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TWN
Info Service on WTO and Trade Issues (May22/06) Geneva, 2 May (Kanaga Raja) – A dispute panel at the World Trade Organization has largely ruled that safeguard measures imposed by the European Union on imports of certain steel products, in a dispute raised by Turkey, are inconsistent with its WTO obligations. In a ruling (WT/DS595/R) issued on 29 April, the Panel concluded that to the extent that the definitive safeguard is inconsistent with the GATT 1994 and the Agreement on Safeguards it has nullified or impaired benefits accruing to Turkey under those agreements. The Panel recommended that the EU bring its measure into conformity with the Agreement on Safeguards and the GATT 1994. While the Panel accepted several of Turkey’s claims, it rejected some other claims. The Panel declined to consider certain other claims put forward by Turkey. BACKGROUND TO THE DISPUTE According to the Panel report, on 13 March 2020, Turkey requested consultations with the European Union with respect to the measures and claims at issue in the dispute. Consultations were held on 29 April 2020 but failed to resolve the dispute. On 16 July 2020, Turkey requested the establishment of a panel, and at its meeting on 28 August 2020, the Dispute Settlement Body (DSB) established a panel pursuant to the request of Turkey in document WT/DS595/3. According to the Panel report, Turkey identified the measures at issue as “the provisional and definitive safeguard measures imposed by the European Union on the imports of certain steel products and the investigation leading to the imposition of those measures”. In response to a question from the Panel, Turkey clarified that its challenge to the “investigation” leading to the imposition of the provisional and definitive safeguards was not distinct from its challenge to the provisional and definitive safeguards themselves. Turkey claimed that the provisional and definitive safeguards on certain steel products adopted by the European Union in July 2018 and January 2019, respectively, are inconsistent with a number of provisions of the Agreement on Safeguards and the GATT 1994. Turkey argued that the European Commission applied 26 distinct safeguards, on 26 products, but did not examine whether the circumstances and conditions for imposing a safeguard existed for each of those products individually. Turkey also argued that the European Commission adopted an internally inconsistent approach to product scope at different stages of the investigation and application of the measures. The European Union applied a safeguard measure consisting of duty-free tariff-rate quotas and a 25% safeguard duty on certain steel imports that exceed those quotas. According to the Panel report, the legal instrument setting out the provisional safeguard measures on certain steel products is the Commission Implementing Regulation (EU) No. 2018/1013 of 17 July 2018 imposing provisional safeguard measures with regard to imports of certain steel products (the provisional determination). The legal instruments setting out the definitive safeguard measures on certain steel products include: a. Commission Implementing Regulation (EU) No. 2019/159 of 31 January 2019 imposing definitive safeguard measures against imports of certain steel products (the definitive determination); b. Commission Implementing Regulation (EU) No. 2019/1382 of 2 September 2019 amending certain regulations imposing anti-dumping or anti-subsidy measures on certain steel products subject to safeguard measures (double remedy regulation); c. Commission Implementing Regulation (EU) No. 2019/1590 of 26 September 2019 amending Implementing Regulation (EU) No. 2019/159 imposing definitive safeguard measures against imports of certain steel products (the first review regulation); d. Commission Implementing Regulation (EU) No. 2020/35 of 15 January 2020 amending Implementing Regulation (EU) No. 2019/159 imposing definitive safeguard measures against imports of certain steel products; and e. Commission Implementing Regulation (EU) No. 2020/894 of 29 June 2020 amending Implementing Regulation (EU) No. 2019/159 imposing definitive safeguard measures against imports of certain steel products (the second review regulation). Turkey requested the Panel to find that the measures at issue are inconsistent with Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.1(c), 4.2(a), 4.2(b), 4.2(c), 5.1, 5.2(a), 6, 7.1, and 7.4 of the Agreement on Safeguards, and with Articles II:1(b), XIII:2 chapeau, XIII:2(d), and XIX:1(a) of the GATT 1994. Turkey also requested, pursuant to Article 19.1 of the Dispute Settlement Understanding (DSU), that the Panel recommend that the European Union bring its measures into conformity with its obligations under the Agreement on Safeguards and the GATT 1994. In addition, Turkey requested the Panel to suggest, pursuant to the second sentence of Article 19.1 of the DSU, that the European Union implement that recommendation by revoking the measures at issue. The European Union requested that the Panel reject Turkey’s claims in this dispute in their entirety. FINDINGS AND CONCLUSIONS For the reasons set out in its report, the Panel concluded as follows: a. Turkey has established that the definitive safeguard is inconsistent with: i. Article XIX:1(a) of the GATT 1994, because the European Commission did not ascertain that the increase in imports took place as a result of the unforeseen developments it had identified, and did not identify in its published reports the obligations whose effect resulted in the increase in imports; and ii. Article 4.1(b) of the Agreement on Safeguards, because two central elements of the European Commission’s determination of a threat of serious injury were not “based on facts” as required by that provision. b. Turkey has not established that the definitive safeguard is inconsistent with: i. Article XIX:1(a) of the GATT 1994 and Articles 2.1, 3.1, 4.1(c), 4.2(a), 4.2(b), and 4.2(c) of the Agreement on Safeguards because of the European Commission’s approach to product scope; ii. Article XIX:1(a) of the GATT 1994 and Articles 2.1 and 4.2(a) of the Agreement on Safeguards because of alleged errors in the European Commission’s determination of an increase in imports; iii. Article 5.1 of the Agreement on Safeguards because the European Commission did not take into account data from the first six months of 2018 in determining the size of the tariff rate quotas (TRQs), or because of the double remedy regulation, or because the European Union reduced the pace of liberalization or allegedly made the measure more restrictive; iv. Article XIII:2(d) and the chapeau of Article XIII:2 of the GATT 1994 and Article 5.2(a) of the Agreement on Safeguards because the European Commission did not take into account data from the first six months of 2018 in allocating the TRQs; and v. Article 7.4 of the Agreement on Safeguards because the European Union reduced the pace of liberalization and allegedly made the measure more restrictive. The Panel did not consider it necessary to decide whether the definitive safeguard is inconsistent with: i. Articles 4.1(a) and 4.2(a) of the Agreement on Safeguards for reasons substantively identical to those put forward under Article 4.1(b) of the Agreement on Safeguards; ii. Article 2.1 of the Agreement on Safeguards as a consequence of the inconsistency with Article 4.1(b) of the Agreement on Safeguards; iii. Article 4.2(b) of the Agreement on Safeguards because of errors in the determination of causation; iv. Articles 2.1, 5.1, and 7.1 of the Agreement on Safeguards as a consequence of the claimed inconsistency with Article 4.2(b) of the Agreement on Safeguards; and v. Article II:1(b) of the GATT 1994 as a consequence of the inconsistency with Article XIX:1(a) of the GATT 1994. d. The automotive end-use requirement is no longer in force, and the Panel said it did not consider it in reviewing the definitive safeguard. e. The provisional safeguard is no longer in force, and Panel said it did not make findings on its consistency with the covered agreements. The Panel concluded that, to the extent that the definitive safeguard is inconsistent with the GATT 1994 and the Agreement on Safeguards, it has nullified or impaired benefits accruing to Turkey under those agreements. Pursuant to Article 19.1 of the DSU, it recommended that the European Union bring its measure into conformity with the Agreement on Safeguards and the GATT 1994. The Panel noted that in addition to requesting recommendations, “Turkey asks us to suggest that the European Union implement our recommendation by revoking the safeguard at issue, pursuant to Article 19.1 of the DSU.” Article 19.1 of the DSU contains two prongs, said the Panel. First, “[w]here a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned bring the measure into conformity with that agreement”. Thus, panels are required to make such a recommendation when an inconsistency is established, it added. Second, “[i]n addition … the panel or Appellate Body may suggest ways in which the Member concerned could implement the recommendations”. Thus, suggestions are additional to recommendations, and the choice whether to make such suggestions falls squarely within the discretion of each panel, said the Panel. “Some panels have made suggestions under Article 19.1 of the DSU. Others have preferred to decline to do so, reasoning in particular that the choice on the manner of implementation is, in the first place, for the Member concerned,” it added. In this case, the Panel declined to make a suggestion under Article 19.1 of the DSU.
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