The case at hand was brought by the European Union, which charged the US of illegally protecting its domestic steel industry.
On November 10 2003 the complaint brought by Brazil, China, the European Communities, Japan, Korea, New Zealand, Norway, and Switzerland against the US imposition of safeguard measures on certain steel products had a report issued by the World TradeOrganization Appellate Body. The Appellate Body had in consideration a prior ruling that the US measures were not consistent with the WTO Safeguards Agreement established by the GATT on 1994. Because of this the Appellate Body of the WTO recommended that the US should abide by the agreement standards.
In June of 2001 due to doubts that steel products were being imported into theUnited States in high quantities that could cause serious problems to the domestic industry, the International Trade Commission (USITC) initiated a safeguard investigation under Section 201 of the Trade Act of 1974.
The USITC, determined do to its investigation that numerous steel product categories tariffs should be increased. Based on the USITC determination, President Bush signed a paper wheretariffs on imports of ten categories of steel products should be increased. This decision was described by the US as "safeguard measures. These measures ranged from 30% to 8% during a period of 3 years.
On June 3, 2002, a WTO dispute settlement panel was established. This panel was created at the request of the European Communities to examine the US safeguard measures and compare with WTO rules.Other complaints by Japan, Korea, China, Norway, Switzerland, New Zealand and Brazil of the same characteristics were also submitted.
The Agreement on Safeguards and Article XIX of GATT 1994
This safeguard sais that: A WTO member may apply safeguard measures only if, following an investigation by competent authorities, it determines that imports have increased, that the increase was a result ofunforeseen developments and that the increased imports have caused, or threatened to cause, its domestic industry to suffer serious injury. The Agreement further provides that the competent authorities must issue a "report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law." (http://www.wto.org/english/tratop_e/safeg_e/safeint.htm)
The conclusionwhich the panel came to was that all US safeguard measures were inconsistent with the Agreement on Safeguards of the GATT on 1994.The US had failed to provide an adequate explanation of their conclusion on the following points:
* Increase in imports
* The link between imports and serious injury to the domestic industry
* Increased imports had resulted from "unforeseen developments.In conclusion The Panel recommended that the US bring all the safeguard measures into accordance with its WTO obligations.
The US argued that a failure explaining a finding was not proof that the USITC had not performed the correct and necessary analysis to make the findings it was presenting.
In a counter argument Brazil that the findings and presentation that was made by panel was inaccordance to the agreement on safeguards. Brazil also argued that The US not agreeing with the panel’s decision didn’t mean that it wasn’t a correct verdict. Regarding the US position on the Appellate Bodies findings China requested that the AB should reject the US appeal do to the logical and transparent investigation the AB had presented.
On August 14, 2003, the US appealed the Panel decision.