News Release
No. 69/03
November 10, 2003
EU WELCOMES WTO RULING CONFIRMING US STEEL TARIFFS ARE ILLEGAL
In
a joint press statement issued today, the European Union—together
with Japan, Korea, China, Switzerland, Norway, New-Zealand and Brazil—
welcomed the confirmation by the WTO
Appellate Body that each of the US safeguard measures (“201”) imposed on 10
steel
product groupings by the US in March 2001 was in violation of WTO rules. The EU
and its co-complainants welcome the Appellate Body Report released today which
upholds the Panel’s findings and leaves the United States with no other choice
but to terminate its WTO incompatible safeguard measures without delay. WTO members
affected by the US measures are entitled to apply re-balancing measures upon the
adoption of the Appellate Body report by the WTO Dispute Settlement Body, unless
the safeguard measures are withdrawn. The EU took the requisite steps to be able
to impose sanctions, back in June 2002. Consequently, unless the US removes its
steel tariffs by early December, it will be subject to tariffs
ranging from 30% to 8% on a wide range of US exports covering $2.2 billion worth
of trade with the EU.
Background
The
US Presidential Proclamation of 5
March 2002 imposed safeguard
measures on 10 steel product groupings in the form of additional tariffs up to
30%. Immediately thereafter, the EC, followed by Japan,
Korea, China, Switzerland, Norway, New Zealand and Brazil, engaged WTO dispute
settlement procedures against the US steel safeguard measures.
The
co-complainants closely co-operated at each stage of the Panel and Appellate Body
procedures. The Appellate Body upheld the main violations found by the Panel in
its reports of 11 July 2003
and confirmed that overall the US
measures lack a legal basis because:
-
none of the US measures
has been taken as a result of unforeseen developments as required under the WTO
rules;
-
for most products imports have not increased;
-
the US has excluded imports from Canada, Mexico, Israel and Jordan from the measures
in a manner inconsistent with the WTO rules.
The
Appellate Body report shall now be adopted by the WTO Dispute Settlement Body
within 30 days. The co-complainants will ensure the timely adoption of this report
to allow a prompt termination of the US
safeguard measures.
For
the list of products that could be subject to sanctions by the EU see Annex II
of the Steel Regulation adopted by the EU in June 2002
http://europa.eu.int/comm/trade/issues/sectoral/industry/
steel/docs/steelreg100602.pdf
For
more information see also :
http://europa.eu.int/comm/trade/issues/sectoral/industry/steel/index_en.htm
http://trade-info.cec.eu.int/wtodispute/show.cfm?id=166&code=1
US Steel Safeguard Measures: Questions & Answers
The WTO Dispute
What
is the history of this case?
The
US adopted safeguard measures
on imports of certain steel products on 5
March 2002, in the form of
additional tariffs ranging from 8, 13, 15 and up to 30% for a 3-year period starting
on 20 March 2002.
The EU, together with Japan,
Korea, China, Switzerland, Norway, New Zealand and Brazil, immediately initiated
a WTO dispute settlement procedure against these measures. The WTO Panel of 11
July 2003 ruled in favour of the co-complainants that the US steel safeguards
are inconsistent with WTO rules because:
1)
the US failed to demonstrate that the alleged increased imports were the result
of unforeseen developments;
2)
for most products, imports have not increased;
3)
the US did not properly establish the causal link between the alleged increased
imports and the purported serious injury faced by the US steel industry;
4)
the US excluded imports from Canada, Mexico, Israel and Jordan from the measures
in violation of WTO obligations.
The
US appealed on 11 August 2002.
Why
has the Appellate Body (AB) declared the US safeguards
WTO-inconsistent?
In
its report released today, the AB upheld the Panel report and confirmed that the
US had failed to meet the basic pre-requisite conditions required before any safeguard
action can be implemented, regarding unforeseen developments, increased imports
and exclusion of imports from certain sources.
When
will the AB report be adopted?
Article
17.14 of the WTO Dispute Settlement Understanding (DSU) provides that AB reports
shall be adopted by the Dispute Settlement Body (DSB) within 30 days of their
circulation. In the present case, the AB report could be adopted at the regular
meeting of the DSB on 1 December 2003 and shall in any event be adopted on 10
December 2003 at the latest.
The EU countermeasures
What
is the history of these measures?
In
accordance with the provisions of Article 8 of the Agreement on Safeguards, on
14 May 2002, the EU notified the WTO that it reserved its rights to re-balance
the adverse effect of the US steel safeguards. The EU subsequently adopted a re-balancing
Regulation on 13 June 2002, which provides for the automatic application of additional
tariffs on certain imports originating in the US after the final condemnation
of the US steel safeguards.
When
will the EU re-balancing tariffs apply?
The
EU re-balancing tariffs will automatically apply from the fifth day following
the date of the adoption of the AB report by the DSB, i.e., by 15
December 2003 at the latest,
unless the US
has removed its WTO-inconsistent safeguard measures before that date. If the AB
report were to be adopted at the regular DSB meeting of 1
December 2003, re-balancing
tariffs could apply on 6 December
2003, again unless the US
has removed its WTO-inconsistent safeguard measures before that date.
Which
products will be hit and for which value?
Products
from the US concerned by the
EU re-balancing measures are listed in Annex II to the Council Regulation No.
1031/2002 of 13 June 2002 [http://trade-info.cec.eu.int/doclib/docs/2003/november/tradoc_114427.pdf].
This list is not limited to steel products but encompasses a wide range of goods,
from orange juice and apples to sunglasses, knitwear, motor boats or photocopying
machines. The list represents $2,242 million of US exports to the EU. This amount
is substantially equivalent to the value of EU steel exports affected by the US
steel safeguards.
What
the EU re-balancing measures consist of?
The
EU re-balancing tariffs consist of additional duties of 8, 13, 15 or 30%, depending
on the products. These additional duties mirror the additional tariffs imposed
on EU steel exports in the context of the US
steel safeguards.
What
does the EU expect the US do next?
The
EU calls upon the US to terminate
its WTO-inconsistent safeguard action without delay and to avoid replacing the
safeguard measure by any other illegal measure. Under US law, the US President
has been invested with the legal authority to reduce, modify or terminate the
safeguard measures since the US International Trade Commission (ITC) issued its
mid-term report assessing the impact of the measures on the benefiting industry
on 19 September 2003.
If the US makes the right move and fully terminates its steel safeguards, the
EU will proceed to repeal its re-balancing measures.
Will the EU take action before the US is given a reasonable period of time to
bring its safeguards in conformity with the AB report?
The
possibility for the US to be given a reasonable period of time to bring its safeguard
measures in conformity with WTO obligations does not prevent the application of
re-balancing measures upon the adoption of the AB report by the DSB. Re-balancing
against safeguard action under Article 8 of the Agreement on Safeguards can apply
as soon as the safeguard at issue has been declared inconsistent with WTO rules
by the DSB. The EU has already followed this course of action in 2001 in a case
concerning the US safeguard
on wheat
gluten.
Can the EU re-balance for the full amount notified to the WTO, without deducting
the value of the US product exclusions granted in favour of EU steel exporters?
Under
Article 8 of the Agreement on Safeguards, the right to re-balance is established
with respect to the full impact of the safeguard measure at the time when it was
adopted, i.e., $2,242 million. There is nothing in the WTO that requires re-balancing
to take account of any action which might have a posteriori reduced the
initial impact of the safeguard measure, such as product exclusions, which happened
to benefit to EU steel exporters.
The US steel situation
Is it true that removing the US safeguards will leave US steel industry unprotected
vis-à-vis foreign imports (dumped or subsidised)?
No.
Many of the steel products covered by the US
safeguard action are already subject to antidumping (AD) and/or countervailing
duty (CVD) measures. A total of 21 antidumping orders against EU exporters are
outstanding on products already covered by the safeguard measures. The termination
of safeguard actions does not have any impact on the outstanding AD and CVD orders.
The US steel industry insists that safeguard measures are necessary and appropriate
to offset illegal (i.e., subsidised or dumped) imports into the US. Is this true?
No,
US safeguard measures are
neither appropriate nor necessary. They are not appropriate because they do not
distinguish between “fair” (legal) and “unfair” (illegal) trade. Indeed, they
force all exporters to “pay,” including those who have done nothing “illegal”
(and EU exports to US fall much more within the latter category than other origins).
Furthermore, US safeguards are not necessary, given the already strong protection
granted to the US
steel sector via existing AD and CVD measures.
How
will the removal of US measures improve international trade relations on steel?
The
US safeguard measures had
a strong impact world-wide and triggered a dangerous “domino effect”: several
other WTO members (including the EU in September 2002) decided to impose similar
measures to avoid possible trade diversion of steel products otherwise directed
to the US. Removing the US
measures will allow lifting these other national barriers and restoring exporters’
confidence in international steel trade. The EU has always declared that it would
remove its safeguards as soon as the US would remove theirs given that the EU
safeguards were only taken in response to the US measures.
An
improved international climate will also enhance the chances of success of the
international OECD talks on strict steel subsidy disciplines world-wide and on
steel capacity reductions. By lifting the steel safeguards, and thus eliminating
the biggest distorting of world steel trade, the US would certainly send a strong
message to the other 40 members of the OECD steel talks to further demonstrate
strong commitment to reach an international Steel Subsidies Agreement (SSA) aimed
at reducing trade-distorting steel subsidies, the main responsible for global
excess steel capacity.
Press Contacts: |
Anthony Gooch
202-862-9523
|
Maeve O'Beirne
202-862-9549
|
