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Info Service on WTO and Trade Issues (Sept21/05) Geneva, 3 Sep (Kanaga Raja) – A dispute panel at the World Trade Organization has ruled that China has failed to demonstrate that the United States has acted inconsistently with the provisions of the GATT 1994 and Agreement on Safeguards in its imposition of a safeguard measure on imports of certain crystalline silicon photovoltaic cells. In a ruling (WT/DS562/R) issued on 2 September, the Panel, in light of its findings, made no recommendations to the Dispute Settlement Body (DSB) pursuant to Article 19.1 of the Dispute Settlement Understanding (DSU). The Panel rejected all four of China’s claims put forth in its dispute raised against the United States. BACKGROUND TO THE DISPUTE According to the Panel report, on 14 August 2018, China requested consultations with the United States with respect to the measures and claims as set out in its dispute with the US. Consultations were held on 22 October 2018, but failed to resolve the dispute. On 11 July 2019, China requested the establishment of a panel, and at its meeting on 15 August 2019, the DSB established a panel pursuant to the request of China in document WT/DS562/8. According to the Panel report, the dispute concerns a safeguard measure imposed by the United States with regard to imports of certain crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products (including, but not limited to, modules, laminates, panels, and building-integrated materials) – CSPV products – pursuant to “Proclamation 9693 of January 23, 2018 – To Facilitate Positive Adjustment to Competition from Imports of Certain Crystalline Silicon Photovoltaic Cells (Whether or Not Partially or Fully Assembled Into Other Products) and for Other Purposes”, published in the 83 US Federal Register 3541 on 25 January 2018. In May 2017, two firms representing the US domestic industry, Suniva, Inc. and SolarWorld Americas, Inc., petitioned the United States International Trade Commission (USITC) seeking the imposition of a safeguard measure on imports of CSPV products from all sources. After conducting an investigation, the USITC unanimously determined in its final report of 13 November 2017 that CSPV products were being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing an article like or directly competitive with the imported article. In response to a request from the United States Trade Representative (USTR) for further information, the USITC issued a supplemental report on 27 December 2017, wherein the USITC determined that unforeseen developments had resulted in CSPV products being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry. Following the receipt of these reports, on 23 January 2018, the President of the United States decided to impose a safeguard measure beginning on 7 February 2018. According to the Panel report, the safeguard measure took the form of: (a) a 2.5 GW tariff-rate quota on imports of solar cells not partially or fully assembled into other products for a period of four years, with unchanging in-quota quantities and annual reductions in the rates of duty applicable to goods entered in excess of those quantities in the second, third, and fourth years; and (b) ad valorem duties on imports of modules for a period of four years, with annual reductions in the duty rates in the second, third, and fourth years. China requested the Panel to find that the safeguard measure imposed by the United States is inconsistent with the US obligations under Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3, and 4.2(b) of the Agreement on Safeguards. Specifically, China contended that the United States acted inconsistently with: a. Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards because the United States failed to establish, prior to the application of the measures, that the increases in imports were the result of “unforeseen developments” and were the “effect of obligations incurred” under the GATT 1994 by the United States; b. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards because the United States failed to establish the required “causal link” between the increased imports and the serious injury found to exist; c. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards because the United States failed to ensure that injury caused by other factors was not attributed to increased imports; and d. Articles 3.1 and 3.2 of the Agreement on Safeguards because the United States provided non-confidential summaries to interested parties with such delay that the parties were not provided with an adequate opportunity to exercise their right to present a defence, and because the actual public summaries were not sufficient so as to permit interested parties to reasonably present a defence. The United States requested the Panel to find that China has failed to establish any inconsistency with Article XIX of the GATT 1994 or the Agreement on Safeguards. According to the Panel report, the parties disagree on whether the US safeguard measure on CSPV products complied with the requirement in the first clause of Article XIX:1(a) of the GATT 1994 that imports increased “as a result of unforeseen developments and of the effect of the obligations incurred”. China claims that the Agreement on Safeguards obligated the USITC to demonstrate in its published report that imports increased “as a result of unforeseen developments and of the effect of the obligations incurred”. China further claims that the USITC’s supplemental report failed to appropriately demonstrate compliance with these requirements and advances several lines of argumentation to this effect. Based on these claims, China submits that the safeguard measure on CSPV products is inconsistent with the US obligations under Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards. According to the Panel report, for its part, the United States argues that China misapprehends the legal relationship between the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994. In its view, the Agreement on Safeguards does not require the competent authorities of a Member to demonstrate in their published report that the safeguard measure complied with the requirements in the first clause of Article XIX:1(a) of the GATT 1994. Thus, in WTO dispute settlement proceedings, a Member can modify or supplement the competent authorities’ explanation as to whether imports increased “as a result of unforeseen developments and of the effect of the obligations incurred”. Nevertheless, the United States maintains that this interpretive issue does not arise in the present case, because the USITC appropriately demonstrated compliance with the requirements of the first clause of Article XIX:1(a) of the GATT 1994, said the Panel. FINDINGS AND CONCLUSIONS The Panel found that China has failed to demonstrate that the United States acted inconsistently with: a. Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards by failing to establish, prior to the application of the measures, that the increases in imports were the result of “unforeseen developments” and were the “effect of obligations incurred” under the GATT 1994 by the United States; b. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing to establish the required “causal link” between the increased imports and the serious injury found to exist; c. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing to ensure that injury caused by other factors was not attributed to increased imports; and d. Articles 3.1 and 3.2 of the Agreement on Safeguards by providing non-confidential summaries to interested parties with such delay that the parties were not provided with an adequate opportunity to exercise their right to present a defence, and because the actual public summaries were not sufficient so as to permit an interested party to reasonably present a defence. In light of these findings, the Panel made no recommendation to the DSB pursuant to Article 19.1 of the DSU.
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