latter portion of the period examined causedthe industry to lose market share and revenues.
5708  This observation is applicable as
well to non-NAFTA imports.
With respect to market share measured by quantity, cold-finished bar imports from
non-NAFTA sources increased from 9.8 percent in 1996 to 10.5 percent in 1997 and
then to 12.1 percent in 1998.  The market share of these imports then declined to 9.6percent in 1999 and increased to 14.3 percent in 2000.  Like imports from all sources,
non-NAFTA imports posted a significant increase in market share between 1999 and
2000.  Indeed, non-NAFTA imports were responsible for the entire increase in import
market share both during this period and the period between 1996 and 2000.
5709
Average unit values of cold-finished bar imports from sources other than Canada andMexico declined during every full-year of the period examined, falling from $919 in
1996 to $758 in 2000.  The 17.6 percent decline in average unit values for non-
                                                     
5705 Second Supplementary Report, p. 4 (footnote omitted).
5706 (original footnote) USITC Pub. 3479, vol. III at Table LONG-C-4.  The quantity of non-NAFTA
imports was lower in interim 2001, when it was 99,082 short tons, than in interim 2000, when it was 122,028short tons.
5707 (original footnote) USITC Pub. 3479, vol. II at Table LONG-6.  The ratio was higher in interim
2001, at 17.5 percent, than it was in interim 2000, when it was 17.0 percent.
5708 (original footnote) See USITC Pub. 3479, vol. I at 105.
5709 (original footnote) USITC Pub. 3479, vol. III at Table LONG-C-4.  The market share of non-
NAFTA imports was higher in interim 2001, when it was 14.2 percent, than in interim 2000, when it was 13.5percent.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 912
NAFTA imports from 1996 to 2000 was greater than the decline in average unit
values for imports from all sources over the same period.5710
In our analysis of import competition, we discussed pricing trends and underselling of
one-inch round C12L14 during 1999 and 2000.5711  For imported C12L14 from non-
NAFTA sources, there were significant price declines during 1999.  Prices declined
further during 2000, particularly during the final quarter of the year.  Between the
second quarter of 1999 and the fourth quarter of 2000, non-NAFTA imports of
C12L14 undersold the domestically-produced product by margins ranging from
***.5712  Both the pricing trends and the underselling data for non-NAFTA imports
are similar to those for imports from all sources on which we relied in our injury
determination.5713
Consequently, the same considerations that led us to conclude that increased importsof cold-finished bar are a substantial cause of serious injury are also applicable to
increased imports of cold-finished bar from all sources other than Canada andMexico."
5714
(ii) Claims and arguments of the parties
10.635  The arguments of the parties as regards the US ITC's findings are set out in Sections VII.K.2,
3(b) and 4(d) supra .
(iii) Analysis by the Panel
10.636  The Panel notes that the safeguard measure on cold-finished bar excludes imports from
Canada, Mexico, Israel and Jordan5715 and that the determination made by the USITC in October 2001
covered imports from all sources.  The question is, therefore, whether the competent authorities of the
United States have established explicitly, with a reasoned and adequate explanation, that imports from
sources other than Canada, Mexico, Israel and Jordan meet the conditions for the application of asafeguard measure as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on
Safeguards.
10.637  The Panel notes that the USITC has, in its Second Supplementary Report, made certain
findings on the exclusion of imports from Israel and Jordan and with regard to the question of whether
increased imports of cold-finished bar from non-NAFTA countries are a substantial cause of serious
injury to the domestic industry.
5716  In these findings, the USITC established and explained that non-
NAFTA imports had increased.  The USITC also examined the market share, average unit values andpricing data concerning imports from non-NAFTA sources.  It concluded that non-NAFTA imports
were responsible for the entire increase in import market share from 1999 to 2000 and from 1996 to
2000, that the average unit values of such imports declined during every full year of the period
                                                     
5710 (original footnote) USITC Pub. 3479, vol. III at Table LONG-C-4.  The average unit values of non-
NAFTA imports were higher in interim 2001 than in interim 2000.
5711 (original footnote) See USITC Pub. 3479, vol. I at 106-07.
5712 (original footnote) CR, Table LONG-92.
5713 (original footnote) Compare USITC Pub. 3479 at 105-07.
5714 USITC Second Supplementary Report, pp. 6-7.
5715 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5716 USITC Second Supplementary Report, pp. 4, 6-7.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 913
examined, and that non-NAFTA imports of the C12L14 product undersold the domestically producer
product between the second quarter of 1999 and the fourth quarter of 2000.5717
10.638  The Panel notes two legal flaws in these findin gs and, therefore, believes that they do not
establish explicitly, with a reasoned and adequate explanation, that imports from sources covered by
the measure satisfy the requirements for the imposition of a safeguard measure.  First, the requirement
of causation in Articles 2.1 and 4.2(b) of the Agreement on Safeguards, including the requirement of
non-attribution, has not been satisfied.  In the Second Supplementary Report, the USITC did not
address other factors than increased imports which contributed to the causation of serious injury to the
domestic cold-finished bar industry.  The United States maintains that there was no need to do so,since of the two "other factors", i.e. the non-import factors identified, one did not cause the serious
injury observed and the other one was discussed in the analysis pertaining to all imports.  Hence, in
the view of the United States, the non-attribu tion performed in the main USITC Report remains
valid.
5718
10.639  In the Panel's view, the fact that those other factors were the same, does not mean that no new
findings on causation had to be made.  The obligation of non-attribution comprises the obligation of
separating and distinguishing the respective effects of increased imports and other factors to discern
whether there is a genuine and substantial causal relationship between increased imports and serious
injury.  It may be unnecessary to repeat the exercise of separating and distinguishing the effects of
other factors.  However, the effects of increased imports from all sources and the effects of increased
imports  only from a subset of sources will not necessarily be the same.  Therefore, it potentially
makes a difference whether one compares the effects of all increased imports or the effects of only
some increased imports with the effects of other factors.
10.640  For that reason, a genuine and substantial relationship of cause and effect between all
increased imports and serious injury, if established, is not a sufficient basis for assuming the existenceof such a genuine and substantial link between increased imports from non-NAFTA sources and
serious injury.  The United States' proposition could be maintained only if those two groups of
imports had the same effects.  At least for quantitative reasons and the fact that increased NAFTA
imports undoubtedly had  some  effect, this proposition cannot be upheld in this case.  The competent
authority is under an obligation to account for the fa ct that excluded (FTA) imports contributed to the
serious injury suffered by the domestic industry in establishing whether imports from sources covered
by the measure satisfy the requirement of causing serious injury.
10.641  Second, the Panel notes that the sources excluded from the measure are not only Canada and
Mexico, but also those from Israel and Jordan.
5719  Accordingly, imports from sources covered by the
measure are not "non-NAFTA imports", but imports other than those from Canada, Mexico, Israel and
Jordan.  With regard to such imports, the USITC did not establish explicitly that they satisfied the
requirements of Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards, neither in theUSITC Report, nor in the Second Supplementary Report.
10.642  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports.  However, in the
view of the Panel, it would then still be required for the competent authorities to actually express the
findings required under parallelism with regard to increased imports other than those from Canada,Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that imports
                                                     
5717 See para. 10.634.
5718 United States' first written submission, paras. 838-846.
5719 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 914
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding (establishing explicitly) to be ma de it is not sufficient to merely find that the
exclusion of imports from Israel and Jordan would not change the conclusions regarding the
prerequisites for a safeguard measure.5720  The Panel recognizes that if imports from an excluded
source were "small and sporadic" and "virtually non-existent"5721 or non-existent5722, it is very likely
that the facts  allow a finding that imports from sources covered by the measure do satisfy the
conditions for the application of a safeguard measure.  This, however, still needs to be established
explicitly and supported with a reasoned and adequate explanation.
10.643  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on cold-finished
bar, after including imports from all sources in its determination, and without establishing explicitly,
with a reasoned and adequate explanation, that non- excluded imports satisfy the requirements for the
right to apply a safeguard measure.
(e) Rebar
(i) The USITC's findings
10.644  Before the Panel, the United States relies on footnote 704 of the USITC Report.  This
footnote states:
"We find that our injury analysis would not be affected in any way by the exclusion
of rebar imports from Canada and Mexico.
Exclusion of imports from Canada and Mexico only makes the increase in imports
during the period examined more dramatic.  Imports of rebar from all sources other
than Canada and Mexico increased from 302,217 tons in 1996 to 403,881 tons in
1997, to 1.1 million tons in 1998, and then to 1.7 million tons in 1999.  Imports thendecreased to 1.6 million tons in 2000. Imports from sources other than Mexico and
Canada were lower in interim 2001, at 778,779 tons, than in interim 2000, when they
were 960,625 tons.  Imports from sources ot her than Mexico and Canada increased by
434.8 percent from 1996 to 2000, and had major increases both from 1997 to 1998
(183.5 percent) and from 1998 to 1999 (50.2 percent).  See CR and PR, Table
LONG-7.
Excluding Canada and Mexico also serves to accentuate the increase in market share
of imports from other sources. The market share of rebar imports from sources other
than Canada and Mexico increased from 5.5 percent in 1996 to 21.4 percent in 1999,
its peak level of the period examined, and then declined to 19.9 percent in 2000.  The
market share of imports from sources other than Mexico and Canada was lower in
interim 2001 than interim 2000.  See CR and PR, Table LONG-72.
Average unit values of imports from sources other than Canada and Mexico followed
the same pattern as average unit values of imports from all sources.  The average unit
value of imports from sources other than Canada and Mexico from $300 in 1996 to
                                                     
5720 USITC Second Supplementary Report, p. 4.
5721 United States' first written submission, para. 754.
5722 USITC Report, Vol. I, p. 376 and footnote 117.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 915
$275 in 1998, then plummeted to $207 in 1999, and increased slightly to $215 in
2000.  These average unit values were $210 in interim 2000 and $224 in interim2001.  See CR and PR, Table LONG-7.
Finally, excluding imports from Canada and Mexico from the database does not
appreciably change import pricing trends during the period examined.  There were no
pricing observations for imports from Canada, and imports from Mexico were sold at
higher prices than imports from all other sources during every quarter for which
pricing data were collected except the fourth quarter of 1996 and the first quarter of
1997.  Consequently, for periods after 1998, exclusion of Mexican imports increasesthe magnitude of underselling margins somewhat.  See CR and PR, Table LONG-93.
Consequently, the conclusions we have made concerning the effects of increased
imports are equally applicable whether or not imports from Canada and Mexico are
included among the imports evaluated."
5723
10.645  The USITC also reported in the Second Supplementary Report, "in accord with its findings in
the Views on Remedy, that exclusion of imports from Israel and Jordan would not change the
conclusions of the Commission or of individual Commissioners".5724
(ii) Claims and arguments of the parties
10.646  The complainants assert that neither the USITC Report nor the USITC Supplementary Report
contain any particular findings establishing "explicitly" that increa sed imports from non-NAFTA
sources satisfy the conditions set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on
Safeguards.  The claims and arguments of the complainants as regards the USITC's findings on rebar
are set out in more detail in Sections VII.K.2, 3(b) and 4(e) supra .
10.647  The United States relies on footnote 704 of the USITC's analysis of all imports, which
provides a detailed analysis of non-NAFTA rebar imports.  In that footnote, the USITC expresslyfound that "the conclusions we have made concerning the effects of increased imports are equally
applicable whether or not imports from Canada and Mexico are included among the imports
evaluated".
5725  The claims and arguments of the United States as regards the USITC's findings on
rebar are set out in more detail in Sections VII.K.2, 3(b) and 4(e) supra .
(iii) Analysis by the Panel
10.648  The Panel first notes that imports from Canada, Mexico, Israel and Jordan have been
excluded from the safeguard measure on rebar.5726  The question is, therefore, whether the competent
authorities of the United States have established explicitly, with a reasoned and adequate explanation,
that imports from sources other than Canada, Mexico, Israel and Jordan meet the conditions for the
application of a safeguard measure as set out in Article 2.1 and elaborated in Article 4.2 of the
Agreement on Safeguards.
                                                     
5723 USITC Report, Vol. I, p. 116, footnote 704.
5724 USITC Second Supplementary Report, p. 4 (footnote omitted).
5725 USITC Report, p. 116, footnote 704.
5726 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 916
10.649  The Panel notes two legal flaws in the USITC's findings and, therefore, believes that they do
not establish explicitly, with a reasoned and adequate explanation, that imports from sources coveredby the measure satisfy the requirements for the imposition of a safeguard measure.
10.650  First, the requirement of causation in Articl es 2.1 and 4.2(b) of the Agreement on Safeguards
has not been satisfied.  In the view of the Panel, the USITC failed to consider adequately the fact that
it was dealing with a smaller amount of increased imports.  In order to establish the existence of a
genuine and substantial relationship of cause and effect between increased imports (covered by the
measure) and serious injury, the injury caused by excluded imports must be accounted for.  The
USITC did not sufficiently do so by noting the similarity of average unit value patterns between allimports and non-NAFTA imports and that non-NAFTA import undersold domestic goods even more
strongly than all imports (on average) did.
5727  This approach does not account for the possibility that
serious injury caused by non-NAFTA imports is but a part of serious injury caused by all imports and
does not establish that there is a genuine and substantial relationship of cause and effect.  In other
words, a genuine and substantial relationship of cause and effect between all increased imports andserious injury, if established, is not a sufficient basis for assuming the existence of such a genuine and
substantial link between increased imports from non-NAFTA sources and serious injury.
10.651  Second, the Panel notes that the sources excluded from the measure are not only Canada and
Mexico, but also those from Israel and Jordan.
5728  Accordingly, imports from sources covered by the
measure are not "non-NAFTA imports", but imports other than those from Canada, Mexico, Israel andJordan.  With regard to such imports, the USITC did not establish explicitly that they satisfied the
requirements of Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards, neither in the
USITC Report, nor in the Second Supplementary Report.
10.652  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports.  However, in theview of the Panel, it would then still be required for the competent authorities to actually express the
findings required under parallelism with regard to increased imports other than those from Canada,
Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that imports
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding to be made it is not sufficient to merely find that the exclusion of imports from Israel
and Jordan would not change the conclusions regarding the prerequisites for a safeguard measure.
5729
The Panel recognizes that if imports from an excluded source were "small and sporadic" and
"virtually non-existent"5730 or non-existent5731, it is very likely that the facts  allow a finding that
imports from sources covered by the measure do satisfy the conditions for the application of a
safeguard measure.  This, however, still needs to be established explicitly and supported with a
reasoned and adequate explanation.
10.653  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on rebar, after
including imports from all sources in its determination, and without establishing explicitly, with a
reasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right to
apply a safeguard measure.
                                                     
5727 USITC Report, Vol. I, p. 116, footnote 704.
5728 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5729 Second Supplementary Report, p. 4.
5730 United States' first written submission, para. 754.
5731 USITC Report, Vol. I, p. 376 and footnote 117.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 917
(f) Welded pipe
(i) The USITC's findings
10.654  In the Second Supplementary Report, the USITC reported "that its results would have been
the same had imports from Canada and Mexico been excluded from the analysis."  The USITC also
indicated, "in accord with its findings in the Views on Remedy, that exclusion of imports from Israel
and Jordan would not change the conclusions of  the Commission or of individual Commissioners."5732
Specifically as regards welded pipe, the USITC made the following findings:
"We report that increased imports of welded tubular products other than OCTG from
non-NAFTA countries are a substantial cause of  the threat of serious injury to the
domestic industry producing welded tubular products other than OCTG.
Non-NAFTA imports of welded tubular products other than OCTG have increased.
Imports from sources other than the NAFTA countries increased from 786,151 short
tons in 1996 to 1,420,685 short tons in 2000, and from 724,859 short tons in interim
2000 to 870,944 short tons in interim 2001.  Non-NAFTA imports had majorincreases of 20-30 percent in every year of the period examined except 1999.
5733
Similarly, the ratio of non-NAFTA imports of such welded tubular products to USproduction increased in each year except 1999 during the period examined; the ratio
rose from 16.9 percent in 1996 to 29.7 percent in 2000, and was 34.5 percent in
interim 2001 compared to 28.6 percent in interim 2000.
5734
Similarly, with respect to market share, measured by quantity, non-NAFTA imports
increased from 13.1 percent in 1996 to 19.8 percent in 2000, and were 22.7 percent of
the market in the first half of 2001, compared to 18.9 percent in the first half of
2001 [sic].5735
Moreover, prices for standard pipe and mechanical pipe from non-NAFTA sources
undersold comparable domestic products in all but one quarter (32 of 33 quarters) for
which data were available.  For both products, the prices of pipe from non-NAFTA
countries fell over the period examined, including during the most recent quarter or
quarters for which data are available.5736
Finally, excluding Canada and Mexico from the database does not appreciably alterprojections for foreign production, capacity, and exports to the United States.  Indeed,
capacity, production, and exports to the United States from non-NAFTA countries areall projected to reach new peaks during the period 2001-2002.
5737
Consequently, the same considerations that led us to conclude that increased importsof welded tubular products (other than OCTG) are a substantial cause of the threat of
                                                     
5732 Second Supplementary Report, p. 4 (footnote omitted).
5733 (original footnote) USITC Pub. 3479, vol. III, at Table TUBULAR C-4.
5734 (original footnote) USITC Pub. 3479, vol. II, at Table TUBULAR-6.
5735 (original footnote) USITC Pub. 3479, vol. III, at Table TUBULAR C-4.
5736 (original footnote) USITC Pub. 3479, vol. II, at Table TUBULAR-58-59.
5737 (original footnote) USITC Pub. 3479, vol. II, at Tables TUBULAR-30-32.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 918
serious injury are also applicable to increased imports of welded tubular products
(other than OCTG) from all sources other than Canada and Mexico."5738
(ii) Claims and arguments of the parties
10.655  The claims and arguments of the parties as regards the USITC's findings are set out in
Sections VII.K.2, 3(b) and 4(f) supra .
(iii) Analysis by the Panel
10.656  The Panel notes that the safeguard measure on welded pipe excludes imports from Canada,
Mexico, Israel and Jordan5739 and that the determination made by the USITC in October 2001 covered
imports from all sources.  The question is, therefore, whether the competent authorities of the UnitedStates have established explicitly, with a reasoned and adequate explanation, that imports from
sources other than Canada, Mexico, Israel and Jordan meet the conditions for the application of a
safeguard measure as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on
Safeguards.  In this regard, the Panel notes that the USITC has, in its Second Supplementary Report,
made certain findings on the exclusion of imports from Israel and Jordan and with regard to thequestion whether increased imports of welded pipe from non-NAFTA countries are a substantial
cause of the threat of serious injury to the domestic industry.
5740
10.657  The Panel notes two legal flaws in these findin gs and, therefore, believes that they do not
establish explicitly, with a reasoned and adequate explanation, that imports from sources covered by
the measure satisfy the requirements for the imposition of a safeguard measure.  First, the requirementof causation in Articles 2.1 and 4.2(b) of the Agreement on Safeguards has not been satisfied.  In the
view of the Panel, the USITC failed to consider adeq uately the fact that it was dealing with a smaller
amount of (increased) imports.  In order to establish the existence of a genuine and substantial
relationship of cause and effect between increased imports (covered by the measure) and the threat of
serious injury to the domestic industry, the threat of serious injury caused by excluded imports mustbe accounted for.  The USITC did not adequately do so by stating that standard and mechanical pipe
from non-NAFTA countries undersold domestic goods.
5741  This does not account for the fact that the
threat of serious injury caused by non-NAFTA imports  is but a part of the threat of serious injury
caused by all imports and does not establish that there is a genuine and substantial relationship of
cause and effect.  In other words, a genuine and substantial relationship of cause and effect between
all increased imports and threat of serious injury, if established, is not a sufficient basis for assuming
the existence of such a genuine and substantial link between increased imports from non-NAFTAsources and threat of serious injury.
10.658  Second, the sources excluded from the measure are not only Canada and Mexico, but also
those from Israel and Jordan.
5742  Accordingly, imports from sources covered by the measure are not
"non-NAFTA imports", but imports other than those from Canada, Mexico, Israel and Jordan.  With
regard to such imports, the USITC did not establish explicitly that they satisfied the requirements ofArticle 2.1 (as elaborated in Article 4) of the Ag reement on Safeguards, neither in the USITC Report,
nor in the Second Supplementary Report.
                                                     
5738 USITC Second Supplementary Report, pp. 10-11.
5739 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5740 USITC Second Supplementary Report, pp. 4, 10-11.
5741 USITC Second Supplementary Report, p. 10.
5742 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
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Page 919
10.659  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports.  However, in theview of the Panel, it would then still be required for the competent authorities to actually express the
findings required under parallelism with regard to increased imports other than those from Canada,
Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that imports
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding to be made it is not sufficient to merely find that the exclusion of imports from Israel
and Jordan would not change the conclusions regarding the prerequisites for a safeguard measure.
5743
The Panel recognizes that if imports from an excluded source were "small and sporadic" and
"virtually non-existent"5744 or below one per cent and non-existent5745, it is very likely that the facts
 allow a finding that imports from sources covered by the measure do satisfy the conditions for the
application of a safeguard measure.  This, however, still needs to be established explicitly and
supported with a reasoned and adequate explanation.
10.660  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on welded pipe,
after including imports from all sources in its determination, and without establishing explicitly, with
a reasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right
to apply a safeguard measure.
(g) FFTJ
(i) The USITC's findings
10.661  In the Second Supplementary Report, the USITC reported "that its results would have been
the same had imports from Canada and Mexico been excluded from the analysis."  The USITC also
indicated, "in accord with its findings in the Views on Remedy, that exclusion of imports from Israeland Jordan would not change the conclusions of  the Commission or of individual Commissioners."
5746
Specifically as regards FFTJ, the USITC made the following findings:
"We report that increased imports of carbon and alloy fittings from non-NAFTA
countries are a substantial cause of serious injury to the domestic industry producing
carbon and alloy fittings.
Non-NAFTA imports of carbon and alloy fittings have increased.  Imports from
sources other than the NAFTA countries increased from 76,079 short tons in 1996 to100,592 short tons in 2000; non-NAFTA imports increased in each year of the period
examined except 1997.
5747  Similarly, the ratio of non-NAFTA imports to US
production increased in each year of the period examined except 1997; the ratio rose
from 37.1 percent in 1996 to 51.8 percent in 2000, and was 69.0 percent in interim
2001 compared to 43.9 percent in interim 2000.5748
                                                     
5743 USITC Second Supplementary Report, p. 4.
5744 United States' first written submission, para. 754.
5745 USITC Report, Vol. I, p. 385 and footnote 155.
5746 USITC Second Supplementary Report, p. 4 (footnote omitted).
5747 (original footnote) USITC Pub. 3479, vol. III, at Table TUBULAR C-6.
5748 (original footnote) USITC Pub. 3479, vol. II, at Table TUBULAR-8.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 920
With respect to market share, measured by quantity, non-NAFTA imports increased
from 25.7 percent in 1996 to 31.0 percent in 2000, and were 36.3 percent of themarket in the first half of 2001, compared to 28.8 percent in the first half of
2001 [sic].
5749
Average unit values of non-NAFTA imports were similar to the average unit valuesof imports from all sources and generally were above domestic average unit
values.
5750  ***.5751 ***.
Consequently, the same considerations that led us to conclude that increased imports
of carbon and alloy fittings are a substantial cause of serious injury are alsoapplicable to increased imports of carbon and alloy fittings from all sources other
than Canada and Mexico.
The conclusion would not be different if  only Mexico was excluded, or if only
Canada was excluded."
5752
(ii) Claims and arguments of the parties
10.662  The claims and arguments of the parties as regards the USITC's findings are set out in
Sections VII.K.2, 3(b) and 4(g) supra .
(iii) Analysis by the Panel
10.663  The Panel notes that the safeguard measure on FFTJ excludes imports from Canada, Mexico,
Israel and Jordan5753 and that the determination made by the USITC in October 2001 covered imports
from all sources.  The question is, therefore, whether the competent authorities of the United States
have established explicitly, with a reasoned and adequate explanation, that imports from sources other
than Canada, Mexico, Israel and Jordan meet the conditions for the application of a safeguard measure
as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on Safeguards.  In this regard,
the Panel notes that the USITC has, in its Second Supplementary Report, made certain findings on theexclusion of imports from Israel and Jordan and with regard to the question whether increased imports
of FFTJ from non-NAFTA countries are a substantial cause of serious injury to the domestic
industry.
5754
10.664  The Panel notes two legal flaws in these findin gs and, therefore, believes that they do not
establish explicitly, with a reasoned and adequate explanation, that imports from sources covered by
the measure satisfy the requirements for the imposition of a safeguard measure.  First, the requirement
of causation in Articles 2.1 and 4.2(b) of the Agreement on Safeguards has not been satisfied.  In theview of the Panel, the USITC failed to consider adeq uately the fact that it was dealing with a smaller
amount of (increased) imports.  In order to establish the existence of a genuine and substantial
relationship of cause and effect between increased imports (covered by the measure) and serious
injury, the injury caused by excluded imports must be accounted for.  The USITC did not adequately
do so by stating that average unit values of non-NAFTA imports were similar to those of all
                                                     
5749 (original footnote) USITC Pub. 3479, vol. III, at Table TUBULAR C-6.  Non-NAFTA imports
increased from 45,537 short tons in interim 2000 to 63,226 short tons in interim 2000 [sic].  Id.
5750 (original footnote) USITC Pub. 3479, Vol. I, at 176.
5751 (original footnote) USITC Pub. 3479, Vol. II, at Table TUBULAR-61.
5752 Second Supplementary Report, p. 8.
5753 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5754 USITC Second Supplementary Report, pp. 4, 8.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 921
imports.5755  This does not account for the fact that serious injury caused by non-NAFTA imports is
but a part of serious injury caused by all imports and does not establish that there is a genuine andsubstantial relationship of cause and effect.
10.665  Moreover, when discussing non-NAFTA imports in the Second Supplementary Report, the
USITC did not address other factors than increased imports which contributed to the causation of
serious injury to the domestic FFTJ industry.  The United States maintains that there was no need to
do so since of the five "other factors" identified in the analysis of all imports, four were found not to
cause the serious injury and one, purchaser consolidation, focused exclusively on domestic industry
data.
5756
10.666  In the view of the Panel, the fact that those other factors were the same, does not mean that no
new findings on causation had to be made.  The non-attribution obligation comprises the obligation of
separating and distinguishing the respective effects of increased imports and other factors to discern
whether there is a genuine and substantial causal relationship between increased imports and serious
injury.  It may be unnecessary to repeat the exercise of separating and distinguishing the effects ofother factors.  However, the effects of increased imports from all sources and the effects of increased
imports  only from a subset of sources will not necessarily be the same.  Therefore, it potentially
makes a difference whether one compares the effects of all increased imports or the effects of only
some increased imports with the effects of other factors.
10.667  For that reason, a genuine and substantial relationship of cause and effect between all
increased imports and serious injury, if established, is not a sufficient basis for assuming the existence
of such a genuine and substantial link between increased imports from non-NAFTA sources and
serious injury.  The United States' proposition could be maintained only if those two groups of
imports had the same effects.  At least for quantitative reasons and the fact that increased NAFTA
imports undoubtedly had  some  effect, this proposition cannot be upheld in this case.  As already
stated, the competent authority is under an obligation to account for the fact that excluded (FTA)
imports contributed to the serious injury suffered by the domestic industry in establishing whether
imports from sources covered by the measure satisfy the requirement of causing serious injury.
10.668  Second, the sources excluded from the measure are not only Canada and Mexico, but also
those from Israel and Jordan.
5757  Accordingly, imports from sources covered by the measure are not
"non-NAFTA imports", but imports other than those from Canada, Mexico, Israel and Jordan.  With
regard to such imports, the USITC did not establish explicitly that they satisfied the requirements ofArticle 2.1 (as elaborated in Article 4) of the Ag reement on Safeguards, neither in the USITC Report,
nor in the Second Supplementary Report.
10.669  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, be they about all imports, be they about non-NAFTA imports.  However,
in the view of the Panel, it would then still be required for the competent authorities to actually
express the findings required under parallelism with regard to increased imports other than those from
Canada, Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that
imports from sources covered by the measure satisfy all conditions for the right to apply a safeguard
measure.  For this finding to be made it is not su fficient to merely find that the exclusion of imports
from Israel and Jordan would not change the conclusions regarding the prerequisites for a safeguard
                                                     
5755 USITC Second Supplementary Report, p. 8.
5756 United States' first written submission, para. 882.
5757 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 922
measure.5758  The Panel recognizes that if imports from an excluded source were "small and
sporadic"5759 or below one per cent and "virtually non-existent"5760, it is very possible that the facts
 allow a finding that imports from sources covered by the measure do satisfy the conditions for the
application of a safeguard measure.  This, however, still needs to be established explicitly and
supported with a reasoned and adequate explanation.
10.670  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on FFTJ, after
including imports from all sources in its determination and without establishing explicitly, with areasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right to
apply a safeguard measure.
(h) Stainless steel bar
(i) The USITC's findings
10.671  In the Second Supplementary Report, the USITC reported "that its results would have been
the same had imports from Canada and Mexico been excluded from the analysis."  The USITC also
indicated, "in accord with its findings in the Views on Remedy, that exclusion of imports from Israel
and Jordan would not change the conclusions of  the Commission or of individual Commissioners."
5761
Specifically as regards stainless steel bar, the USITC made the following findings:
"We report that increased imports of stainless bar and light shapes ("stainless bar")
from non-NAFTA countries are a substantial cause of serious injury to the domestic
industry producing stainless bar.
Non-NAFTA imports of stainless bar have increased.  In terms of quantity, imports of
stainless bar and light shapes from non-NAFTA countries increased by 61.1 percent
during the five full-years of the period of investigation, growing from 81,426 shorttons in 1996 to 131,184 short tons in 2000.
5762  Although the quantity of non-NAFTA
imports fluctuated somewhat during the period (remaining essentially stable in 1998
and declining somewhat in 1999 from its level in 1997 and 1998), a rapid and
dramatic increase in the quantity of non-NAFTA imports occurred during the last
full-year of the period of investigation, when non-NAFTA imports of stainless bar
grew by 38,843 short tons.5763
The ratio of non-NAFTA imports of stainless steel bar to domestic production also
increased significantly during the period, growing from 43.1 percent in 1996 to 73.3
                                                     
5758 USITC Second Supplementary Report, p. 4.
5759 United States' first written submission, para. 754.
5760 USITC Report, Vol. I, p. 390 and footnote 180.
5761 USITC Second Supplementary Report, p. 4 (footnote omitted).
5762 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-6 & STAINLESS-C-4.
5763 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-6 & STAINLESS-C-4.  The
quantity of these imports declined between interim 2000 and interim 2001, dropping from 73,738 short tons to57,584 short tons.  USITC Pub. 3479, Vol. III at Tables STAINLESS-6 & STAINLESS-C-4.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 923
percent in 2000, with the largest single percentage increase in the ratio (17.1
percentage points) occurring in 2000.5764
In sum, non-NAFTA imports of stainless bar increased significantly, both in quantity
terms and as a ratio to domestic production, between 1996 and 2000, with the largest
single increase in imports occurring during the last full-year of the period.  Although
there was a decline in non-NAFTA imports in terms of quantity and as a ratio to
domestic production between interim 2000 and interim 2001, we report that non-
NAFTA imports of stainless bar have increased.
As we concluded with respect to imports of stainless bar from all sources, we report
that increases in non-NAFTA import volumes between 1996 and 2000 had a serious
adverse impact on the production levels, shipments, commercial sales and market
share of the domestic industry.  During the period from 1996 to 2000, the quantity of
non-NAFTA imports increased by 61.1 percent and the market share of those imports
increased by 11 percentage points as well.5765  Although these import increases
occurred during a period of growing demand, the industry's production volumes,
shipment levels and sales revenues all declined significantly as a result of increases in
non-NAFTA import volume during the period between 1996 and 20005766, with the
industry's production levels falling by 5.3 percent5767, its net commercial sales falling
by *** percent5768, and the value of its net commercial sales falling by *** percent
during the period.5769  Moreover, the industry's share of the market also fell
considerably, dropping from 64.6 percent in 1996 to 59.8 percent in 1999 and then to
53.5 percent in 2000, with imports from non-NAFTA sources accounting for all of
the industry's market share loss during that period.5770  Accordingly, we report that the
increasing imports from non-NAFTA sources had a serious adverse impact on theproduction, shipment, sales and market share levels of the industry during the period
of investigation.
Excluding imports from Canada and Mexico from our analysis also would not affect
our conclusion that imports affected domestic prices of stainless bar negatively during
the period of investigation.  There were no reported prices for the price comparison
products with respect to imports from Mexico and the exclusion of the reported price
comparisons for Canadian imports results in an increase in the percentage of pricecomparisons in which underselling by imports occurred during the period.
5771  In
particular, after excluding the data for Canada, the record indicates that imports from
other sources undersold the domestic merchandise throughout the period of
investigation in 40 of 43 possible quarterly comparisons at underselling margins of up
                                                     
5764 (original footnote) USITC Pub. 3479, Vol. III at Table STAINLESS-6.  The ratio of non-NAFTA
imports to domestic production declined from 77.7 percent in interim 2000 to 70.4 percent in interim 2001.
USITC Pub. 3479, Vol. III at Table STAINLESS-6.
5765 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-67 & STAINLESS-C-4.
5766 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-18, STAINLESS-30, &
STAINLESS-C-4.
5767 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-18 & STAINLESS-C-4.
5768 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-30 & STAINLESS-C-4.
5769 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-30 & STAINLESS-C-4.
5770 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-67 & STAINLESS-C-4.
5771 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-86, STAINLESS-87,
STAINLESS-98, STAINLESS-99, & Figures STAINLESS-7 & STAINLESS-8.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 924
to 51 percent.5772  Given these underselling trends and taking into account the analysis
set forth in our pricing analysis for imports of stainless bar from all sources, we reportthat this underselling by non-NAFTA imports depressed and suppressed domestic
prices during the period of investigation and led to declines in the sales revenues and
operating profits of the industry.
Consequently, the same considerations that led us to conclude that increased imports
of stainless bar from all sources are a substantial cause of serious injury to the
domestic industry are also applicable to increased imports of stainless bar from all
sources other than Canada and Mexico."
5773 5774
(ii) Claims and arguments of the parties
10.672  The claims and arguments of the parties as regards the USITC's findings are set out in
Sections VII.K.2, 3(b) and 4(h) supra .
(iii) Analysis by the Panel
10.673  The Panel notes that the safeguard measure on stainless steel bar excludes imports from
Canada, Mexico, Israel and Jordan5775 and that the determination made by the USITC in October 2001
covered imports from all sources.  The question is, therefore, whether the competent authorities of the
United States have established explicitly, with a reasoned and adequate explanation, that imports from
sources other than Canada, Mexico, Israel and Jordan meet the conditions for the application of a
safeguard measure as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement onSafeguards.  In this regard, the Panel notes that the USITC has, in its Second Supplementary Report,
made certain findings on the exclusion of imports from Israel and Jordan and with regard to the
question whether increased imports of stainless steel bar from non-NAFTA countries are a substantial
cause of serious injury to the domestic industry.
5776
10.674  The Panel notes two legal flaws in these findin gs and, therefore, believes that they do not
establish explicitly, with a reasoned and adequate explanation, that imports from sources covered by
the measure satisfy the requirements for the imposition of a safeguard measure.  First, the requirement
of causation in Articles 2.1 and 4.2(b) of the Agreement on Safeguards has not been satisfied.  In the
view of the Panel, the USITC failed to consider adeq uately the fact that it was dealing with a smaller
amount of (increased) imports.  In order to establish the existence of a genuine and substantial
relationship of cause and effect between increased imports (covered by the measure) and serious
injury, the injury caused by excluded imports must be accounted for.  In assessing the injuriousimpact of non-NAFTA imports on the domestic indu stry, the USITC found that frequent underselling
by non-NAFTA imports at high margins depressed and suppressed domestic prices during the period
                                                     
5772 (original footnote) USITC Pub. 3479, Vol. III at Tables STAINLESS-87, STAINLESS-99, &
Figure STAINLESS-9.
5773 (original footnote) In this regard, we note that we would make this finding whether imports of
stainless bar and light shapes from Mexico are included in the analysis outlined above or not.  Imports ofstainless bar and light shapes from Mexico accounted for a minuscule and declining share of the market andimports during the period of investigation and there was no reported price comparison data for imports fromMexico.  Consequently, the analysis set forth above would apply whether or not the President chose to include
imports from Mexico in any remedy imposed against imports of stainless bar and light shapes.
5774 USITC Second Supplementary Report, pp. 8-10.
5775 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5776 USITC Second Supplementary Report, pp. 4, 8-10.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 925
of investigation and led to declines in the sales revenues and operating profits of the industry.5777  This
approach is inadequate because it does not account for the fact that serious injury caused by non-NAFTA imports is but a part of serious injury cause d by all imports and does not establish that there
is a genuine and substantial relationship of cause and effect.
10.675  Moreover, when discussing non-NAFTA imports in the Second Supplementary Report, the
USITC did not address other factors than increased imports which contributed to the causation of
serious injury to the domestic stainless steel bar industry.  The United States maintains that there was
no need to do so since of the three "other factors"  identified and investigated in the analysis of all
imports (changes in demand during late 2000 and 2001, increases in energy costs, and the pooroperating results of two producers during the period) were found not to cause the serious injury
observed.
5778
10.676  As the Panel understands, the USITC rather conc luded, about the first two of the three "other
factors" that they were not a more important cause of serious injury than imports.5779  In other words,
there were other factors and they also did cause some injury.  In the view of the Panel, this made itnecessary to make adjusted new findings on whether there is a genuine and substantial causal
relationship between increased imports (from covered sources) and serious injury.  It may be
unnecessary to repeat the exercise of separating and distinguishing the effects of other factors.
However, the effects of increased imports from all sources and the effects of increased imports only
from a subset of sources will not necessarily be the same.  Therefore, it potentially makes a difference
whether one compares the effects of all increased imports, or the effects of only some increased
imports with the effects of other factors.
10.677  For that reason, a genuine and substantial relationship of cause and effect between all
increased imports and serious injury, if established, is not a sufficient basis for assuming the existence
of such a genuine and substantial link between increased imports from non-NAFTA sources andserious injury.  The United States' proposition could be maintained only if those two groups of
imports had the same effects.  At least for quantitative reasons and the fact that increased NAFTA
imports undoubtedly had  some  effect, this proposition cannot be upheld in this case.  As already
stated, the competent authority is under an obligation to account for the fact that excluded (FTA)
imports contributed to the serious injury suffered by the domestic industry in establishing whether
imports from sources covered by the measure satisfy the requirement of causing serious injury.
10.678  Second, the sources excluded from the measure are not only Canada and Mexico, but also
Israel and Jordan.
5780  Accordingly, imports from sources covered by the measure are not "non-
NAFTA imports", but imports other than those from Canada, Mexico, Israel and Jordan.  With regard
to such imports, the USITC did not establish explicitly that they satisfied the requirements of
Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards, neither in the USITC Report,
nor in the Second Supplementary Report.
10.679  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports.  However, in the
view of the Panel, it would then still be required for the competent authorities to actually express the
findings required under parallelism with regard to increased imports other than those from Canada,
Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that imports
                                                     
5777 USITC Second Supplementary Report, p. 9.  See para. 10.671.
5778 United States' first written submission, para. 893.
5779 USITC Report, Vol. I, p. 212.
5780 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 926
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding to be made it is not sufficient to merely find that the exclusion of imports from Israeland Jordan would not change the conclusions regarding the prerequisites for a safeguard measure.
5781
The Panel recognizes that if imports from an excluded source were "small and sporadic" and"virtually non-existent"
5782 or "small or non-existent" and "non-existent"5783, it is very possible that the
facts  allow a finding that imports from sources covered by the measure do satisfy the conditions for
the application of a safeguard measure.  This, however, still needs to be established explicitly and
supported with a reasoned and adequate explanation.
10.680  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on stainless steel bar
after including imports from all sources in its determination and without establishing explicitly, with a
reasoned and adequate explanation, that non-excluded imports satisfy the requirements for the right to
apply a safeguard measure.
(i) Stainless steel wire
(i) Claims and arguments of the parties
10.681  The complainants assert that the determination made by the USITC in October includes all
imports.  Neither the initial USITC Report nor the Second Supplementary Report establishes
explicitly that imports from sources covered by the measure satisfy the conditions of Articles 2.1 and4.2 of the Agreement on Safeguards.  The Second Supplementary Report does not even mention
stainless steel wire specifically.  The claims and arguments of the complainants as regards the
USITC's findings on stainless steel wire are set out in more detail in Sections VII.K.2, 3(b) and 4(i)
supra .
10.682  The United States contends that, when performing the analysis of all imports, Commissioners
Bragg and Koplan made the necessary findings on non-NAFTA imports of stainless steel wire.  The
claims and arguments of the United States as regards the USITC's findings on stainless steel wire are
set out in more detail in Sections VII.K.2, 3(b) and 4(i) supra .
(ii) Analysis by the Panel
Split findings
10.683  The Panel first notes that imports from Canada, Mexico, Israel and Jordan have been
excluded from the safeguard measure on stainless steel wire.5784  Second, the October 2001
determination by the USITC covered imports from all sources.  Hence, the requirement of parallelism
requires that the competent authorities of the United States have established explicitly, with a
reasoned and adequate explanation, that imports of stainless steel wire from sources other than
Canada, Mexico, Israel and Jordan satisfy the requirements for the application of a safeguard measure,
as set out in Article 2.1 and elaborated in Article 4.2 of the Agreement on Safeguards.  In this regard,before the Panel, the United States relies on findings made by Commissioners Koplan and Bragg in
the USITC Report.
                                                     
5781 USITC Second Supplementary Report, p. 4.
5782 United States' first written submission, para. 754.
5783 USITC Report, Vol. I, p. 399 and footnote 225.
5784 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 927
10.684  The Panel recalls that Commissioner Bragg made her findings on a product category broader
than, and comprising, stainless steel wire (stainless steel wire and stainless steel wire rope), asCommissioner Devaney did.
5785  The Panel also recalls that stainless steel wire is not only the product
category for a separate remedy imposed by the United States, but also the product for which the three
Commissioners were reported to have made the affirmative determination5786 which later served as the
basis for the safeguard measure.5787  Those three Commissioners  supported  this determination with
findings that are based on different product categories.  However, for the purposes of WTO law, the
USITC has actually made a determination on stainless steel wire as a separate product.  The Panel
notes that this is confirmed by the Proclamation of the President of 5 March 2001, in which thePresident "decided to consider the determinations of the groups of commissioners voting in the
affirmative with regard to [tin mill products and st ainless steel wire] to be the determination of the
[US]ITC".
5788
10.685  Therefore, and for the reasons elaborated in the context of tin mill products5789, the Panel does
not believe that findings on a product category other than stainless steel wire are able to support ameasure relating to stainless steel wire, unless there is a reasoned and adequate explanation relating
the two product categories.  If it was necessary to establish explicitly certain conditions with regard to
stainless steel wire, then these conditions cannot be established with findings on a different (broader)
product category.  Such findings would not be specific to the product to which the USITC
determination and the United States' safeguard measure related.  Hence, the views of CommissionersBragg
5790 and Devaney5791, who reached no findings on stainless steel wire but did reach findings on a
broader category including stainless steel wire, do not meet the requirements of parallelism.
Therefore, in the remainder of this section, the Panel will review the findings reached by
Commissioner Koplan which relate to stainless steel wire as a separate product.
Commissioner Koplan's and the USITC's findings
10.686  Commissioner Koplan made the following findings:
"Additionally, I conclude that increased imports from all sources other than Canada
and Mexico are a substantial cause of the threat of serious injury to the domestic
industry.  Imports of stainless steel wire from Canada and Mexico accounted for a
small and decreasing share of domestic apparent consumption over the period of
investigation.  Imports from Canada and Mexico accounted for 3.8 percent of
apparent consumption in 1996, 3.6 percent in 1997, 1.5 percent in 1998, 0.4 percentin 1999, and 0.3 percent in 2000.  Imports from Canada and Mexico accounted for 0.3
percent of apparent consumption in interim 2000 and in interim 2001.  Imports from
all sources other than Canada and Mexico accounted for an increasing share of
apparent consumption over the period of investigation, increasing from 20.1 percent
in 1996 to 22.8 percent in 2000.  Between the interim periods, imports from all othersources other than Canada and Mexico increased from 20.7 percent in interim 2000 to
27.8 percent in interim 2001.  CR and PR at Table STAINLESS-C-7.  Consequently,
                                                     
5785 USITC  Report, Vol. I, p. 277 (Commissioner Bragg) and p. 335 (Commissioner Devaney).
5786 USITC Report, Vol. I, p. 27.
5787 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10553.
5788 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10553.
5789 Supra  paras. 10.613-10.614.
5790 USITC Second Supplementary Report, pp. 22-23.
5791 The Panel notes that the United States does not rely on findings made by Commissioner Devaney
in defence, possibly because this Commissioner app ears not to have reached any conclusions about imports
other than excluded imports.  See USITC Report, Vol. I, p. 347.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 928
the conclusions I have made concerning the effects of increased imports are equally
applicable whether or not imports from Canada and Mexico are included among theimports evaluated."
5792
10.687  The USITC also reported in the Second Supplementary Report, "in accord with its findings in
the Views on Remedy, that exclusion of imports from Israel and Jordan would not change the
conclusions of the Commission or of individual Commissioners."5793
Panel's assessment
10.688  The Panel does not believe that these statements establish explicitly, with a reasoned and
adequate explanation, that increased imports from  sources other than Canada, Mexico, Israel and
Jordan, alone, satisfy the requirements of Article 2.1 as elaborated in Article 4.2 of the Agreement on
Safeguards.  The findings relied upon by the United States do not take account of the portion of the
threat of serious injury caused by NAFTA imports.  They do not establish a genuine and substantial
relationship of cause and effect between non-NAFTA imports and the threat of serious injury in the
light of the threat attributable to other factors.  They examine an increase in imports merely in a
rudimentary fashion and otherwise focus on market share developments before stating that the
conclusions made concerning the effects of increased imports are equally applicable even when
NAFTA imports are excluded.
10.689  Second, the Panel recalls that the sources excluded from the measure are not only Canada and
Mexico, but also those from Israel and Jordan.5794  Accordingly, imports from sources covered by the
measure are not "non-NAFTA imports", but imports other than those from Canada, Mexico, Israel and
Jordan.  With regard to such imports, the USITC did not establish explicitly that they satisfied the
requirements of Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards, neither in the
USITC Report, nor in the Second Supplementary Report.
10.690  It may well be that imports from Israel and Jordan were so small that they could not possibly
affect the findings reached, whether about all imports or about non-NAFTA imports.  However, in the
view of the Panel, it would then still be required for the competent authorities to actually express the
findings required under parallelism with regard to increased imports other than those from Canada,
Mexico, Israel and Jordan.  The standard is that the Member must establish  explicitly that imports
from sources covered by the measure satisfy all conditions for the right to apply a safeguard measure.
For this finding to be made it is not sufficient to merely find that the exclusion of imports from Israel
and Jordan would not change the conclusions regarding the prerequisites for a safeguard measure.5795
The Panel recognizes that if imports from an excluded source were "small and sporadic"5796 or "small
or non-existent" and "virtually non-existent"5797, it is very possible that the facts  allow a finding that
imports from sources covered by the measure do satisfy the conditions for the application of a
safeguard measure.  This, however, still needs to be established explicitly and supported with a
reasoned and adequate explanation.
10.691  These findings, finally, relate only to non-NAFTA imports, not to imports from sources other
than Canada, Mexico, Israel and Jordan.  They do not establish explicitly, with a reasoned and
                                                     
5792 USITC Report, p. 260, footnote 36.
5793 USITC Second Supplementary Report, p. 4 (footnote omitted).
5794 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.
5795 Second Supplementary Report, p. 4.
5796 United States' first written submission, para. 754.
5797 USITC Report, Vol. I, p. 405 and footnote 268.WT/DS248/R, WT/DS249/R,
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WT/DS253/R, WT/DS254/R,
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Page 929
adequate explanation, that imports from sources  other than Canada, Mexico, Israel and Jordan
satisfied the requirements of Article 2.1 (as elaborated in Article 4) of the Agreement on Safeguards.
10.692  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on stainless steel
wire, after including imports from all sources in its determination and without establishing explicitly,
with a reasoned and adequate explanation, that non- excluded imports satisfy the requirements for the
right to apply a safeguard measure.
(j) Stainless steel rod
(i) The USITC's findings
10.693  Before the Panel, the United States relies on footnote 1437 of the USITC's analysis of all
imports.  This footnote states:
"We also have considered whether the exclusion of imports of stainless rod from
Mexico or Canada from our injury analysis would have affected our finding thatimports were a substantial cause of serious injury to the stainless rod industry.
Because imports of stainless rod from Mexico and Canada each accounted for an
extremely small percentage of total imports during the period of investigation,
INV-Y-180 at Table G-25, we find the exclusion of these volumes does not change
our volumes or pricing analysis in a significant manner.  Accordingly, our injuryanalysis would not be changed in any way by their exclusion."
5798
10.694  The USITC also reported in the Second Supplementary Report, "in accord with its findings in
the Views on Remedy, that exclusion of imports from Israel and Jordan would not change the
conclusions of the Commission or of individual Commissioners."5799
(ii) Claims and arguments of the parties
10.695  The claims and arguments of the parties as regards the USITC's findings are set out in
Sections VII.K.2, 3(b) and 4(j) supra .
(iii) Analysis by the Panel
10.696  The Panel first notes that imports from Canada, Mexico, Israel and Jordan have been
excluded from the safeguard measure on stainless steel rod.5800  Second, the October 2001
determination by the USITC covered imports from all sources.  Hence, the requirement of parallelism
requires that the competent authorities of the United States have established explicitly, with areasoned and adequate explanation, that imports of stainless steel rod from sources other than Canada,
Mexico, Israel and Jordan satisfy the requirements for the application of a safeguard measure, as set
out in Article 2.1 and elaborated in Article 4.2 of the Agreement on Safeguards.
10.697  The Panel agrees with the United States that in a case where excluded imports account for
less than 0.08% of total imports, it would normally be possible to reach the conclusion that imports
                                                     
5798 USITC Second Supplementary Report, p. 223, footnote 1437.
5799 USITC Second Supplementary Report, p. 4 (footnote omitted).
5800 Proclamation No. 7529 of 5 March 2002, Federal Register, Vol. 67, No. 45, p. 10556.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
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Page 930
from other sources satisfy the same requirements as all imports do.5801  However, the Panel is unable
to identify in the statements contained in footnote 1437 the required findings that establishesexplicitly, with a reasoned and adequate explanation, that imports from other sources than Canada,
Mexico, Israel and Jordan satisfy the conditions of Article 2.1 as elaborated by Article 4.2 of the
Agreement on Safeguards.  In particular, the rather implicit statement made that imports other than
Canadian and Mexican imports have increased and that they have caused serious injury to the
domestic industry, does not relate to imports covered by the measure which are imports from sources
other than Canada, Mexico, Israel and Jordan.
10.698  Also, it may well be that imports from Israel and Jordan were so small that they could not
possibly affect the findings reached, whether about all imports or about non-NAFTA imports.
However, in the view of the Panel, it would then  still be required for the competent authorities to
actually express the findings required under paralleli sm with regard to increased imports other than
those from Canada, Mexico, Israel and Jordan.  The standard is that the Member must establish
explicitly that imports from sources covered by the measure satisfy all conditions for the right to
apply a safeguard measure.  For this finding to be made it is not sufficient to merely find that the
exclusion of imports from Israel and Jordan would not change the conclusions regarding the
prerequisites for a safeguard measure.
5802  The Panel recognizes that if imports from an excluded
source were "small and sporadic" and "virtually non-existent"5803 or "small and non-existent" and
"non-existent"5804, it is very likely that the facts allow a finding that imports from sources covered by
the measure do satisfy the conditions for the application of a safeguard measure.  This, however, still
needs to be established explicitly and supported with a reasoned and adequate explanation.
10.699  The Panel concludes that the United States has acted inconsistently with the requirement of
parallelism under Articles 2 and 4 of the Agreement on Safeguards by excluding imports from
Canada, Mexico, Israel and Jordan from the application of the safeguard measure on stainless steelrod, after including imports from all sources in its determination, and without establishing explicitly,
with a reasoned and adequate explanation, that non- excluded imports satisfy the requirements for the
right to apply a safeguard measure.
G. 
ADDITIONAL FINDINGS
1. Judicial economy
10.700  The Panel has not addressed each and every claim raised by the complainants.  Relying on
judicial economy, the Panel refrains from ruling on several claims and sub-claims, including those
relating to the proper definition of the imported product, the like product and the domestic industry;
claims relating to serious injury; claims relating to the consistency of product exclusions with the
principle of parallelism; claims relating to Articles 5, 7, 8 and 9 of the Agreement on Safeguards as well
as claims relating to Articles I, X, XIII, XIX (ex cept insofar as the latter deals with the unforeseen
developments requirement) and XXIV of GATT 1994.
10.701  The principle of judicial economy is recognized in WTO law.  In US – Wool Shirt and
Blouses , the Appellate Body made clear that panels are not required to address all the claims made by
                                                     
5801 The Panel recalls in this regard that it has found the USITC's finding on increased imports of
stainless steel rod to be legally inconsistent with WTO law since the facts did not show that stainless steel rodwas being imported in increased quantities and therefore the USITC failed to provide a reasoned and adequate
explanation of how the facts support the conclusion.
5802 USITC Second Supplementary Report, p. 4.
5803 United States' first written submission, para. 754.
5804 USITC Report, Vol. I, p. 405 and footnote 268.WT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
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Page 931
a complaining party.  The Appellate Body relied on the explicit aim of the dispute settlement
mechanism which is to secure a positive solution to a dispute (Article 3.7) or a satisfactory settlement of
the matter (Article 3.4).  Thus, the basic aim of disput e settlement in the WTO is to settle disputes and
not to develop jurisprudence.  The Appellate Body stated:
"[G]iven the explicit aim of dispute settlement that permeates the DSU , we do not
consider that Article 3.2 of the DSU  is meant to encourage either panels or the
Appellate Body to 'make law' by clarifying existing provisions of the WTO
Agreement  outside the context of resolving a particular dispute.  A panel need only
address those claims which must be addressed in order to resolve the matter in issuein the dispute.
5805" 5806
10.702  In its supporting reasoning, the Appellate Body  also explored Article 11 of the DSU, the
provision setting out the mandate of panels and found nothing in this provision that would require
panels to examine all legal claims made by a complaining party.  The Appellate Body relied on
previous dispute settlement practice, inter alia , under the GATT 1947.  Specifically, it stated:  "if a
panel found that a measure was inconsistent wi th a particular provision of the GATT 1947, it
generally did not go on to examine whether the measure was also inconsistent with other GATT
provisions that a complaining party may have argued were violated."5807
10.703  Yet, the Panel is aware of the limits to its discretionary right to exercise judicial economy.  As
the Appellate Body stated in Australia – Salmon , the right to exercise judicial economy could not be
exercised where only a partial resolution of a dispute would result:
"The principle of judicial economy has to be applied keeping in mind the aim of the
dispute settlement system.  This aim is to resolve the matter at issue and 'to secure a
positive solution to a dispute'.  To provide only a partial resolution of the matter at
issue would be false judicial economy.  A panel has to address those claims on whicha finding is necessary in order to enable the DSB to make sufficiently precise
recommendations and rulings so as to allow for prompt compliance by a Member
with those recommendations and rulings 'in order to ensure effective resolution of
disputes to the benefit of all Members.'"
5808
10.704  The Panel believes that these principles are applicable in the present dispute.  The
complainants have raised a large number of legal claims, arguing that each of the safeguard measures
at issue in this dispute violates various obligations contained in the Agreement on Safeguards andGATT 1994.  The Panel has concluded that each safeguard measure is inconsistent with various
provisions of the Agreement on Safeguards or the GATT 1994.  The Panel need not to examine
whether each of the same safeguard measures also violates other provisions of the Agreement on
Safeguards or the GATT 1994 that were raised by the complainants.
10.705  In addressing several of the claims raised in this dispute (those relating to unforeseen
developments, increased imports, causation and parallelism), the Panel believes that it has effectively
resolved the dispute in finding inconsistencies that  result in the absence of the right of the United
States to take the safeguard measures at issue in this dispute.  Since the safeguard measures at issue
                                                     
5805 (original footnote) The "matter in issue" is the "matter referred to the DSB" pursuant to Article 7 of
the DSU .
5806 Appellate Body Report, US – Wool Shirts and Blouses , DSR 1997:I, 323 at 340.
5807 Appellate Body Report, US – Wool Shirts and Blouses , DSR 1997:I, 323 at 340 (footnote omitted) .
5808 Appellate Body Report, Australia – Salmon , para. 223.WT/DS248/R, WT/DS249/R,
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WT/DS253/R, WT/DS254/R,
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Page 932
were deprived of a legal basis, the United States could not impose such safeguard measures against
any WTO Members, Thus, the Panel does not need to examine the remaining claims, a number ofwhich, have been raised only by some of the complainants and sometimes only for some of the
measures at issue.
10.706  Since the Panel's conclusions mean that the United States had not complied with the
requirements to exercise the right to apply safeguard measures, there is no need to address those
claims relating to the alleged breaches of obligations regarding the application  of such safeguard
measures.  For the same reasons, we believe that the Panel need not examine whether the tariff quota
on slabs constitutes a distinct measure from that applied on the rest of CCFRS.  Since the basis forthat safeguard measure on slabs was a determination made on CCFRS which we concluded lacked
legal basis, such determination could not provide any legal basis for a tariff quota on a sub-group of
CCFRS, namely on slabs.  Moreover, the Panel does not have to address the legal questions of
whether the United States, in applying its safeguard measures, acted inconsistently with Articles 5.1
and 7 (relating to the necessary extent and duration), Article 5.2 of the Agreement on Safeguards andArticle XIII of the GATT (quota allocation), Article 8 of the Agreement on Safeguards (maintenance
of an equivalent level of concessions) or Articl e 9.1 of the Agreement on Safeguards (exemption of
 de minimis developing country exporters).
10.707  The Panel finds support for its exercise of judicial economy in the practice of panels and the
Appellate Body in previous dispute settlement proceedings relating to safeguard measures.  In  US –
Wheat Gluten,  the Appellate Body upheld the panel's exercise of judicial economy by not ruling on
claims relating to Article XIX (unforeseen developments), Article I of GATT 1994 and Article 5 of
the Agreement on Safeguards.
5809  In US – Lamb , the Appellate Body upheld the panel's exercise of
judicial economy by not ruling on a claim relating to Article 5 of the Agreement on Safeguards.5810  In
fact, the panel had exercized judicial economy in relation to claims under Articles 2.2, 3.1, 5.1, 8, 11and 12 of the Agreement on Safeguards and Articles II and XI of GATT 1994.
5811
10.708  In the two mentioned cases, the Appellate Body accepted as basis for the panels' exercise of
judicial economy the fact that the panels had reached the conclusion that inconsistencies with
Articles 2.1 and 4 of the Agreement on Safeguards and Article XIX of GATT 1994 deprived the
safeguard measures at issue of a legal basis.5812  According to the Appellate Body, the panels were,
therefore, entitled to exercise judicial economy and not to address further claims relating to alleged
inconsistencies with further provisions of the same safeguard measures.  The Appellate Body alsoobserved that additional findings (on Article I of GATT 1994 or Article 5.1 of the Agreement on
Safeguards) would not have enhanced the ability of the DSB to make sufficiently precise
                                                     
5809 Appellate Body Report, US – Wheat Gluten , paras. 183-184.
5810 Appellate Body Report, US – Lamb , paras. 193-195.  In US – Lamb (para. 192), the Appellate Body
also referred to Argentina – Footwear (EC)  and stated that the panel in that case had, like the panel in US –
Wheat Gluten , "acted within its discretion in declining to a ddress the issue of 'unforeseen developments' under
Article XIX:1(a) of the GATT 1994."  As a matter of fact, the panel considered Article XIX:1(a) to be of noindependent relevance (see Panel Report, Argentina – Footwear Safeguard (EC) , para. 8.69).  However, the
Appellate Body itself, after reversing the panel's conclusion, saw no need to complete the analysis on the claimunder Article XIX of the GATT 1994 (unforeseen developments) because violations of Articles 2 and 4 alreadydeprived the measure of a legal basis.  See Appellate Body Report, Argentina – Footwear , para. 98 and
Appellate Body Report, US – Wheat Gluten , paras. 181-182.
5811 Panel Report, US – Lamb , para. 7.280.
5812 Appellate Body Report, US – Wheat Gluten , para. 183; Appellate Body Report, US – Lamb ,
para. 193.WT/DS248/R, WT/DS249/R,
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Page 933
recommendations and rulings in the dispute.5813  The Panel believes that the circumstances in the
present dispute are similar.
10.709  Two further claims on which the Panel exercises judicial economy are, on the one hand, under
Articles 2.1 and 4.1(c) of the Agreement on Safeguards relating to the allegedly incorrect definition of
the imported product, like product and the domestic industry and, on the other hand, under Articles
2.1 and 4.2(a) relating to serious injury.  These claims are also concerned with the question of whether
the United States has complied with the WTO requirements that must be satisfied for the right to
apply a safeguard measure to exist.  According to the Panel's conclusions, each of the safeguard
measures lacked a legal basis under WTO law.  There is, therefore, no need to address further claimswhich also relate to the question of whether the United States satisfied the conditions for the right to
apply these measures.
10.710  All of the determinations on which the safeguard measures challenged in this dispute are
based have been found to be inconsistent with several of the requirements of Article 2.1 and 4 of the
Agreement on Safeguards.  There is, therefore, also no need to address the claim made underArticle X of GATT 1994 in relation to the decision-making process leading to the relevant
determinations.
10.711  Finally, since the Panel has found that the exemption of imports from Canada, Mexico, Israel
and Jordan in this case was inconsistent with the requirement of parallelism, there was no need to
address the question whether this exemption in departure of Article I of GATT 1994 and Article 2.2 of
the Agreement on Safeguards was justified by Article XXIV of GATT 1994.  As the Appellate Body
has stated, the question of whether Article XXIV of GATT 1994 can serve as an exception to
Article 2.2 of the Agreement on Safeguards becomes relevant only when the requirement of
parallelism has been complied with.
5814
10.712  With reference to China and Norway's claims under Article 9.1 of the Agreement on
Safeguards, the Panel recalls the provisions of Ar ticle 12.11 of the DSU pursuant to which where one
or more of the parties is a developing country Member, the panel's report shall explicitly indicate the
form in which account has been taken of relevant provisions on differential and more-favourable
treatment for that developing country.
10.713  The Panel is aware of the crucial importance of the provisions on special and differential
treatment in the WTO Agreement in general, and of Article 9.1 of the Agreement on Safeguards as
one such provision.5815  Article 9.1 of the Agreement on Safeguards, under certain circumstances,
requires importing Members to exempt developing country Members from the application of
safeguard measures.  Those developing country Members, accordingly, are intended to enjoy the
benefit of continued access to the market of the importing Member without facing the restrictions
imposed by the safeguard measure.  A Member imposing a safeguard measure is under an obligation
to accord these advantages to every Member which is a developing country.  We note that China'sProtocol of Accession to the WTO makes refere nce to China's status in the WTO context.
                                                     
5813 Appellate Body Report, US – Wheat Gluten , para. 184; Appellate Body Report, US – Lamb ,
para. 194.
5814 Appellate Body Report, US – Line Pipe , paras. 198-199.
5815 It is not without reason that the Doha Minister ial Declaration contains a mandate to review all
special and differential treatment provisions with a view to strengthening them and making them more precise,effective and operational.  See Ministerial Declaration, WT/MIN(01)/DEC/1, adopted on 14 November 2001,para. 44.WT/DS248/R, WT/DS249/R,
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Page 934
10.714  Nevertheless, the Panel believes that the principle of judicial economy also applies to a claim
such as that made under Article 9.1 of the Agreement on Safeguards. The Panel, therefore, believesthat it is not necessary to examine the additional specific claim raised under Article 9.1 and that China
is not prejudiced in its asserted rights under Article 9.1, by the Panel's exercise of judicial economy.
Since there was no legal basis to impose any of the safeguard measures at issue in this dispute against
any other WTO Member, there was obviously also no legal basis to apply any of these measures to
China.  For this Panel, the recommendations and ru lings of the DSB on claims relating to Article 9.1
would not have had any different practical effects on the WTO-compatibility of these safeguard
measures.
10.715  Finally, in resorting to judicial economy, the Pa nel has been aware of the need for a "prompt
settlement" of disputes, including the expeditious issuance of its report, as called for by Article 3.3 of
the DSU.
2. The United States' request for the issuance of separate panel reports
10.716  The Panel recalls that in accordance with Article 6 of the DSU, the DSB originally
established multiple panels to examine similar matters raised by the various complainants.  Pursuant
to two procedural agreements (one concl uded on 27 June 2002 between, on the one hand, the
European Communities, Japan, Korea, China, Switzerland, Norway and New Zealand and, on the
other hand, the United States
5816 and the other concluded on 18 July 2002 between Brazil and the
United States5817), the United States accepted, inter alia , the establishment of a single panel under
Article 9.1 of the DSU.  Pursuant to the two agr eements and in accordance with Article 9.1 of the
DSU, the DSB agreed that the various disputes would proceed on the basis of a single panel.5818
10.717  On 28 January 2003, the Panel received a request from the United States pursuant to
Article 9.1 of the DSU that the Panel issue eight separate panel reports rather than one single report.
The basis for the United States' request was to prot ect its DSU rights including the right to seek a
solution with one or more of the individual complaints without adoption of a report or without an
appeal, in case this right depended on the existence of separate reports.
10.718  On 30 January 2003, the complainants opposed that request for a number of reasons, notably
because the request had not been made in a timely fashion, that complying with the request would
result in additional delays and that had the complainants known that multiple reports would be issued,
they would have presented their arguments differently.
10.719  A series of communications between the parties followed.5819  On 3 February 2003, the Panel
wrote to the parties that a decision on the United States' request would be issued with the Interim
Panel Report but that, in any case, should the United States' request be accepted by the Panel, all such
separate Panel Reports would have the same Descriptive Part.  The content of this letter is reproduced
in paragraph 2.18 of the Descriptive Part.  On Thursday, 6 February 2003, the Panel issued a single
draft Descriptive Part.  On 19 February 2003 the Panel received consolidated comments from thecomplainants as well as comments from the United States.
5820
                                                     
5816 WT/DS248/13, WT/DS249/7, WT/DS251/8, WT/DS252/6, WT/DS253/6, WT/DS254/6,
WT/DS258/10.
5817 WT/DS259/9.
5818 See para. 10.1.
5819 See paras. 2.6-2.19.
5820 The Panel notes also that complainants co-ordinated their comments on the Panel's Interim
Findings (of 9 April) as well as their comments on the United States' comments (of 16 April).WT/DS248/R, WT/DS249/R,
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Page 935
10.720  The Panel will now examine the United States' request for the issuance of separate Panel
Reports.  We recall that our working procedures do not address this issue as such.5821  As a starting-
point, we refer to Article 9.2 of the DSU, which deals with the issue of requests for separate reports in
cases involving multiple complainants.  Article 9.2 provides in relevant part that:
"The … panel shall organize its examination and present its findings to the DSB in
such a manner that the rights which the part ies to the dispute would have enjoyed had
separate panels examined the complaints are in no way impaired.  If one of the parties
to the dispute so requests, the panel shall submit separate reports on the dispute
concerned."
10.721  The Appellate Body in US – Offset Act (Byrd Amendment)  acknowledged that, by its terms,
Article 9.2 accords to the requesting party a broad right to request a separate report, which is not made
dependent on any conditions.5822  The Appellate Body also noted that the text of Article 9.2 of the
DSU contains no requirement for the request for a separate panel report to be made by a certain time ,
but also observed that the text does not explicitly provide that such requests may be made  at any
time.5823  The Appellate Body went on to observe that Article 9.2 must not be read in isolation from
other provisions of the DSU and without taking into account the overall object and purpose of that
Agreement, namely that expressed in Article 3.3 of that Agreement, the prompt settlement of
disputes.5824  On the basis of the foregoing, the Appellate Body concluded that the right contained in
Article 9.2 is not unqualified.  In particular, it cannot justify a request for a separate panel report at
any time during the panel proceedings .5825
10.722  We note also that the United States did express a reason for its request for separate Panel
Reports – that is, to protect its right to seek a solution to one or more of the individual complaints
without adoption of a report (or without an appeal) and, thus, claimed that it might otherwise suffer
prejudice.
10.723  As for the timing of the United States' request, in the Panel's view, the United States' request
for separate Panel Reports was not necessarily  made in an untimely  fashion.  The Panel finds that the
United States' request did not come too late in order to adopt the approach that we have chosen in the
issuance of this report.  We use the word "necessarily" because we consider that despite the fact that
the request was made when the Panel's process was quite advanced – that is, three days before the
draft Descriptive Part was due to be issued5826, this did not necessarily prevent the Panel from settling
the dispute in a prompt fashion.  Indeed, for the reasons mentioned in the Panel's letter dated3 February 2003
5827 and with a view to expediting the process, while respecting all the parties' rights,
the Panel decided to issue a single draft Descriptive Part.  The question remains, however, as to
whether separate Panel Reports should be issued, of which the common Descriptive Part will form a
part, to address the concerns expressed by the United States in requesting the issuance of separate
Panel Reports.
10.724  In this regard, the Panel notes that the Appellate Body in US – Offset Act  interpreted the
meaning of the first sentence in Article 9.2, which pr ovides that it is for the panel to "organize its
                                                     
5821 See para. 6.1.
5822 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 310.
5823 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 310.
5824 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 311.
5825 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 311.
5826 The draft Descriptive Part was, however, not issued on 31 January 2003 but rather on
6 February 2003;  the United States' request for separate reports was made on 28 January 2003.
5827 See para. 2.18.WT/DS248/R, WT/DS249/R,
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Page 936
examination and present its findings in such a manner that the rights which the parties to the dispute
would have enjoyed had separate panels examined the complaints are in no way impaired."5828  In so
doing, the Appellate Body, referred to its comments in  EC – Hormones   about panels' discretion in
dealing with procedural issues, which it said were  pertinent in the context of Article 9.2 of the DSU:
"[T]he DSU and in particular its Appendix 3, leave panels a margin of discretion   to
deal, always in accordance with due process, with specific situations that may arise in
a particular case and that are not explicitly regulated.  Within this context, an
appellant requesting the Appellate Body to reverse a panel's ruling on matters of
procedure must demonstrate the prejudice generated by such legal ruling."5829
(emphasis added)
10.725  In exercising our "margin of discretion" under Article 9.2 of the DSU, and taking into account
the particularities of this dispute, the Panel decides to issue its Reports in the form of one document
constituting eight Panel Reports.  For WTO purposes, this document is deemed to be eight separate
reports, each of the reports relating to each one of the eight complainants in this dispute.  The
document comprises a common cover page and a common Descriptive Part.  This reflects the fact that
the eight steel safeguard disputes were reviewed through a single panel process.  This single
document also contains a common set of Findings in relation to each of the claims that the Panel has
decided to address.  In our exercise of judicial economy, we have mainly addressed the complainants'
common claims and on that basis, we were able to issue a common set of Findings which, webelieved, resolved the dispute.  Finally, this document also contains Conclusions and
Recommendations that are particularised for each of the complainants, with a separate number
(symbol) for each individual complainant.
10.726  In coming to this solution, which is specific to the present dispute, the Panel is aware that it
must, in exercising its discretion under Article 9.2 of the DSU, bear in mind that "the rights which[all] the parties would have enjoyed had separate panels examined the complaints are in no way
impaired".  In fact, the approach seeks to protect the rights of both sides to the dispute.  In particular,
we consider that the approach protects the rights of the complainants who, in the present dispute, with
the apparent agreement of the United States, referred to and relied upon each other's arguments and
demonstrations, cross-referenced each other's written submissions
5830 and written answers, and
explicitly stated as much.  From the initiation of the panel process, parties have recognized5831 that the
complainants would act together on some common claims and that the United States would respondonce to such common claims while responding as well to claims specific to some of the complainants.
The complainants coordinated their presentations to the Panel, divided among themselves the
argumentation on common claims often explicitly stating that they were speaking on behalf of all
complainants.  The complainants submitted common comments on the Descriptive Part, common
comments on the Interim Findings as well as a common response to the United States' comments onthe Interim Findings.  At all these stages, the United States often provided one response addressing
collectively the arguments made by the complainants. We are aware that some complainants may not
                                                     
5828 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 315.
5829 Appellate Body Report, EC – Hormones , footnote 138 to para. 152.
5830 See for example, European Communities' first written submission, paras. 16-17;  Switzerland's first
written submission, para. 10; Norway's first written submission, para. 8;  Brazil's first written submission,para. 3; New Zealand's first written submission, para. 1.5;  China's first written submission, para. 8; Japan's firstwritten submission, para. 5; Korea's first written submission, para. 7.  Throughout their written and oral
submissions the complainants refered to each other's alle gations and arguments.  See also the oral statements of
the complainants (before the Panel) stating that each of the complainant was speaking on a specific matter onbehalf of the other complainants.
5831 See para. 5 of the Panel's working procedures quoted in para. 6.1 of the Descriptive PartWT/DS248/R, WT/DS249/R,
WT/DS251/R, WT/DS252/R,
WT/DS253/R, WT/DS254/R,
WT/DS258/R, WT/DS259/R
Page 937
have developed much argumentation in relation to one or more of the measures at issue.5832  Yet, all
complainants challenged the WTO-compatibility of all measures and decided to argue their casetogether; this was encouraged by the Panel and seemed to have been accepted by the United States.
10.727  Therefore, in organizing its examination of the various claims at issue, at the outset, the Panel
understood that since all complainants made (some) similar violation claims against the USITC's
Report for all measures at issue and since such claims were to be examined through a single panel
process, complainants would rely upon each other's arguments and demonstrations when making their
case.  On the basis of our findings on common claims, we were able to conclude that the United
States' safeguard measures lack legal basis.
10.728  We are aware that panels are not entitled to make the case for the complainants.
5833  WTO
jurisprudence recognizes that panels may, after an assessment of the evidence and argumentation
made by complainants, reach a conclusion as to whether, overall, the complainants made their
prima facie case.5834  We believe that in the present case, each of the complainant has made a prima
facie case that the safeguard measures at issue were inconsistent with the WTO provisions listed inour Recommendations, through its own and together with each other's demonstration.  In addition, we
consider that this approach also protects, the right of the United States, by allowing it to respond to all
arguments and allegations made with regard to each measure in a more coherent and comprehensive
manner and to seek a solution with one or more of the individual complaints without adoption of that
complainant's report or without an appeal, should this right at all depend on the existence of separatereports.  Accordingly, we are of the view that the approach we adopted respects the principles of
judicial economy and the rights of all parties.
10.729  Finally, in considering the United States' request for separate panel reports, and throughout
this Panel process, the Panel has been aware of its duty to make all efforts to ensure, as far as possible,
a prompt and effective  resolution of the dispute, while respecting the rights of all parties.  We believe
this is essential to the functioning of the WTO.
5835
                                                     
5832 We note in this regard that, in fact, some of the complainants may not have much trade interest in
relation to some of the measures at issue, which would have a direct impact on these complainants' rightspursuant to Article 22.4 of the DSU.
5833 Appellate Body Report, Japan – Agricultural Products II , paras. 126-130.
5834 Appellate Body Report, Korea – Dairy,  para. 145.  The Appellate Body confirmed this view in
Thailand – H-Beams,  para. 134.  See also the Panel Report, Argentina – Poultry Anti-Dumping Duties ,
para. 7.50.
5835 The Panel notes that Members are now negotiating amendments to the DSU, Ministerial
Declaration, WT/MIN(01)/DEC/1 adopted on 14 November 2001, para. 30.  Members may want to address theissue of the legal consequences of the establishment of a single panel during these negotiations.