(b) Other tools of interpretation
7.75 Chile has argued that the Panel, in its interpretation
of Article 4.2, should draw on the following elements:
(a) "state practice", including: the alleged
existence in other Members of measures similar to the Chilean PBS; the
fact that these Members never converted their measures to ordinary
customs duties; and the absence of any challenge of such measures on the
basis of Article 4.2;
(b) Article 24 of Economic Complementarity Agreement
No. 35 ("ECA 35") between Chile and MERCOSUR;
(c) negotiating history of Article 4.2 of the
Agreement on Agriculture, including communications by or with individual
members of the GATT Secretariat.
7.76 We will first examine to what extent Articles 31 and 32
of the Vienna Convention instruct or allow us to consider these elements in our
interpretation of Article 4.2, in particular the question as to whether Article
4.2 was meant to prohibit measures such as the Chilean PBS. Only if we find that
we should consider some or all of these elements for the purpose of interpreting
Article 4.2, we will subsequently address them.
7.77 According to Article 31 of the Vienna Convention, we
should draw, as context, on any agreement relating to "the treaty", i.e. the WTO
Agreement649, which was made between all the parties in connection with the
conclusion of the WTO Agreement, as well as any instrument which was made by one
or more parties in connection with the conclusion of the WTO Agreement and
accepted by the other parties as an instrument related to the WTO Agreement. We
should also take into account any subsequent agreement between the parties
regarding the interpretation of the treaty or the application of its provisions;
any subsequent practice in the application of the treaty which establishes the
agreement of the parties regarding its interpretation; and any relevant rules of
international law applicable in the relations between the parties. Finally,
according to Article 32 of the Vienna Convention, we may draw on preparatory
work and circumstances of the Treaty's conclusion to confirm the ordinary
meaning or to resolve ambiguity.
(i) "state practice"
7.78 Presumably, by referring to these elements under the
banner of "state practice", Chile is suggesting that we consider these elements
either as "any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation" under
Article 31, or as a supplementary means of interpretation under Article 32 of
the Vienna Convention. First, we do not consider that the alleged "state
practice" can be qualified as subsequent practice within the meaning of Article
31 of the Vienna Convention. As stated by the Appellate Body in its report on
Japan - Alcoholic Beverages II650:
"(�) in international law, the essence of subsequent
practice in interpreting a treaty has been recognized as a 'concordant,
common and consistent' sequence of acts or pronouncements which is
sufficient to establish a discernable pattern implying the agreement of the
parties regarding its interpretation.651 An isolated act is generally not
sufficient to establish subsequent practice652; it is a sequence of acts
establishing the agreement of the parties that is relevant."653
7.79 Thus, first, the mere fact that Argentina or other
Members did not challenge the Chilean PBS through the WTO dispute settlement
system until recently does not constitute a "sequence of acts or
pronouncements".654 Second, the fact that a few Members of the WTO would have in
place measures similar to the Chilean PBS is not a "sufficiently concordant,
common and consistent sequence of acts" establishing the agreement of the WTO
Members regarding the interpretation of Article 4.2 of the Agreement on
Agriculture.655 We will address the question of state practice as a supplementary
means of interpretation below.
(ii) Article 24 of Economic Complementarity Agreement No.
35 ("ECA 35") between Chile and MERCOSUR
7.80 ECA 35 between Chile and MERCOSUR was signed on 25 June
1996 and entered into force on 1 October of that year. Article 24, which is
listed under the heading "Customs Valuation", reads:
"When using the Price Band System provided for in its
domestic legislation concerning the importation of goods, the Republic of
Chile commits, within the framework of this Agreement, neither to
include new products nor to modify the mechanisms or apply them in such a
way which would result in a deterioration of the market access conditions
for MERCOSUR."656
7.81 According to Chile, by signing ECA 35657, Argentina has
expressed the understanding that Article 4.2 does not prohibit the Chilean PBS,
because it would not have negotiated Article 24 of ECA 35 if the Chilean PBS was
prohibited outright under Article 4.2 of the Agreement on Agriculture.
7.82 Article 31 of the Vienna Convention instructs us to
consider other international agreements for the purpose of interpreting Article
4.2 of the Agreement on Agriculture, provided they meet certain conditions. In
our view, however, it is clear that ECA 35 does not meet the conditions of the
agreements referred to in Article 31 of the Vienna Convention. First, ECA 35 is
clearly not an "agreement relating to the Treaty which was made between all
the parties in connection with the conclusion of the Treaty", nor an
"instrument which was made by one or more parties in connection with the
conclusion of the Treaty and accepted by the other parties as an instrument
related to the Treaty".
7.83 Second, ECA 35 is in our view not a "subsequent
agreement between the parties regarding the interpretation of the treaty or the
application of its provisions". Leaving aside the question of whether such an
agreement should be concluded between all parties to the WTO Agreement -
which we need not address -, it suffices to note that the Preamble to ECA 35
reads:
"(�) the Marrakesh Agreement establishing the World Trade
Organization constitutes a framework of rights and obligations to which the
commercial policies and compromises of the present Agreement shall adjust."658
7.84 If the policies and compromises embodied in ECA35 have
to "adjust to" the WTO Agreement, we find it difficult to see how ECA35 could be
an agreement "regarding the interpretation" or "the application" of the WTO
Agreement.
7.85 Finally, Article 24 of ECA 35 does not constitute in our
view a "relevant rule of international law applicable in the relations between
the parties". Again, leaving aside the question of whether such a rule of
international law should be applicable between all parties to the WTO
Agreement, the language of ECA 35 itself makes clear that Article 24 cannot be
"relevant" to the interpretation of Article 4.2 of the Agreement on Agriculture.
First, the Preamble states that the commercial policies and compromises of ECA
35 shall "adjust to" the WTO framework of rights and obligations. A fortiori,
Article 24 of ECA 35 cannot influence the interpretation of the WTO Agreement.
Second, Chile's commitment regarding its PBS in Article 24 of ECA 35 has been
explicitly made "within the framework of" ECA 35. Such language suggests that
the parties to ECA 35 did not intend to exclude the possibility that different
commitments regarding the Chilean PBS may have been or will be made in the
context of other international agreements.
7.86 In any event, even if we were somehow to take into
account Article 24 of ECA 35 for the purpose of interpreting Article 4.2 of the
Agreement on Agriculture, quod non, we would fail to see how a simple
stand-still commitment by Chile vis-�-vis MERCOSUR and its members
regarding its PBS would detract from the position that the Chilean PBS is a
measure "of the kind which ha[s] been required to be converted into ordinary
customs duties" within the meaning of Article 4.2 of the Agreement on
Agriculture.
(iii) Negotiating history of Article 4.2
7.87 Chile is of the view that the text and context of
Article 4.2 leave no ambiguity that its PBS is not a prohibited measure.
However, according to Chile, should the Panel consider that there is any
ambiguity, the negotiating history of the Article 4.2 will demonstrate that the
negotiators did not intend to prohibit the maintenance of the PBS.
7.88 We note that Chile links its arguments regarding the
negotiating history with elements of subsequent practice and maintains that
under the general rubric of "state practice" it becomes clear that Members did
not consider the PBS inconsistent with Article 4.2. We have already dealt with
the issue of subsequent practice above; here we will turn to the issue of the
negotiating history.
7.89 Article 32 of the Vienna Convention provides that:
"Recourse may be had to supplementary means of
interpretation, including the preparatory work of the treaty and the
circumstances of its conclusion, in order to confirm the meaning resulting
from the application of Article 31, or to determine the meaning when the
interpretation according to Article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or
unreasonable."
7.90 Chile has argued that the PBS was in place before the
start of the Uruguay Round and, therefore, all Uruguay Round negotiators were
fully aware of its existence when preparing the text of Article 4.2. According
to Chile, none of the negotiators required that it be converted.
7.91 We cannot agree with Chile's position that it results
from the negotiating history of Article 4.2 that the Chilean PBS is not a
measure of the kind which has been required to be converted. As we have
discussed extensively above, the text and context of Article 4.2 make it clear
that Article 4.2 and footnote 1 both are provisions of general application.
Article 4.2 refers to measures of the kind that were to be converted.
Footnote 1 provides an illustrative list of such measures, but generalizes to
include other similar border measures. Thus, neither the text of the
Article nor the footnote contemplate the need for negotiators to conclusively
agree on what measures should be converted. Quite the contrary; there was a
textual requirement that measures of this kind were not to be maintained. Thus,
the lack of an explicit agreement that the PBS was required to be converted does
not help Chile's argument.659
7.92 We can find no evidence in the negotiating history that
it was intended by the negotiators to exclude the Chilean PBS from coverage of
Article 4.2. We note, for example, that the Draft Final Act version of Article
4.2 provided that:
"Participants undertake not to resort to, or revert to,
any measures which have been converted into ordinary customs duties
pursuant to concessions under this agreement."660
7.93 As can be seen, this text used different language. It
referred to a requirement that any measures which actually had been converted,
would not be resorted to or reverted to. In contrast, Article 4.2 requires that
Members not "maintain, resort to or revert to any measure of the kind
which have been required to be converted." (emphasis added) So, the word
"maintain" was added implying that not every measure had been explicitly
addressed because there is no reason to have a prohibition on maintaining a
measure which had been explicitly negotiated out of existence. The prohibition
on reverting to or resorting to would have been sufficient otherwise. This is
made conclusively clear by the addition of the phrase "of the kind" which
broadened the language of Article 4.2 beyond those which had actually been
subject to negotiations.
7.94 Chile has also reported that during the early 90s,
during a seminar held in a Central-American country, "a letter was presented
from an authority of the GATT Secretariat arguing that it was not necessary to
tariffy price bands since they were unrelated to the domestic price - provided
the price bands were maintained within the bound levels."661 Chile was unable to
produce the said letter. However, even if we had been able to verify the exact
contents of said letter, we consider that such a letter could not have changed
our interpretation of Article 4.2 of the Agreement on Agriculture. The mere fact
that an individual in the GATT Secretariat might have made a statement - orally
or in writing - along the lines described by Chile is not determinative. The WTO
Agreement gives the Ministerial Conference and the General Council the exclusive
right to adopt interpretations of the WTO Agreement.662 While the Secretariat has
in the past, and will in the future be requested to provide advice to Members of
the WTO, we believe the general rule of reserving the legal right to adopt
interpretations to the Members to be the appropriate standard in this context,
while, of course, recognizing that the WTO rules were not in force at the time
in question.663
7.95 The Secretariat's advice might prove a part of a more
comprehensive compilation of preparatory work if there were evidence that
negotiators specifically adopted an approach recommended by the Secretariat, but
that is not the case here. Even at face value, the advice referenced by Chile
would appear to have been isolated advice offered at a regional seminar held in
Central America. There is a complete lack of comprehensive evidence in this case
that would correspond with any such advice. Indeed, Chile's argument seems to
turn more on the silence of the negotiators regarding its PBS rather than
positive evidence that it was intended to be excluded from the application of
Article 4.2.664
7.96 Chile's general argument regarding "state practice" is
in many ways like a non-violation argument.665 In effect, Chile argues that it had
a reasonable expectation that it was not required to convert. The nature of
Chile's argument can be seen in light of Chile's affirmation that it is not
arguing that Argentina is legally estopped from pursuing the claim
against the PBS system. Rather, Chile argues all of this constitutes the broader
interpretative context. In other words, Chile should not now be required to
convert a system that it had a reasonable basis for concluding was not
prohibited by article 4.2. Of course, non-violation is not at all applicable
here given the fact that Chile as a respondent could not raise a non-violation
claim.
7.97 Chile's "negotiating history" argument might have served
as a valid defence by Chile had Argentina argued that it had a non-violation
claim under Article 26 of the DSU. In such a case, the existence of the PBS
since 1983 would be an issue, inter alia, which Argentina would have to
explain if it were to establish all the elements of a non-violation claim.
7.98 There is another aspect of the contrast between
violation and non-violation claims which is useful to note here. As the
Appellate Body pointed out in EC - Computer Equipment, non-violation
rests on reasonable expectations in a primarily bilateral context whereas
violation claims rest ultimately in a multilateral context. In order to serve as
a useful tool in a violation context, there must be positive evidence in the
negotiating history of a common understanding of the various parties to the
negotiation.666 Hence the need for some comprehensive evidence of
negotiators' intentions to sustain a defence667 based on preparatory work.668
7.99 Thus, just as with subsequent practice, we cannot agree
that silence by negotiators regarding such a measure as the Chilean PBS provides
meaningful evidence that the negotiators intended to exclude the Chilean PBS
from the requirements of Article 4.2.
7.100 We should also note here that we do not see the
evidence regarding the negotiating history as helpful in establishing a defence
based on "state action" which includes subsequent practice. We remain uncertain
about the legal basis of Chile's defence of "state practice". We raise this
point here because we have now examined the second aspect of the defence, i.e.,
the negotiating history. The first aspect, "subsequent practice", was dealt with
above.669 Viewed in light of the facts of this case, this argument of "state
practice" might rest more firmly on a legal basis of estoppel or a
defence against a claim of non-violation nullification or impairment. What Chile
really seems to put forward in this case, however, is an argument of "state
inaction". That is, because Members allegedly were silent about the Chilean
PBS before and after the conclusion of the Uruguay Round negotiations, any claim
by such Members against the PBS should fail. We have noted above that
"subsequent practice" requires overt acts, not mere toleration. Whereas there
may be circumstances in which the silence of negotiators might indicate
acquiescence and, therefore, may be probative evidence regarding the negotiating
history, in this case, such silence could perhaps have been more significant if,
for instance, Chile had included the PBS in its Schedule. In such a case,
Chile's assertion of silence during the verification period in early 1994 might
arguably have had significance. However, as the PBS is not in its Schedule,
there was nothing to verify.
7.101 We therefore conclude that, in asserting the defence of
"state action" (to the extent it is based on the negotiating history), Chile has
not produced sufficient evidence to call into question our interpretation of
Article 4.2 as requiring conversion of the Chilean PBS into ordinary customs
duties.
(c) Conclusion regarding Article 4.2 of the Agreement on
Agriculture
7.102 Having regard to our analysis above670, we find that the
Chilean PBS is "a similar border measure other than ordinary customs duties"
which is not maintained "under balance-of-payment provisions or under other
general, non-agriculture specific provisions of GATT 1994 or of the other
Multilateral Trade Agreements in Annex 1A to the WTO Agreement", within the
meaning of footnote 1 to the Agreement on Agriculture. We therefore conclude
that the Chilean PBS is a measure "of the kind which ha[s] been required to be
converted into ordinary customs duties", within the meaning of Article 4.2 of
the Agreement on Agriculture. By maintaining a measure which should have been
converted, Chile has acted inconsistently with Article 4.2 of the Agreement on
Agriculture.
5. The
Chilean PBS and Article II:1(b) of GATT 1994
7.103 According to Argentina, the Chilean PBS duties are
ordinary customs duties within the meaning of the first sentence of Article
II:1(b). Argentina has argued, and Chile has acknowledged, that the Chilean PBS
duties can potentially exceed671 and, at several instances in the past, have
effectively exceeded672, Chile's binding of 31.5 per cent in the bound rate column
of its Schedule. Argentina therefore concludes that the Chilean PBS is
inconsistent with Article II:1(b).673
7.104 We have found above that the Chilean PBS is a border
measure "other than an ordinary customs duty", which is prohibited under Article
4.2 of the Agreement on Agriculture. We have also found that "ordinary customs
duties" must have the same meaning in Article 4.2 of the Agreement on
Agriculture and Article II:1(b) of GATT 1994. Consequently, the Chilean PBS
duties not constituting ordinary customs duties, their consistency with Article
II:1(b) cannot be assessed under the first sentence of that provision, which
only applies to ordinary customs duties.
7.105 The next question is whether the Chilean PBS duties
could be considered as "other duties or charges of any kind" imposed on or in
connection with importation, under the second sentence of Article II:1(b). We
have already indicated that all "other duties or charges of any kind" should in
our view be assessed under the second sentence of Article II:1(b). Pursuant to
the Uruguay Round Understanding on the Interpretation of Article II:1(b), such
other duties or charges had to be recorded in a newly created column "other
duties and charges" in the Members' Schedules. Paragraph 1 of the Uruguay Round
Understanding on the Interpretation of Article II:1(b) of the GATT 1994 ("the
Understanding") reads:
"(�) [i]n order to ensure transparency of the legal
rights and obligations deriving from paragraph 1(b) of Article II, the
nature and level of any 'other duties or charges' levied on bound tariff
items, as referred in that provision, shall be recorded in the Schedules and
concessions annexed to GATT 1994 against the tariff item to which they
apply. It is understood that such recording does not change the legal
character of 'other duties or charges'."
7.106 According to the second paragraph of the Understanding:
"(�) [t]he date as of which "other duties or charges" are
bound, for the purposes of Article II, shall be 15 April 1994. 'Other duties
or charges' shall therefore be recorded in the Schedules at the levels
applying on this date."
7.107 Other duties or charges must not exceed the binding in
this "other duties and charges" column of the Schedule. If other duties or
charges were not recorded but are nevertheless levied, they are inconsistent
with the second sentence of Article II:1(b), in light of the Understanding on
the Interpretation of Article II:1(b). We note that Chile did not record its PBS
in the "other duties and charges" column of its Schedule.
7.108 We therefore find that the Chilean PBS duties are
inconsistent with Article II:1(b) of GATT 1994.674
-
The Chilean Safeguard Measures on Wheat, Wheat Flour
and Edible Vegetable Oils
1. The measures at issue
7.109 At issue in this dispute are safeguard measures on
imports of wheat, wheat flour and edible vegetable oils, adopted by the Chilean
government in accordance with the recommendations by the competent investigating
authorities, the Chilean Distortions Commission ("CDC"). The safeguard measures
consist of an additional duty on wheat, wheat flour and edible vegetable oils
which "shall be determined by the difference between the general tariff added to
the ad valorem equivalent of the specific duty determined by the
mechanism set out in Article 12 of Law 18.525 - and its relevant annual
implementing decrees - and the level bound in the WTO for these products".675 Thus,
whenever the Chilean PBS duty exceeds, in conjunction with the 8 per cent
applied tariff, the 31.5 per cent bound rate, the portion of the duty in excess
of that bound rate shall be considered to constitute a safeguard measure. Put
another way, the duty applied pursuant to the safeguard measure is the Chilean
PBS duty to the extent it exceeds the 31.5 per cent bound rate.
2. Preliminary issues
7.110 Chile argues that none of the safeguard measures
challenged by Argentina are within the Panel's jurisdiction. According to Chile,
the provisional and definitive safeguard measures were no longer in effect on
the date of Argentina's request for establishment of the Panel. Chile therefore
requests the Panel to rule that it cannot recommend that Chile bring these
measures into conformity with its WTO obligations. To support its thesis, Chile
refers to the text of the respective decrees imposing the provisional and
definitive safeguard measures, Articles 3.4 and 3.7 of the DSU, and the
Appellate Body report on United States - Import Measures on Certain Products
from the European Communities.676 According to Chile, the definitive safeguard
measure is distinct from the measure extending its application, and has
therefore expired, notwithstanding the extension measure.
7.111 As regards the extension, Chile submits that the Panel
cannot examine the measure extending the application of the definitive safeguard
measure, as it was not included in Argentina's request for consultations. Chile
states that, although it has had some consultations with Argentina, "this does
not mean that [�] Argentina had called for valid consultations in the WTO on the
extension measures because it did not request such consultations in writing and
made no notification to the WTO to this effect."677 Chile does not deny that "the
content of the final measure (extension) is identical to that in the previous
measure", but argues that the new measure is the result of a new request, new
hearings and new evidence, and only exists because of a formal decision by the
Chilean authorities.678 Finally, Chile posits that the Panel should not make
findings with respect to the extended safeguard measures which it has recently
"withdrawn".
(a) The provisional safeguard measures
7.112 We note that the Appellate Body in US - Certain EC
Products stated that "the panel erred in recommending that the DSB request
the US to bring into conformity a measure which the panel has found no longer
exists."679 In this regard, we recall that Article 19.1 DSU provides that "[w]hen
a panel [�] 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". Put another way, a panel is
required to make the recommendation to bring a measure which it has found
inconsistent into conformity if that measure is still in force.
Conversely, when a panel concludes that a measure was inconsistent with a
covered agreement, the said recommendation cannot and should not be made.
However, in our view, Article 19.1 DSU would not prevent us from making
findings regarding the consistency of an expired provisional safeguard
measure, if we were to consider that the making of such findings is necessary
"to secure a positive solution" to the dispute. We would not, however, formulate
recommendations with regard to those measures.
7.113 In our view, this approach is fully consistent with the
Appellate Body's findings in US - Certain EC Products and the findings in
other WTO disputes. While the Appellate Body in US - Certain EC Products
found that the Panel should not have made a recommendation regarding a measure
that no longer existed, it nowhere suggested that the Panel erred in making
findings regarding that measure.680 To the contrary, the Appellate Body stated that
the Panel "should have limited its reasoning to issues that were relevant and
pertinent" to the expired measure. And, while we note that the Panel in
Argentina - Textiles and Apparel681
decided not to address a measure which had
been terminated before commencement of the Panel proceedings, we do not
understand that Panel to have found that it lacked jurisdiction to make
findings on an expired measure. To the contrary, the Panel considered US
arguments that it should rule on the expired measure because of the threat of
recurrence, but found no evidence to that effect.682 This suggests that the Panel
merely exercised its discretion not to rule on the expired measures in that
case.
7.114 Further, to argue, as Chile does, that the provisional
measures lie necessarily outside the scope of the Panel's jurisdiction, because
those measures have elapsed, is not tenable, because this would imply that the
Panel could examine all aspects of the investigation, except those relating to
the provisional measures. We are concerned that if the conformity of such
measures cannot, as a matter of principle, be addressed by panels solely because
they are no longer in effect at the time of the request for establishment, then
provisional safeguard measures generally will escape panel scrutiny, since they
are generally terminated before the matter reaches the panel stage.683 Members
could then adopt provisional safeguard measures, the WTO-consistency of which,
could never be examined by panels. In our view, the drafters of the DSU cannot
have meant to exclude, in such a manner, provisional safeguard measures from its
scope.
7.115 Although we do not consider that the termination of a
measure before the commencement of panel proceedings deprives a panel of the
authority to make findings in respect of that measure, we would only make
findings regarding the provisional safeguard measures in this case if we were to
consider this necessary in order to "secure a positive solution" to the dispute.
As explained below684, this is not the case.
(b) The definitive safeguard measures and the extension
of their period of application
7.116 Chile raises two different objections regarding the
Panel's jurisdiction with respect to the definitive safeguard measures and the
extension of their duration: first, the definitive safeguard measures had
"expired" before the request for establishment was made; second, the "extension
measures" were not formally included in the request for consultations. We cannot
accept either of those objections, for one and the same reason. Both of Chile's
objections are based on the proposition that the extension of the period of
application results in a measure distinct from the definitive safeguard measure.
We disagree with this proposition. In our view, Article 7 of the Agreement on
Safeguards makes it clear that what is at issue is not an extension "of the
safeguard measure", but, rather, an extension "of the period of application of
the safeguard measure" or of "the duration of the safeguard measure". Article 7
is entitled "Duration and Review of Safeguard Measures". Article
7.1 provides:
"A Member shall apply safeguard measures only for such
period of time as may be necessary to prevent or remedy serious injury
and to facilitate adjustment. The period shall not exceed four years,
unless it is extended under paragraph 2." (emphasis added)
7.117 Article 7.2 reads:
"The period mentioned in paragraph 1 may be
extended provided that the competent authorities [�] have determined [�]
that the safeguard measure continues to be necessary to
prevent or remedy serious injury and that there is evidence that the
industry is adjusting [�]." (emphasis added)
7.118 Article 7.3 reads:
"The total period of application of a safeguard measure
including the period of application of any provisional measure, the period of initial application and
any extension thereof, shall
not exceed eight years." (emphasis added)
7.119 This language is sufficiently clear for us as to
conclude that the "extensions" are not distinct measures, but merely
continuations in time of the definitive safeguard measures. As a result, we
consider that the definitive safeguard measures were not terminated before the
request for establishment, but, rather, that their duration was simply extended
at that time. Thus, we need not further consider Chile's argument that we lack
the authority to make findings in respect of the definitive measures on the
grounds that they have expired.685 For the same reason, we also consider the fact
that the extension was not mentioned in the request for consultations irrelevant
for the determination of our jurisdiction: pursuant to Article 4.4 of the DSU,
Argentina had to, and did, identify the definitive safeguard measures in its
request for consultations. The fact that the duration of the identified measures
was extended by Chile after the request for consultations cannot affect
Argentina's compliance with Article 4.4 of the DSU.686
7.120 We note, moreover, that the "extension" did not in any
way amend the content of the safeguard measures and that there were, in fact,
exchanges between Argentina and Chile during the period of consultations
regarding the "extension". Chile must therefore have been fully informed about
Argentina's intention to challenge the safeguard measures, as extended in
time. Thus, even if the "extension" were to be considered a separate
measure, quod non, Chile's due process rights would not have been
impinged upon.687
(c) Withdrawal of safeguard measures while the panel
proceedings were ongoing
7.121 On 14 August 2001, the Panel received a communication
from Chile stating that the safeguard measures on wheat and wheat flour had been
terminated as of 27 July 2001. At the second meeting with the parties, the Panel
was informed by Chile that the safeguard measure on vegetable oils would be
terminated as of 26 November 2001.
7.122 Argentina has nevertheless explicitly requested the
Panel to make findings regarding those measures. Argentina posits that the
safeguard measures, even though they may have been repealed following their
extension, require a specific ruling by the Panel because they form part of its
Terms of Reference. Argentina contends that the fact that the definitive
measures were repealed is irrelevant for the purpose of a ruling, since Chile
explicitly recognized that it resorted to safeguards "to obtain the required
legal backing" for its PBS.688 In Argentina's view, if there is no ruling by the DSB establishing the inconsistency of the safeguard measures, the situation
could recur, since the attempt at ex-post facto justification will have
escaped the scrutiny of the DSB.
7.123 We first recall in this respect that the safeguard
measures are defined by reference to the difference between the PBS duty plus
the 8 per cent applied tariff and the 31.5 per cent bound rate. Consequently, it
appears to us that the duty covered by the safeguard measure could de facto
continue to be applied as long as the PBS duties plus the 8 per cent applied
tariff exceed the 31.5 per cent bound rate. Formally, however, the portion of
the PBS duty exceeding the 31.5 per cent bound rate would then presumably no
longer be motivated by the objective of safeguard protection.
7.124 We also recall that, in our view, Article 19.1 DSU does
not prevent us from making findings regarding the consistency of an
expired provisional safeguard measure, if we were to consider that the making of
such findings is necessary "to secure a positive solution" to the dispute. We
would not, however, formulate recommendations with regard to those
measures.
7.125 In determining then whether or not to make findings
regarding the "withdrawn" safeguard measures, we note that the challenged
measures are indeed within our Terms of Reference. Argentina has in effect
argued that it has suffered nullification or impairment as a result of the
withdrawn measures and that it is entitled to a ruling on the matter which has
been referred to us by the DSB. Considering our findings and conclusions
regarding the Chilean PBS, on the one hand, and the particular nature of the
safeguard measures by which a portion of the PBS duties were justified, on the
other, we believe that it would be in the interest of a prompt settlement of the
overall dispute to make findings regarding the safeguard measures at issue, even
though they have been withdrawn in the course of the proceedings. By making
findings on the "withdrawn" safeguard measures, we thus wish to make it clear
that the partial identity between the Chilean PBS and the safeguard measures is
bound to affect the question of consistency of such safeguard measures with the
substantive requirements of Article XIX of GATT 1994 and the Agreement on
Safeguards.
7.126 In accordance with past practice of GATT and WTO
panels689, we will therefore examine the "withdrawn" safeguard measures challenged
by Argentina in these proceedings, and make findings accordingly.
3. Published report (Article 3.1 of the Agreement on
Safeguards)
7.127 Article 3.1 of the Agreement on Safeguards provides
in fine that "[t]he competent authorities shall publish a report setting
forth their findings and reasoned conclusions reached on all pertinent issues of
fact and law". Chile has confirmed that the Minutes of Sessions Nos. 181, 185,
193 and 224 of the CDC constitute the "published report" within the meaning of
Article 3.1 of the Agreement on Safeguards.690 Argentina argues that Chile has
acted inconsistently with its obligation to "publish" the report of the
investigating authorities.
7.128 In this regard, we note that the Minutes of the
relevant CDC sessions have not been "published" through any official medium.
Rather, they were transmitted to the interested parties and placed at the
disposal of "whoever wishes to consult them at the library of the Central Bank
of Chile".691 In order to determine whether it is sufficient under Article 3.1 of
the Agreement on Safeguards to make the investigating authorities' report
"available to the public" in such a manner, we first refer to the dictionary
meaning of "to publish". The term can mean "to make generally known", "to make
generally accessible", or "to make generally available through [a] medium".692 We
therefore turn to the context of Article 3.1 provided by similar publication
requirements in the AD and SCM Agreements. We note that both Article 22 of the
SCM Agreement ("public notice and explanation of determinations") and Article 12
of the AD Agreement ("public notice and explanation of determination")
distinguish between giving "public notice" and "making otherwise available
through a separate report"693, which must be "readily available to the public".694 In
addition, we also note that various "transparency" provisions in the covered
agreements, such as Article III of the GATS, Article 63.1 of the TRIPS
Agreement, and Article 2.11 of the TBT Agreement all distinguish between "to
publish" and "to make publicly available". In the light of these considerations,
we find that the verb "to publish" in Article 3.1 of the Agreement on Safeguards
must be interpreted as meaning "to make generally available through an
appropriate medium", rather than simply "making publicly available". As regards
the minutes of the relevant CDC sessions, we therefore find that they have not
been generally made available through an appropriate medium so as to constitute
a "published" report within the meaning of Article 3.1 of the Agreement on
Safeguards.
4. Documents examined by the Panel to assess Chile's
compliance with its obligations under Article XIX of GATT 1994 and the
Agreement on Safeguards
7.129 In the previous section, we have found that the Minutes
of the CDC meetings that Chile considers to represent the basis for its decision
to impose the definitive safeguard measures at issue in this dispute do not
constitute a "published" report within the meaning of Article 3.1. Given that
the CDC did however seek to explain the bases for its imposition of the
definitive safeguards measures, that these bases may be found in the publicly
available Minutes referred to above, and that Argentina has not disputed that
Chile may seek to motivate its decision to impose a safeguard measure on the
basis of unpublished but public minutes, we will proceed to examine Argentina's
substantive claims on that basis.
7.130 There is however an issue regarding which of
those Minutes we may refer to in our review. Chile has designated minutes of CDC
sessions Nos. 181, 185, 193 and 224 as jointly constituting the "report"
referred to in Article 3.1 of the Agreement on Safeguards. We note, however,
that the Minutes of Session No. 224 only concern the extension, and that
it contains statistical data not included in the Minutes of Sessions Nos. 181,
185 and 193. According to Chile, "the information in Record No. 224 and its
annexed statistical tables" are "useful in clarifying the analyses made in the
investigation for the recommendation of the definitive measures in Record No.
193", because "much of the information contained in the later of these two
records (Record No. 224) is updated data from the investigation concerning the
measures initially recommended".695
7.131 For the purpose of our analysis of the consistency of
the definitive safeguard measure, and the investigation preceding its
recommendation by the CDC, with the requirements of Article XIX of GATT 1994 and
the Agreement on Safeguards, we shall only consider findings and reasoning by
the CDC reflected in the Minutes of Sessions Nos. 181, 185 and 193, respectively
recommending the initiation of the investigation, the adoption of provisional
measures and the adoption of definitive safeguard measures. We consider that our
duty under Article 11 of the DSU to make an objective assessment of the matter
requires us to assess the consistency of the definitive safeguard and the
preceding investigation with Article XIX of GATT 1994 and the Agreement on
Safeguards on the basis of explanations provided by the CDC before or at the
time of its recommendation to apply definitive safeguard measures. Consequently,
whenever we refer below to information contained in the Minutes of Session No.
224, we will do so, at the most, to provide observations on our findings made on
the basis of the Minutes of Sessions Nos. 181, 185 and 193.696
5. Unforeseen developments (Article XIX:1(a) of GATT 1994
and Article 3.1 of the Agreement on Safeguards)
7.132 Argentina claims that Chile has infringed Article
XIX:1(a) of GATT 1994 and Article 3.1 of the Agreement on Safeguards by not
identifying or making any findings with respect to unforeseen developments
justifying the imposition of safeguard measures. Chile points out that the
reason why the CDC recommended the application of safeguard measures on products
subject to the PBS was the continued existence of unusually low prices over a
period that could not be considered transitory. Chile contends that the
unforeseen developments correspond to this special situation of global prices.
7.133 Article XIX:1(a) reads:
"If, as a result of unforeseen developments and of the
effect of the obligations incurred by a contracting party under this
Agreement, including tariff concessions, any product is being imported into
the territory of that contracting party in such increased quantities and
under such conditions as to cause or threaten serious injury to domestic
producers in that territory of like or directly competitive products, the
contracting party shall be free, in respect of such product, and to the
extent and for such time as may be necessary to prevent or remedy such
injury, to suspend the obligation in whole or in part or to withdraw or
modify the concession."
7.134 We recall that the Appellate Body in US - Lamb
stated that "unforeseen developments" is a circumstance whose existence must be
demonstrated as a matter of fact for a safeguard measure to be applied
consistently with Article XIX.697 According to the Appellate Body, the
demonstration of the existence of this circumstance must feature in the
published report of the investigating authorities.698 If the published report does
not discuss or offers any explanation as to why certain factors mentioned in it
can be regarded as "unforeseen developments", that report does not demonstrate
that the safeguard measure concerned has been applied as a result of "unforeseen
developments".699
7.135 According to Chile, the CDC made its findings and
reasoned conclusions relating to the requirement of "unforeseen developments" in
the Minutes of Session No. 193, where it states that:
" (�) [t]he increase in imports, and the potential for
further substantial increases, has occurred at a time when international
prices of the products investigated have been subject to sizeable and rapid
decreases."700
7.136 We note that the CDC did not discuss or offer any
explanation in its report as to why the reported "sizeable and rapid decrease in
international prices" could be regarded as an unforeseen development. In fact,
nothing in the CDC's report suggests that this reference was intended to relate
to the issue of unforeseen developments. Consequently, we consider that the CDC
did not demonstrate that the safeguard measures at issue have been applied "as a
result of unforeseen developments", as required by Article XIX:1(a) of GATT
1994.
7.137 Argentina has claimed that Chile failed to set forth
reasoned findings and conclusions regarding unforeseen developments in its
report, as required by Article 3.1 of the Agreement on Safeguards. We recall in
this respect the statement by the Appellate Body in US - Lamb:
"(�) we observe that Article 3.1 requires competent
authorities to set forth findings and reasoned conclusions on 'all pertinent
issues of fact and law' in their published report. As Article XIX:1(a) of
the GATT 1994 requires that 'unforeseen developments' must be demonstrated,
as a matter of fact, for a safeguard measure to be applied, the existence of
'unforeseen developments' is, in our view, a 'pertinent issue[] of fact and
law', under Article 3.1, for the application of a safeguard measure, and it
follows that the published report of the competent authorities, under that
Article, must contain a 'finding' or 'reasoned conclusion' on 'unforeseen
developments'."701
7.138 In light of our finding that the CDC did not discuss or
offer any explanation in its report as to why the reported "sizeable and rapid
decrease in international prices" could be regarded as an unforeseen
development, we find that Chile has failed to set forth reasoned findings and
conclusions in its report regarding unforeseen developments, as required by
Article 3.1 of the Agreement on Safeguards.
7.139 According to Chile, the statement by the CDC regarding
declining international prices reflects the fact that a fall in international
prices to such low levels and for such a long period is unusual and
unpredictable, especially with respect to products whose prices tend to undergo
strong fluctuations.702 We wish to point out that, although this ex post facto
explanation provided by Chile cannot, in any event, cure the CDC's failure to
make findings and reasoned conclusions in its report, this explanation would not
meet the requirement to demonstrate the existence of "unforeseen developments"
either. First, Chile in its explanation and the CDC in its determination seem to
refer to different events. Whereas the CDC spoke of "sizeable and rapid"
decreases in international prices, Chile now argues that it was the "sustained"
fall in international prices which could not have been foreseen. Second, it
should be recalled that the safeguard measures do not impose any duty which was
not already being applied under the Chilean PBS. The duty applied pursuant to
the safeguard measures is merely a different label for the portion of the
Chilean PBS duties exceeding the 31.5 per cent bound rate. The Chilean PBS has
the stated objective of providing additional protection to offset declining
international prices. The very fact that Chile established its PBS with such an
objective constitutes, in our view, evidence that declining international prices
cannot have been unforeseen. If the safeguard measures are not adding any
protection to what already resulted from the Chilean PBS, in force since 1983,
it is difficult to see how those safeguard measures could then have been adopted
as a result of developments which could not have been foreseen at the end of the
Uruguay Round.703
7.140 In conclusion, we find that Chile failed to demonstrate
the existence of unforeseen developments, as required by Article XIX:1(a) of
GATT 1994, and set forth findings and reasoned conclusions in this respect in
its report, as required by Article 3.1 of the Agreement on Safeguards.
6. Definition of like or directly competitive product
(Articles XIX:1(a) of GATT 1994 and Articles 2.1, 4.1(a) and 4.2(c) of the
Agreement on Safeguards)
7.141 Argentina claims that Chile has infringed Article
XIX:1(a) of GATT 1994 and Articles 2.1, 4.1(c) and 4.2(a) of the Agreement on
Safeguards on the grounds that the CDC failed to properly identify the product
that was like or directly competitive to each imported product, and thereby
failed to identify the affected domestic industries. Accordingly, Argentina
contends, the entire analysis of increased imports and of threat of injury is
based on false premises and lack legal validity. Chile argues that the
categories of products subject to the safeguard measures correspond to products
subject to the PBS, which groups categories of products that are directly
competitive. According to Chile, if the PBS had not taken into account each
agricultural product and its respective like or directly competitive products,
the application of the system would have been ineffective. Chile claims that the
CDC reaffirmed this analysis, as reflected in the Minutes.
7.142 We recall that the Appellate Body in US - Lamb
stated:
"(�) according to Article 2.1, the legal basis for
imposing a safeguard measure exists only when imports of a specific
product have prejudicial effects on domestic producers of products that are
'like or directly competitive' with that imported product. In our view, it
would be a clear departure from the text of Article 2.1 if a safeguard
measure could be imposed because of the prejudicial effects that an imported
product has on domestic producers of products that are not 'like or
directly competitive products' in relation to the imported product. [�]
Accordingly, the first step in determining the scope of the domestic
industry is the identification of the products which are 'like or directly
competitive' with the imported product. Only when those products have been
identified is it possible then to identify the 'producers' of those
products."704
7.143 With respect to wheat, the CDC provided in its report
only an implicit assertion of likeness or direct competitiveness, without
offering any reasoned conclusion regarding the products which, in its view,
should be considered like or directly competitive. The report of the CDC does,
in the final section containing the recommendation, identify the tariff heading
(1001.9000, "wheat other than durum wheat") of imported products to which the
safeguard measures will apply. However, the identification of the tariff lines
of the imported products to which the safeguard measures shall apply, does not
say anything about whether the domestic product is like or directly competitive
with the imported products.705
7.144 With respect to wheat flour, Chile has asserted that
wheat and wheat flour are directly competitive products. In Chile's view, this
reasoning is reflected in the CDC's report, where it reads that:
"(�) wheat flour represents an alternative way of
importing wheat if direct imports prove to be more costly or are subject to
a higher tariff, so it is necessary to apply a treatment similar to that
applicable to wheat."706
7.145 This comment, however, relates to a possible
relationship of likeness or direct competitiveness between two imported
products, imported wheat and imported wheat flour, not between domestic wheat or
wheat flour and the imported wheat flour.
7.146 Finally, as regards vegetable oils, Chile has confirmed
that the safeguard measures on vegetable oils apply to both crude and refined
oils.707 The CDC, however, does not provide any reasoned conclusions or finding as
regards the likeness or direct competitiveness between domestic crude and
refined oils and the imported crude and refined oils included in the 25 tariff
lines subject to the safeguard measures. Chile has offered the following ex
post facto explanation:
"(�) colza-oil (rape) produced domestically is a like
product to all oils to which the measure applies since: (i) they are
physically and chemically very similar, (ii) they are consumed without
distinction, (iii) they have the same final use, and (iv) they utilize the
same distribution channels."708
7.147 Even if these assertions were to be substantiated,
however, they do not provide any explanation as regards the relationship of
likeness or direct competitiveness between other domestic oils, such as maize
and olive oil,709 and the imported oils included in the 25 tariff lines subject to
the safeguard measures. In any event, we recall that even this incomplete
explanation was not provided, as a reasoned conclusion, in the CDC's report, but
only offered by Chile as ex post facto rationalization.
7.148 Furthermore, when asked by the Panel to identify the
domestic industry as regards edible vegetable oils identified in reference to 25
tariff lines, Chile stated that "[t]he relevant domestic industry is the oils
industry, which includes the rape-seed oil industry".710 Nevertheless, Chile has
clarified that the injury data in the minutes of CDC session No. 193 regarding
production, employment and "marginalization" of producers concern the
agricultural production of rape-seed, and not "the oils industry".711 Thus, by
considering injury data relating to agricultural producers of rape-seed, the CDC
would appear to have included such producers in its definition of the domestic
industry. The CDC, however, provided in its report no explanation of how
domestic rape-seeds can be regarded as like or directly competitive with
imported vegetable oils. We note in this respect that, according to the
Appellate Body in US - Lamb, the input and end-product need to be like or
directly competitive for their respective producers to be included in the
definition of the domestic industry.712
7.149 We therefore find that the CDC failed to make adequate
findings and reasoned conclusions with respect to the issue of likeness or
direct competitiveness, and, consequently, failed to identify the domestic
industry, as required by Article XIX:1(a) of GATT 1994 and Articles 2 and 4 of
the Agreement on Safeguards.
7. Increase in imports (Articles XIX:1(a) of GATT 1994
and Articles 2.1 and 4.2(a) of the Agreement on Safeguards)
7.150 Argentina claims that an analysis of the content of the
Minutes of the CDC sessions and the notifications reveals that Chile did not
demonstrate that there were increased imports, and that Chile therefore failed
to comply with its obligations under Article XIX:1(a) of GATT 1994 and Articles
2.1 and 4.2(a) of the Agreement on Safeguards. Chile submits that the
requirement regarding an increase in imports and the impact of the PBS in this
case are factors that cannot be examined separately. According to Chile, the
CDC's investigation did identify increased imports in accordance with the
requirements of Article XIX:1(a) of GATT 1994 and Articles 2.1 and 4.2(a) of the
Agreement on Safeguards. In addition, as regards the extension of the definitive
measure, Chile argues that the justification of such an extension cannot require
that the competent authority find for a second time that there is an increase in
imports.
7.151 The relevant section of the Minutes of Session No. 193
of the CDC, at which the CDC decided to recommend the adoption of the definitive
safeguard measures, reads as follows:
"In its analysis of imports, the Commission has taken
into account the fact that the normal operation of price bands has been a
decisive factor in preventing a greater increase in imports, and
consequently the trend in imports cannot be considered without bearing this
factor in mind. Even so, there has been an increase in imports in absolute
terms which threatens to cause injury to the production sectors concerned.
In its analysis, the Commission has taken into account the period commencing
when, for each product, the specific tariffs determined by the application
of the price band, added to the general tariff, exceeded the level bound in
the WTO. Without prejudice to this analysis, information prior to this
period shall also be considered for comparison and assessment. In this
regard, the Commission points out that:
- Imports of wheat (in tons) increased by 6 per cent
in 1998 in comparison with the previous year. Over the first ten months
of 1999, imports rose by 281 per cent compared with the same period in
1998. There was an increase in imports from 1993 to 1996, with a drop in
1997. Imports of wheat flour fluctuated, but this can be explained by
their low volume. Nevertheless, the Commission notes that wheat flour
represents an alternative way of importing wheat if direct imports prove
to be more costly or are subject to a higher tariff, so it is necessary
to apply a treatment similar to that applicable to wheat.
- [�]
- Imports of the two main edible vegetable oils
increased by 23 per cent in 1998 compared with the previous year. Over
the first ten months of 1999, imports fell by 24 per cent. In relation
to this reduction, the Commission points out that there was an abnormal
situation in 1999 concerning the behaviour of importers as a result of
the tariff disputes regarding the tariff headings for oil imports. From
1993 to 1997, the level of imports was similar.
The Commission notes the significant differences between
recent import prices resulting from full application of the band and prices
resulting from imposition of a tariff ceiling of 31.5 per cent. This
substantiates the forecasts of a greatly accelerated increase in imports
that would occur (or has already occurred) unless the full duties specified
in the bands are applied. The increase in imports, and the potential for
further substantial increases, has occurred at a time when international
prices of the products investigated have been subject to sizeable and rapid
decreases."
7.152 We recall that the Appellate Body in its report on
Argentina - Safeguard Measures on Imports of Footwear stated:
"[W]e agree with the Panel that the specific provisions
of Article 4.2(a) require that 'the rate and amount of the
increase in imports � in absolute and relative terms'� must be evaluated.
[..] Thus, we do not dispute the Panel's view and ultimate conclusion that
the competent authorities are required to consider the trends in
imports over the period of investigation (rather than just comparing the end
points) under Article 4.2(a).
[�] Although we agree with the Panel that the 'increased
quantities' of imports cannot be just any increase, we do not agree
with the Panel that it is reasonable to examine the trend in imports over a
five-year historical period.
[�] [T]his language in both Article 2.1 of the Agreement
on Safeguards and Article XIX:1(a) of the GATT 1994, we believe, requires
that the increase in imports must have been recent enough, sudden enough,
sharp enough, and significant enough, both quantitatively and qualitatively,
to cause or threaten to cause 'serious injury'."713
7.153 In addition, we recall that the Appellate Body in its
report on US - Lamb stated:
"[W]e believe that, although data from the most recent
past has special importance, competent authorities should not consider such
data in isolation from the data pertaining to the entire period of
investigation. The real significance of the short-term trends in the most
recent data, evident at the end of the period of investigation, may only
emerge when those short-term trends are assessed in the light of the
longer-term trends in the data for the whole period of investigation. If the
most recent data is evaluated in isolation, the resulting picture of the
domestic industry may be quite misleading."714
7.154 We consider that the analysis by the CDC contained in
the minutes of its session No. 193 does not demonstrate that the products
concerned are "being imported [�] in such increased quantities, absolute or
relative to domestic production, and under such conditions as to cause or
threaten to cause or threaten to cause serious injury," as required by Article
2.1 of the Agreement on Safeguards.
7.155 First, according to the Minutes of Session No. 193,
imports of "the two main" edible vegetable oils fell 24 per cent over the first
ten months of 1999. Thus, in the period immediately preceding the opening of the
investigation, imports of the product concerned actually fell significantly. In
addition, although the Minutes of Session No. 193 do also indicate that imports
increased by 23 per cent in 1998, they only state with respect to long-term
trends that "[f]rom 1993 to 1997, the level of imports was similar". We
consider, therefore, that the CDC failed to identify such increase in imports of
edible vegetable oils as required by Article XIX:1(a) of GATT 1994 and Articles
2.1 and 4.2(a) of the Agreement on Safeguards.
7.156 Second, as regards wheat flour, according to the
Minutes of Session No. 193, imports "fluctuated". Such a statement does not
identify a discernable upward trend in the growth of these imports. In the
absence of this discernable trend, we find that the CDC did not demonstrate that
there was an increase in imports of wheat flour recent enough, sudden enough,
sharp enough, and significant enough, both quantitatively and qualitatively, to
cause or threaten to cause "serious injury".715 We consider, therefore, that the
CDC failed to identify such increase in imports of wheat flour as required by
Article XIX:1(a) of GATT 1994 and Articles 2.1 and 4.2(a) of the Agreement on
Safeguards.
7.157 Third, with respect to wheat, the CDC identified in the
Minutes of Session No. 193 a 281 per cent increase in the first ten months of
1999. Although the Minutes of Session No. 193 do also indicate that imports
increased by 6 per cent in 1998, they only state with respect to long-term
trends that "[t]here was an increase in imports from 1993 to 1996, with a drop
in 1997". We consider that such a conclusory statement does not meet the
requirement of assessing short-term trends "in the light of the longer-term
trends in the data for the whole period of investigation". For example, the
import volumes for 1999, even though they represented a 281 per cent increase
over the preceding year, were still smaller than the import volumes for 1995 and
1996. The CDC should have provided a reasoned analysis as regards the
significance of the import volumes for 1999 in the context of the import volumes
for 1995 and 1996.716 Accordingly, we find that the CDC did not demonstrate that
there was an increase in imports of wheat recent enough, sudden enough, sharp
enough, and significant enough, both quantitatively and qualitatively, to cause
or threaten to cause serious injury.717 We consider, therefore, that the CDC failed
to identify such increase in imports of wheat as required by Article XIX:1(a) of
GATT 1994 and Articles 2.1 and 4.2(a) of the Agreement on Safeguards.
7.158 Moreover718, we note that table 3 annexed to the Minutes
of Session No. 224 of the CDC (containing the recommendation to extend the
period of application) actually shows a decrease in imports of wheat flour of 14
per cent in 1999, of 21 per cent in 1998, and of 28 per cent in 1997. In
addition, table 7 annexed to the Minutes of Session No. 224 of the CDC shows a
decrease of 4 per cent in total imports of vegetable oils during 1997, and
increases of 4 per cent and 21 per cent in 1996 and 1998, respectively. As for
wheat, the tables show a decrease of 60 per cent in 1997 and increases of 5, 11,
and 4 per cent in 1995, 1996 and 1998, respectively.
7.159 Finally, as regards all three product categories
subject to the safeguard measures, we find fault with the CDC's analysis on two
additional grounds. First, Article 4.2(a) of the Agreement on Safeguards
provides that:
"(�) the competent authorities shall evaluate all
relevant factors of an objective and quantifiable nature having a bearing on
the situation of the industry, in particular, the rate and amount of the
increase in imports of the product concerned in absolute and relative
terms � ." (emphasis added)719
7.160 When conducting its investigation, the CDC does not
appear to have made any analysis at all of import trends relative to
domestic production. As a matter of fact, in the Minutes of Session No. 193, the
CDC states only that "there has been an increase in imports in absolute terms".720
In its reply to a question by the Panel, Chile has clarified that the CDC analysed the increase in imports "both in absolute terms and in relation to
production, information which was available in the Technical Report prepared by
the Technical Secretariat", but that it "focused its analysis of imports on
their evolution in absolute terms, which is why only that information was
recorded in the records of the Commission."721 We note Chile's statement which said
that the Technical Report is "non-binding and classified information"722, and was
not part of the CDC's report. We therefore consider that Chile acted
inconsistently with Article 4.2(a) of the Agreement on Safeguards by reason of
the failure of the CDC to evaluate the increase in imports in relation to
domestic production.
7.161 Second, the CDC has stated in Minutes of Session No.
193 that "[i]n its analysis of imports, [it] has taken into account the fact
that the normal operation of price bands has been a decisive factor in
preventing a greater increase in imports, and consequently the trend in
imports cannot be considered without bearing this factor in mind". Moreover,
the CDC has stated that "the significant differences between recent import
prices resulting from full application of the band and prices resulting from
imposition of a tariff ceiling of 31.5 per cent [�] substantiates the
forecasts of a greatly accelerated increase in imports that would occur (or
has already occurred) unless the full duties specified in the bands are
applied". These statements confirm that the CDC's analysis of import trends
somehow accounted for the fact that greater import increases would have
occurred in the absence of Chilean PBS duties exceeding the 31.5 per cent bound
rate. Accordingly, the CDC's analysis of import trends is, at least partly723,
based on hypothetical import increases, i.e. increases which would have
occurred but for Chilean PBS duties granting additional protection by exceeding
the 31.5 per cent bound rate. We consider that this analytical approach is
inconsistent with Article 2.1 of the Agreement on Safeguards, which clearly
requires that actual imports have increased. A threat of increased
imports is not sufficient.
7.162 In conclusion, we find that that the CDC failed to
demonstrate increased imports of the products subject to the safeguard measures,
as required by Article XIX:1(a) of GATT 1994 and Articles 2.1 and 4.2(a) of the
Agreement on Safeguards.
8. Threat of serious injury and evaluation of all
relevant factors (Article XIX:1(a) of GATT 1994 and Articles 4.1(a), 4.1(b)
and 4.2(a) of the Agreement on Safeguards)
7.163 Argentina claims that the CDC did not establish
the existence of a threat of serious injury in the terms laid down in Article
XIX:1(a) of the GATT 1994 and Article 4.1(a), 4.1(b) and 4.2(a) of the Agreement
on Safeguards. Argentina also contends that the CDC did not evaluate all
relevant factors of an objective and quantifiable nature having a bearing on the
situation of the industry, as required by Article 4.2(a) of the Agreement on
Safeguards. Argentina maintains that the determination of threat of serious
injury by the CDC is inconsistent because of two instances of non-compliance:
(i) contrary to the requirements of Article 4.2 of the Agreement on Safeguards,
the CDC did not evaluate all the factors related to the situation of the
industry; and (ii) the findings and conclusions of the CDC regarding the factors
investigated were not substantiated by evidence.
7.164 Chile submits that the CDC followed an analytical
forward-looking approach based on the facts when determining the threat of
serious injury. In this regard, Chile refers to the analysis of "threat of
injury" by the Appellate Body in US - Lamb, where it was said that the
occurrence of future events can never be definitively proven by facts. Chile
considers that, in accordance with this statement, a threat of serious injury
must always be based on a projection, which must be consistent with the data on
which it is based. Chile also submits that the CDC complied with the requirement
to evaluate all relevant factors laid down in Article 4.2(a) of the Agreement on
Safeguards. As indicated in that provision, all "relevant" factors must be
analysed. According to Chile, that relevance is fundamental when considering
factors affecting injury or threat of injury and it must be considered on a
case-by-case, product-by-product basis. Chile maintains that the CDC therefore
considered it highly relevant to include the impact of the PBS on trade flows in
the products investigated that were subject to the PBS.
7.165 Chile has explained that the CDC's relevant findings
and reasoned conclusions are contained in the following section of the Minutes
of Session No. 193:
"The Commission notes the significant differences between
recent import prices resulting from full application of the band and prices
resulting from imposition of a tariff ceiling of 31.5 per cent. This
substantiates the forecasts of a greatly accelerated increase in imports
that would occur (or has already occurred) unless the full duties specified
in the bands are applied. The increase in imports, and the potential for
further substantial increases, has occurred at a time when international
prices of the products investigated have been subject to sizeable and rapid
decreases.
The Commission has also taken into account that the
c.i.f. prices of Chilean imports are closely linked to international prices
(the behaviour of commodities) and domestic prices similarly shadow trends
in import prices. Predicted trends in international prices for these
products are also negative; i.e., prices should remain at their present
levels or fall even more.
The situation described has left the Commission convinced
of the existence of an imminent threat of injury if only the tariff
ceiling of 31.5 per cent is applied, which can be summarized as follows:
(i) In the case of wheat, a decrease of 34 per cent
in the area under cultivation is expected (from 370 thousand hectares to
244 thousand hectares); a decrease of 28 per cent in production (less
than the reduction in the area cultivated as crop yields continue to
improve); 10 per cent fall in prices; a decrease of 35 per cent in
direct employment; and a drop of 20 to 90 per cent in net profit margins
depending on the level of production. This means that around one third
of approximately 90,000 producers will cease this activity. As is the
case for sugar beet and rape, the capacity of utilisation indicator has
not been estimated because it is not relevant to agricultural crops;
(ii) for sugar (sugar beet), the aforementioned
indicators used to assess injury are even more significant, showing a
reduction of around 80 per cent in production, area under cultivation
and employment, and a 28 per cent decrease in prices, meaning that 90
per cent of producers will cease this activity. Very high losses are
expected in the sugar industry, with a 28 per cent reduction in the
value of output and related losses amounting to US$10 million;
(iii) in the case of oils (rape), indicators show a
drop of 54 per cent in production and a decrease of around 60 per cent
in employment (direct and indirect), marginalizing over 63 per cent of
producers. Losses in the oil industry are estimated to include an 8 per
cent fall in the value of output, a US$3.2 million reduction in
production. It should also be noted that a decrease in rape cultivation
will have an impact on wheat yields because rape is sold in rotation
with wheat (30,000 hectares of rape allow the rotation of around 100,000
hectares of wheat)."724
7.166 Article 4.2(a) of the Agreement on Safeguards reads:
"In the investigation to determine whether increased
imports have caused or are threatening to cause serious injury to a domestic
industry under the terms of this Agreement, the competent authorities shall
evaluate all relevant factors of an objective and quantifiable nature having
a bearing on the situation of that industry, in particular, the rate and
amount of the increase in imports of the product concerned in absolute and
relative terms, the share of the domestic market taken by increased imports,
changes in the level of sales, production, productivity, capacity
utilization, profits and losses, and employment."
7.167 We recall that the Appellate Body in US - Lamb
stated that,
"(�) an 'objective assessment' of a claim under Article
4.2(a) of the Agreement on Safeguards has, in principle, two elements.
First, a panel must review whether competent authorities have evaluated all
relevant factors, and, second, a panel must review whether the authorities
have provided a reasoned and adequate explanation of how the facts support
their determination. [�] Thus, the panel's objective assessment involves a
formal aspect and a substantive aspect. The formal aspect is whether the
competent authorities have evaluated 'all relevant factors'. The substantive
aspect is whether the competent authorities have given a reasoned and
adequate explanation for their determination."725
7.168 As regards the formal aspect, the Appellate Body
stated in Argentina - Footwear that:
"Article 4.2(a) of the Agreement on Safeguards requires a
demonstration that the competent authorities evaluated, at a minimum,
each of the factors listed in Article 4.2(a) as well as all other factors
that are relevant to the situation of the industry concerned."726
7.169 Chile has conceded that the CDC did not evaluate
certain relevant factors, such as changes in the level of sales and capacity
utilization with respect to wheat, and productivity and employment with respect
to vegetable oils.727 Chile has explained that it did not evaluate all the relevant
factors explicitly listed in Article 4.2(a), including productivity and
employment in the oils industry, because for those factors "information was
unavailable from public sources and could not be found by consulting other
sources either".728 At the same time, however, Chile has indicated that the
questionnaires which the CDC had sent to the interested parties did not include
"the more specific questions that are necessary in other cases, since the data
contained in the application covered a large part of the background information
from the industry and the data gathered from other sources was considered
sufficient".729 We find it difficult to accept lack of information as a
justification for failure to evaluate all relevant factors, if the investigating
authorities were apparently satisfied that the available information was
sufficient and no further investigative steps had to be taken. Accordingly, by
failing to evaluate each of the factors listed in Article 4.2(a), we consider
that Chile has acted inconsistently with its obligations under Article 4.2(a).
7.170 We now proceed to examine whether Chile has complied
with the substantive requirements of the injury analysis. We recall in this
respect that, pursuant to Article 4.1(b), a threat of serious injury shall be
understood to mean serious injury that is clearly imminent, and that a
determination of the existence of a threat of serious injury shall be based on
facts and not merely on allegation, conjecture or remote possibility. We also
recall that the Appellate Body in US - Lamb has stated:
"[I] making a 'threat' determination, the competent
authorities must find that serious injury is 'clearly imminent'. As we have
already concluded, this requires a high degree of likelihood that the
anticipated serious injury will materialize in the very near future.
Accordingly, we agree with the Panel that a threat determination is
'future-oriented'. However, Article 4.1(b) requires that a 'threat'
determination be based on 'facts' and not on 'conjecture'. As facts, by
their very nature, pertain to the present and the past, the occurrence of
future events can never be definitively proven by facts. There is,
therefore, a tension between a future-oriented 'threat' analysis, which,
ultimately, calls for a degree of 'conjecture' about the likelihood of a
future event, and the need for a fact-based determination. Unavoidably, this
tension must be resolved through the use of facts from the present and the
past to justify the conclusion about the future, namely that serious injury
is 'clearly imminent'. Thus, a fact-based evaluation, under Article 4.2(a)
of the Agreement on Safeguards, must provide the basis for a
projection that there is a high degree of likelihood of serious injury to
the domestic industry in the very near future.730
[�] [W]hatever methodology is chosen, we believe that
data relating to the most recent past will provide competent authorities
with an essential, and, usually, the most reliable, basis for a
determination of a threat of serious injury. The likely state of the
domestic industry in the very near future can best be gauged from data from
the most recent past. Thus, we agree with the Panel that, in principle,
within the period of investigation as a whole, evidence from the most recent
past will provide the strongest indication of the likely future state of the
domestic industry.
However, we believe that, although data from the most
recent past has special importance, competent authorities should not
consider such data in isolation from the data pertaining to the entire
period of investigation. The real significance of the short-term trends in
the most recent data, evident at the end of the period of investigation, may
only emerge when those short-term trends are assessed in the light of the
longer-term trends in the data for the whole period of investigation. If the
most recent data is evaluated in isolation, the resulting picture of the
domestic industry may be quite misleading. [�]"731
7.171 The CDC did not provide in the Minutes of Session No.
193 any indication regarding either the data which it had based its injury
projections on, or the relevant time-period during which such data would have
been examined. The data mentioned in the CDC's report refer to hypothetical
growth rates taken with respect to projected values. They do not reveal what the
most recent historical values were. Consequently, the CDC does not appear to
have based its injury determination on data relating to the most recent past,
and did not assess such data in the context of the data for the entire
investigative period. We therefore find that, also in this respect, Chile has
acted inconsistently with its obligations under Article 4.2(a).
7.172 Moreover, we note that, according to Chile, a threat of
serious injury exists because imports would increase unless the full duties
specified in the Chilean PBS are applied. We consider this reasoning
insufficient to support the CDC's conclusion. As we have stated earlier, at the
time of the adoption of the safeguard measures, the Chilean PBS was already
operating without restriction, and PBS duties were being imposed in excess of
the 31.5 per cent bound rate. Chile argues that there would be a threat of
serious injury if the Chilean PBS were not to be applied without restriction,
and that, therefore, safeguard measures equal to the portion of the PBS duties
exceeding the 31.5 per cent bound rate should be adopted. Put another way, Chile
based its determination of a threat of serious injury on a counterfactual
analysis: if they were to restrict the operation of the Chilean PBS to the 31.5
per cent bound rate, injury may occur. Thus, in their threat of injury analysis,
for "projecting" the future condition of the domestic industry, the
investigative authorities did not rely on an extrapolation of existing trends,
but on the results from a counterfactual exercise, simulating what that
condition would be if the safeguard measure were to be removed.732 Such
counterfactual analysis cannot justify the imposition of definitive safeguard
measures.
7.173 In reply to the Panel's questions, Chile has argued
that "the determination of whether or not serious injury would occur if a
safeguard measure were withdrawn is possible", because the Agreement on
Safeguards "envisages that such an analysis will be made by the competent
authorities in that it assumes that a safeguard measure will be maintained
only for the time necessary to prevent or remedy serious injury."733 We do not
disagree with Chile that this type of analysis is indeed envisaged by Article
7.2 of the Agreement on Safeguards for the extension of the period of
application of the safeguard measure. Obviously, however, it cannot apply to the
adoption of the safeguard measure, where a projection should be made on
the basis that a new safeguard measure would not be adopted, and not on the
basis that an existing safeguard measure (or its equivalent) were to be
withdrawn.
7.174 In conclusion, we find that the CDC did not demonstrate
the existence of a threat of serious injury, as required by Article XIX:1(a) of
the GATT 1994 and Article 4.1(a), 4.1(b) and 4.2(a) of the Agreement on
Safeguards.
9. Causal link (Articles 2.1 and 4.2(b) of the Agreement
on Safeguards)
7.175 Argentina argues that Chile did not comply with
its obligations under Articles 4.2(b) and 2.1 of the Agreement on Safeguards
inasmuch as it did not establish any causal link between the alleged increase in
imports and the alleged threat of injury to the domestic industry. Argentina
also considers that Chile failed to comply with its obligations under Article
XIX:1(a) of GATT 1994 and Articles 2.1 and 4.2(b) of the Agreement on Safeguards
inasmuch as it did not evaluate factors other than the increase in imports which
at the same time were causing injury to the domestic industry. According to
Chile, the CDC established the causal link between increased imports and threat
of serious injury when it stated that "the c.i.f. prices of Chilean imports are
closely linked to international prices (the behaviour of commodities) and
domestic prices similarly shadow trends in import prices."734
7.176 We have found above that the CDC failed to
appropriately establish the existence of both increased imports and threat of
serious injury. No causal link can exist if the existence of either of the two
substantive requirements has not been established.735
7.177 In any event, we recall that, pursuant to Articles 2
and 4.2 of the Agreement on Safeguards, the existence of the causal link between
increased imports of the product concerned and serious injury or threat thereof
must be demonstrated, and that, when factors other than increased imports are
causing injury to the domestic industry, such injury shall not be attributed to
increased imports. In this case, Chile's analysis of causality was strictly
limited to its statement that international prices, import prices and domestic
prices are linked. Further, the CDC's report at no point reflects any
consideration as to the possible effects on the domestic industries concerned of
factors other than increased imports. We consider that such a cursory
one-sentence analysis is insufficient to demonstrate the existence of a causal
link between increased imports and threat of serious injury. Moreover, injury
must be caused or threatened by increased imports, not decreasing international
prices.736 Declining international prices may be a factor in a causal analysis but
mere consideration of such declining international prices cannot be substituted
for such a causal analysis, which, of course, was not done here. We therefore
find that the CDC failed to properly establish a causal link, as required by
Articles 2.1 and 4.2 of the Agreement on Safeguards.
7.178 Finally, we recall the Appellate Body's statement in
US - Wheat Gluten:
"Article 4.2(b) presupposes [�] as a first step in the
competent authorities' examination of causation, that the injurious effects
caused to the domestic industry by increased imports are distinguished
from the injurious effects caused by other factors. The competent
authorities can then, as a second step in their examination, attribute to
increased imports, on the one hand, and, by implication, to other relevant
factors, on the other hand, 'injury' caused by all of these different
factors, including increased imports. Through this two stage process, the
competent authorities comply with Article 4.2(b) by ensuring that any injury
to the domestic industry that was actually caused by factors other
than increased imports is not 'attributed' to increased imports and is,
therefore, not treated as if it were injury caused by increased imports,
when it is not. In this way, the competent authorities determine, as a final
step, whether 'the causal link' exists between increased imports and serious
injury, and whether this causal link involves a genuine and substantial
relationship of cause and effect between these two elements, as required by
the Agreement on Safeguards."737
7.179 We recall that Argentina has argued that the increase
in imports of wheat during 1999 was due to extreme drought in Chile, severely
affecting domestic output that year. We note that this issue was raised, at
least in passing, by Argentine exporters,738 and a Report of a Chilean government
agency submitted by Argentina confirms that Chilean wheat production was
adversely affected by drought in the 1998/99 season.739 The minutes of session No
193 - in which adoption of the definitive measure is recommended by the CDC -
however, do not contain any analysis as regards injury caused by other
factors, such as drought in the case of wheat.740 Thus, the CDC did not distinguish
the injurious effects caused to the domestic industry by increased imports from
the injurious effects caused by other factors. We therefore consider that, also
in this respect, the CDC did not perform an adequate causation analysis, as
required by Article 4.2(b) of the Agreement on Safeguards.
7.180 In conclusion, we find that the CDC did not demonstrate
the existence of a causal link, as required by Articles 2.1 and 4.2(b) of the
Agreement on Safeguards.
10. Measures necessary to remedy injury and facilitate
adjustment (Article XIX:1(a) of GATT 1994 and Articles 3.1 and 5.1 of the
Agreement on Safeguards)
7.181 Argentina submits that Chile's safeguard measure
violates Article XIX:1(a) of GATT 1994 and Article 5.1 of the Agreement on
Safeguards because it was not limited to the extent necessary to remedy injury
and to facilitate adjustment. Argentina contends that the CDC did not consider
whether or not the measure was "necessary" to prevent injury and facilitate
readjustment and that no substantive analysis was undertaken. Argentina argues
that Chile based its safeguard measure on the difference between the bound
tariff and the combination of the PBS duty and applied rate, and this is in no
way related to a threat of injury from imports. Chile submits that, in
accordance with its obligations under the Agreement on Safeguards, it instituted
a measure that protected its domestic producers from serious injury, but which
provided no further amount of protection. Chile explains that, having found the
requisite conditions justifying a safeguard action, the action recommended by
the CDC and taken by the Government involved the least possible trade disruption
consistent with preventing serious injury: an increase in duties to enable the
PBS to apply without regard to the bound level of duties.
7.182 Pursuant to Article 5.1 of the Agreement on Safeguards,
"[a] Member shall apply safeguard measures only to the extent necessary to
prevent or remedy serious injury and to facilitate adjustment". According to the
Appellate Body in Korea - Dairy:
"(�) the wording of this provision leaves no room for
doubt that it imposes an obligation on a Member applying a safeguard
measure to ensure that the measure applied is commensurate with the
goals of preventing or remedying serious injury and of facilitating
adjustment."741 (emphasis added)
7.183 Thus, according to this report, in order to comply with
the requirement of Article 5.1, the Member imposing the safeguard measure must
ensure that the measure is only applied to the extent necessary to
prevent or remedy serious injury and to facilitate adjustment. We consider that
a Member can only ensure that the safeguard measure is calibrated if
there is, at a minimum, a rational connection between the measure and the
objective of preventing or remedying serious injury and facilitating adjustment.
In the absence of such a rational connection, a Member cannot possibly ensure
that the measure is applied only to the extent necessary.
7.184 We recall that the safeguard measures at issue consist
of a duty in the amount of the difference between, on the one hand, the sum of
the 8 per cent applied rate and the ad valorem equivalent of the PBS
duty, and, on the other hand, the 31.5 per cent bound rate. According to Chile,
such a duty is "most appropriate" to remedy injury and facilitate adjustment.742
This argument appears to be based on the premise that the lower PBS threshold
(to which level import prices are raised through the safeguard measure) can be
regarded as indicative of a state below which the domestic industry will
experience (a threat of) serious injury. In our view, this premise is unfounded
because the lower PBS threshold is calculated on the basis of the international
prices observed in the recent past, and therefore does not reflect in any way
the condition of the domestic industry. In our view, therefore, it is clear that
the lower PBS threshold has no rational connection to a state of the domestic
industry below which (a threat of) serious injury will be experienced. We find
accordingly that Chile did not ensure that the safeguards measures are applied
to the extent necessary to prevent or remedy serious injury and facilitate
adjustment, as required by Article XIX:1(a) of GATT 1994 and Article 5.1 of the
Agreement on Safeguards.
7.185 Moreover, we note the following statement by the
Appellate Body regarding the obligation of Article 5.1 in its report on
US - Line Pipe:743
"For all these reasons, we conclude that the phrase 'only
to the extent necessary to prevent or remedy serious injury and to
facilitate adjustment' in Article 5.1, first sentence, must be read as
requiring that safeguard measures may be applied only to the extent that
they address serious injury attributed to increased imports.744
Having reached this conclusion, we must consider now
whether the Panel erred in concluding that Korea did not make a prima
facie case that the United States had not fulfilled this substantive
obligation in Article 5.1, first sentence. On this, we conclude that, by
establishing that the United States violated Article 4.2(b) of the Agreement
on Safeguards, Korea has made a prima facie case that the application
of the line pipe measure was not limited to the extent permissible under
Article 5.1. In the absence of a rebuttal by the United States of this prima facie case by Korea, we find that the United States applied the
line pipe measure beyond the "extent necessary to prevent or remedy serious
injury and to facilitate adjustment".745
[�]
We note that, had the Panel found differently, the United
States might have attempted to rebut the presumption raised by Korea in
successfully establishing a violation of Article 4.2(b) of the Agreement on
Safeguards, that the United States had also violated Article 5.1. [�] The
United States did not rebut Korea's prima facie case by showing that
this was so. We offer this observation only to emphasize that we are not
stating that a violation of the last sentence of Article 4.2(b) implies an
automatic violation of the first sentence of Article 5.1 of the
Agreement on Safeguards."746
7.186 The Appellate Body report on US - Line Pipe
cited above supports our finding that Chile's measures are inconsistent with
Article 5.1, first sentence. Chile failed to either assess the serious injury
arising from �other factors' in the context of its Article 4.2(b) causation
analysis747 or otherwise establish that the Chilean measures address the serious
injury arising from imports alone in the context of Article 5.1.
7.187 We note that Argentina has also based its claim on
Article 3.1, which requires the investigating authorities, inter alia, to
set forth their findings and reasoned conclusions on all pertinent issues of
fact and law, thus raising the question of whether Chile was under an obligation
to justify, in its report, the application of the measures.748
7.188 As we have already found that Chile has acted
inconsistently with Article 5.1 of the Agreement on Safeguards, we do not find
it necessary for the settlement of this dispute to address Argentina's claim
regarding the justification of the application of the measure to the extent that
it has been based on Article 3.1. We accordingly decide to exercise judicial
economy to that extent.
11. Appropriate investigation (Articles 3.1 and 3.2 of
the Agreement on Safeguards)
7.189 Argentina claims that Chile breached its obligation
under Articles 3.1 and 3.2 to conduct a "appropriate investigation" because
Argentina did not have a full opportunity to participate in the investigation.
Specifically, Argentina asserts that it did not have access to any public
summary of the confidential information on which the Chilean authorities may
have based their determination. Chile responds that Argentina participated in
two hearings before the CDC and had access to the file containing submissions of
other interested parties. It further contends that there were no
non-confidential summaries of confidential information because there was no
confidential information to discuss; the information regarding these products
was completely public.
7.190 We note that, pursuant to Article 3.2 of the Agreement
on Safeguards, parties submitting confidential information may be requested to
furnish non-confidential summaries or, if such information cannot be summarized,
the reasons why such summaries cannot be provided. Argentina has not however
established in this case that the record contained any confidential information749;
thus, we do not see the factual basis for a claim based on the absence of
non-confidential summaries. We therefore conclude that Argentina has failed to
establish that Chile has acted inconsistently with Articles 3.1 and 3.2 of the
Agreement on Safeguards by reason of an alleged failure to provide Argentina
with access to non-confidential summaries of confidential information.
7.191 Argentina further contends that the failure of the
minutes of the relevant sessions of the CDC to take into account or analyse
information provided by the Argentine exporters in respect to the evaluation of
imports and the condition of the domestic industry is evidence in support of its
claim that Chile failed to conduct an appropriate investigation.750 In this Report,
we have already found, inter alia, that Chile acted inconsistently with
Articles 2.1 and 4.2(a) of the Agreement on Safeguards in respect of its
consideration of the increased imports requirement and with Article 4.2(a) of
the Agreement by failing to consider all relevant factors having a bearing on
the state of the industry. In these circumstances, we do not consider it
necessary to examine Argentina's further claim under Article 3.1 that Chile
failed take into account information provided by Argentine exporters on these
issues. Accordingly, we exercise judicial economy with respect to this claim.
12. Findings and reasoned conclusions (Article 3.1 of the
Agreement on Safeguards)
7.192 Argentina submits that the national investigating
authorities must explain in their report how they arrived at their conclusions,
based on the information, and that the findings of the competent authorities
must be contained in the decision itself. According to Argentina, the CDC has
not done so, and has therefore acted in a manner inconsistent with Article 3.1
of the Agreement on Safeguards.
7.193 Above, we have already found that the CDC failed to set
forth findings and reasoned conclusions in its report regarding unforeseen
developments and the application of the measures.751 In addition, we have also
found that Chile has not demonstrated that the CDC complied with the substantive
requirements of Articles 2 and 4 of the Agreement on Safeguards. In the light of
these findings, we do not consider it necessary to make any additional findings
under Article 3.1 of the Agreement on Safeguards, and, accordingly, will
exercise judicial economy in this respect.
13. Provisional measures (Article XIX:2 of GATT 1994 and
Article 6 of the Agreement on Safeguards)
7.194 Argentina claims that the CDC did not comply with
Article XIX:2 of GATT 1994 and Article 6 of the Agreement on Safeguards, which
lay down the requirements for the application of provisional measures. Chile
submits that the Minutes of Session No. 185 set out the critical circumstances
and assessments required in order to determine the need for the recommended
provisional measures, as required by Article XIX:2 of GATT 1994 and Article 6 of
the Agreement on Safeguards.
7.195 We have stated above that the provisional safeguard
measures are within our jurisdiction. Nonetheless, considering our findings
above regarding the inconsistency of the CDC's investigation and the resulting
safeguard measures with the requirements of Article XIX of GATT 1994 and
Articles 2, 3, 4 and 5 of the Agreement on Safeguards, we do not consider it
necessary to examine Argentina's claim under Article 6, and, accordingly, decide
to exercise judicial economy in this respect.752
14. Notification and consultation (Article XIX:2 of GATT
1994 and Article 12 of the Agreement on Safeguards)
7.196 Argentina claims that Chile violated Article XIX:2 of
GATT 1994 and Article 12.1(a) of the Agreement on Safeguards by failing to
comply with the notification requirement laid down in Article 12.1(a) and 12.2
and by not holding prior consultations with Members having a substantial
interest as exporters of the product concerned, as required by Article 12.3 and
12.4. Chile responds that it did act in conformity with the requirements of each
of those provisions.
7.197 Considering our findings above regarding the
inconsistency of the CDC's investigation and the resulting safeguard measures
with the requirements of Article XIX of GATT 1994 and Articles 2, 3, 4 and 5 of
the Agreement on Safeguards, we do not consider it necessary to examine
Argentina's claim under Article 12, and, accordingly, decide to exercise
judicial economy in this respect.
15. Extension of the definitive safeguard measures
(Article 7 of the Agreement on Safeguards)
7.198 Argentina has requested the Panel to make findings
regarding the consistency of the extension of the definitive safeguard measures
with the requirements of the Agreement on Safeguards. We recall that we have
found above that the CDC's investigation and the resulting definitive safeguard
measures are inconsistent with the requirements of Article XIX of GATT 1994 and
Articles 2, 3, 4 and 5 of the Agreement on Safeguards. If the definitive
safeguard measures are inconsistent with Chile's obligations under the Agreement
on Safeguards, such inconsistency cannot of course be "cured" by a decision to
extend their duration. On the contrary, the decision to extend their duration
must, by definition, be tainted by inconsistency as well. We recall, however,
that Article 7 of the Agreement on Safeguards, which sets out the conditions for
an extension, is not within our Terms of Reference. We will therefore refrain
from making any finding regarding the consistency of the decision to extend the
safeguard measures' duration with Article 7 of the Agreement on Safeguards.
VIII.
CONCLUSIONS AND RECOMMENDATIONS
8.1 In light of the findings above, we conclude that:
(a) the Chilean PBS is inconsistent with Article 4.2
of the Agreement on Agriculture and Article II:1(b) of GATT 1994;
(b) as regards the Chilean safeguard measures on
wheat, wheat flour and edible vegetable oils:
(i) Chile has acted inconsistently with Article
3.1 of the Agreement on Safeguards by not making available the
relevant minutes of the sessions of the CDC through an appropriate
medium so as to constitute a "published" report;
(ii) Chile has acted inconsistently with Article
XIX:1(a) of GATT 1994 because the CDC failed to demonstrate the
existence of unforeseen developments, and Article 3.1 of the
Agreement on Safeguards because the CDC's report did not set out
findings and reasoned conclusions in this respect in its report;
(iii) Chile has acted inconsistently with Article
XIX:1(a) of GATT 1994 and Articles 2 and 4 of the Agreement on
Safeguards because the CDC failed to demonstrate the likeness or
direct competitiveness of the products produced by the domestic
industry, and, consequently, failed to identify the domestic
industry;
(iv) Chile has acted inconsistently with Article
XIX:1(a) of GATT 1994 and Articles 2.1 and 4.2(a) of the Agreement
on Safeguards because the CDC failed to demonstrate the increase in
imports of the products subject to the safeguard measures required
by those provisions;
(v) Chile has acted inconsistently with Article
XIX:1(a) of the GATT 1994 and Article 4.1(a), 4.1(b) and 4.2(a) of
the Agreement on Safeguards because the CDC did not demonstrate the
existence of a threat of serious injury;
(vi) Chile has acted inconsistently with Articles
2.1 and 4.2(b) of the Agreement on Safeguards because the CDC did
not demonstrate a causal link;
(vii) Chile has acted inconsistently with Article
XIX:1(a) of GATT 1994 and Article 5.1 of the Agreement on Safeguards
because the CDC did not ensure that the measures were limited to the
extent necessary to prevent or remedy injury and facilitate
adjustment;
(viii) Argentina failed to establish that Chile
has acted inconsistently with the requirement of Articles 3.1 and
3.2 of the Agreement on Safeguards to conduct an "appropriate
investigation" because Argentina allegedly did not have a full
opportunity to participate in the investigation and did not have
access to any public summary of the confidential information on
which the Chilean authorities may have based their determination.
8.2 Under Article 3.8 of the DSU, in cases where there is
infringement of the obligations assumed under a covered agreement, the action is
considered prima facie to constitute a case of nullification or impairment of
benefits under that agreement. Accordingly, we conclude that to the extent Chile
has acted inconsistently with the provisions of the GATT 1994, the Agreement on
Agriculture and the Agreement on Safeguards, it has nullified or impaired
benefits accruing to Argentina under those Agreements.
8.3 We recommend that the Dispute Settlement Body request
Chile to bring its PBS into conformity with its obligations under the Agreement
on Agriculture and the GATT of 1994. As explained above753, we do not make any
recommendation with respect to the safeguard measures challenged by Argentina in
these proceedings.
__________
649 Legally speaking, the Agreement on Agriculture is part of an
annex (Annex 1A) to the WTO Agreement. When Article 31 Vienna Convention speaks
of "the treaty", it is the WTO Agreement as a whole which should be referred to.
650 Japan - Alcoholic Beverages II , WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, p. 13. Emphasis added.
651 (original footnote) Sinclair, supra, p. 137; Yasseen,
"L'interpr�tation des trait�s d'apr�s la Convention de Vienne sur le Droit des
Trait�s" (1976-III) 151 Recueil des Cours p. 1 at 48.
652 (original footnote) Sinclair, footnote 24, p. 137.
653 (original footnote) (1966) Yearbook of the International Law
Commission, Vol. II, p. 222; Sinclair, supra, footnote 24, p. 138.
654 We note in this respect that Chile is not arguing estoppel.
See Chile's response to question 13(a) of the Panel.
655 We note in this respect that Argentina has drawn our
attention to the July 1995 Report of the Working Party on the Accession of
Ecuador, which was adopted by consensus and which shows that several Members
considered an Ecuadorian PBS inconsistent with various covered agreements,
including the Agreement on Agriculture:
Some members noted that the use of minimum import prices
and variable charges appeared to be in conflict with Ecuador's obligations
under Articles II, VI and VII of the General Agreement 1994, the WTO Customs
Valuation Agreement and the WTO Agreement on Agriculture. In their view,
Ecuador should either phase out this mechanism or bring it into conformity
with the aforesaid obligations. (WT/L/77, para. 42)
In response, the Ecuadorian delegate has been recorded to
state that,
in order to comply with the provisions of the WTO
Agreement on Agriculture, Ecuador would gradually eliminate the price band
system within a seven year period in accordance with the time table annexed
to Ecuador's Protocol of Accession. During the period for the phase-out of
this mechanism, Ecuador would not enlarge the coverage of the system nor
reintroduce products back into the system. The Working Party took note of
these commitments. (WT/L/77, para. 48)
In our view, however, in the absence of more specific
information regarding the structure and operation of the measure at issue in
this report, we cannot determine to what extent this measure is comparable to
the Chilean PBS, and, consequently, assess its relevance for our analysis. We
are therefore not in a position to take this into account.
656 Our translation. Emphasis added.
657 ECA 35 provides that the "partes contractantes"
(contracting parties) are Chile and MERCOSUR, and that Argentina is a "parte
signataria" (signatory party).
658 Our translation. Emphasis added.
659 See para. 7.18 above.
660 MTN.GNG/W/FA, p. L.3.
661 Chile's response to question 14 of the Panel.
662 Article IX:2 of the Marrakesh Agreement establishing the WTO.
663 In any event, we note that, on the one hand, Chile tabled its
negotiating offer on the basis of the Draft Final Act modalities and draft rules
on agriculture on 5 March 1992, and, on the other hand, has stated that "[t]he
date of the seminar is [�] unclear but it could have taken place in 1993."
(Chile's response to question 40 of the Panel).
664 In this context, we also note that Argentina has referred to
the WTO Secretariat's 1997 Trade Policy Review Report on Chile, which reads that
"[t]he price stabilization mechanism works as a variable levy" (WT/TPR/S/28,
para. 38). We consider that such a Report should not be taken into account in
the context of dispute settlement proceedings. Paragraph A(i) unequivocally
states,
[The Trade Policy Review Mechanism] is not, however,
intended to serve as a basis for the enforcement of specific obligations
under the Agreements or for dispute settlement procedures [�].
Consequently, we will disregard the information contained in
the report referred to by Argentina
665 See Article 26.1 of the DSU
("Non-Violation Complaints of the Type Described in
Paragraph 1(b) of Article XXIII of GATT 1994") and Article XXIII:1(b) of
GATT 1994. The Appellate Body has stated with respect to Article XXIII:1(b) of
GATT 1994,
Article XXIII:1(b) sets forth a separate cause of action
for a claim that, through the application of a measure, a Member has
"nullified or impaired" "benefits" accruing to another Member, "whether or
not that measure conflicts with the provisions" of the GATT 1994. Thus, it
is not necessary, under Article XXIII:1(b), to establish that the measure
involved is inconsistent with, or violates, a provision of the GATT 1994.
Cases under Article XXIII:1(b) are, for this reason, sometimes described as
"non-violation" cases; we note, though, that the word "non-violation" does
not appear in this provision. (Appellate Body report, European
Communities - Measures Affecting Asbestos and Asbestos-Containing Products
("EC - Asbestos "), WT/DS135/AB/R, adopted 5 April 2001, para.
185)
According to the Panel in Japan - Measures Affecting
Consumer Photographic Film and Paper:
"[t]he text of Article XXIII:1(b) establishes three
elements that a complaining party must demonstrate in order to make out a
cognizable claim under Article XXIII:1(b): (1) application of a measure by a
WTO Member; (2) a benefit accruing under the relevant agreement; and (3)
nullification or impairment of the benefit as the result of the application
of the measure." [footnote omitted]
(Panel report, Japan - Measures Affecting Consumer Photographic Film and
Paper, WT/DS44/R, adopted 22 April 1998, para. 10.41)
666 Appellate Body report, European Communities - Customs
Classification of Certain Computer Equipment ("EC - Computer Equipment
"), WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, at para. 93.
667 We note in this regard that this issue of examining
preparatory work in accordance with Article 32 of the Vienna Convention has been
raised by Chile as a defence. Argentina has made its arguments based upon a
textual analysis.
668 For example, even if we had considered the evidence of GATT
Secretariat advice probative, it would have needed to be seen as part of a
comprehensive multilateral pattern of advice combined with negotiators' actions.
669 See paras. 7.78-7.79 above.
670 See paras. 7.17-7.101 above.
671 Although it is not clear whether this can still be the case
in the future, following amendment of Article 12 of Law 18.525. See our remarks
at paras. 7.3-7.8 above.
672 Chile's response to question 12(c) of the Panel.
673 Chile has argued that the Chilean PBS, to the extent that it
results in the exceeding of its 31.5 per cent bound rate, is justified under the
provisions of Article XIX, i.e. as a safeguard measure. We will address this
argument in the section of our Findings dealing with the claims brought under
the Agreement on Safeguards.
674 Considering our finding that Chile failed to record its PBS
in the appropriate column of its Schedule, we do not need to address whether
and, if so, how, Article 21.1 of the Agreement of Agriculture bears on our
finding regarding Article II:1(b) of GATT 1994, in light of our finding that the
Chilean PBS is inconsistent with Article 4.2 of the Agreement on Agriculture.
675 Minutes of CDC session No. 193.
676 Appellate Body report, United States - Import Measures on
Certain Products from the European Communities ("US - Certain EC Products
"), WT/DS165/AB/R, adopted 10 January 2001.
677 Chile's first submission, para. 100.
678 Chile's first submission, para. 101.
679 Appellate Body report, US - Certain EC Products, para.
81.
680 Appellate Body report, US - Certain EC Products, para.
96.
681 Panel report, Argentina - Textiles and Apparel, para.
6.15.
682 Panel report, Argentina - Textiles and Apparel, para.
6.14.
683 According to Article 6 of the Agreement on Safeguards, the
duration of a provisional safeguard measure shall not exceed 200 days.
Furthermore, it is unclear under the line of reasoning proposed by Chile why it
is of such significance that a measure has been terminated just before or just
after establishment of a panel. In both cases the panel would be requested to
reach findings and conclusions with respect to a measure that had been
terminated. This seems to us a distinction without a difference.
684 See para. 7.195.
685 We note, in any event, our view that panels do not lack the
legal authority to make findings in respect of expired measures. See
paras. 7.112-7.113, supra.
686 Accordingly, we need not decide whether the failure to
identify a measure in a request for consultations would deprive a panel of the
legal authority to make findings in respect of a measure otherwise within its
terms of reference.
687 We note, however, that we are not examining the consistency
of the extension decision with the requirements of Article 7.2 of the Agreement
on Safeguards, as that is not within our Terms of Reference.
688 Argentina refers to Chile's First Written Submission, para.
25 in fine.
689 See the panel and Appellate Body reports referenced in
footnote 567.
690 Letter by Chile dated 10 July 2001.
691 Chile's response to question 18 of the Panel.
692 The New Shorter Oxford English Dictionary (L. Brown, Ed.), at
2405.
693 Paragraphs 2, 3, 4, 5 and 6 of Article 22 of the SCM
Agreement. Paragraphs 1.1, 2.1, 2.2, 2.3 of Article 12 of the AD Agreement.
694 Footnote 53 to the SCM Agreement. Footnote 23 to the AD
Agreement.
695 Chile's response to question 50 of the Panel.
696 We note that the Appellate Body in its report on United
States - Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan
("US - Cotton Yarn"), WT/DS192/AB/R, adopted 5 November 2001, para. 78,
stated in the context of a determination in accordance with Article 6 of the
ATC:
"In our view, a panel reviewing the due diligence
exercised by a Member in making its determination under Article 6 of the ATC
has to put itself in the place of that Member at the time it makes its
determination. Consequently, a panel must not consider evidence which did
not exist at that point in time."
697 Appellate Body report, United States - Safeguard Measures
on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia
("US - Lamb "), WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001,
para. 71.
698 Ibid., para. 72.
699 Ibid., para. 73.
700 Emphasis added.
701 Appellate Body report, US - Lamb, para. 76.
702 Chile's response to question 20 of the Panel.
703 Appellate Body report, Korea - Definitive Safeguard
Measure on Imports of Certain Dairy Products ("Korea - Dairy"),
WT/DS98/AB/R, adopted 12 January 2000, para. 86:
such "emergency actions" are to be invoked only in
situations when, as a result of obligations incurred under the GATT 1994, an
importing Member finds itself confronted with developments it had not
"foreseen" or "expected" when it incurred that obligation.
704 Appellate Body report, US - Lamb, paras. 86-87.
705 We note that Chile has offered some ex post facto
explanation for the CDC's conclusions. Chile indicates that, as far as wheat is
concerned:
"(�) in view of the inherent nature of the products under
investigation, domestic wheat was considered to be a like product to
imported wheat since the imports correspond to the same product at the
agricultural production level." (Chile's response to question 27(a) of the
Panel).
As indicated earlier, such
ex post facto explanation,
even if it were sufficient to support the CDC's likeness determination, could
not cure the CDC's failure to provide such analysis in its report.
706 Minutes of CDC Session No. 193.
707 Chile's response to question 27(b) of the Panel.
708 Chile's response to question 27(b) of the Panel.
709 Ibid.
710 Chile's response to question 27(b) of the Panel.
711 Chile's response to question 38 of the Panel.
712 Appellate Body report on US - Lamb, paras. 83-96.
713 Appellate Body report, Argentina - Footwear (EC),
WT/DS121/AB/R, adopted 12 January 2000, paras. 129-131.
714 Appellate Body on US - Lamb, para. 138. We are aware
that the Appellate Body made this observation with respect to the investigating
authorities' injury analysis, and not with regard to their examination of import
trends. We consider, however, in the light of Article 2.1 of the Agreement on
Safeguards, that this reasoning is equally applicable to the analysis of actual
import trends.
715 Ibid., para. 131.
716 We draw these data from the tables annexed to the Minutes of
Session No. 224 of the CDC, which concerns the extension of the measures'
duration. However, the Minutes of Session No. 193 contain an assessment of
increased imports on the basis of unidentified data for the period 1993-1997,
1998 and the first ten months of 1999, and Chile has stated that "much of the
information contained in the later of these two records (Record No. 224) is
updated data from the investigation concerning the measures initially
recommended" (Chile's response to question 50 of the Panel). Thus, Chile
implicitly acknowledges that the CDC had such data on actual import trends that
it should have examined and explained.
717 Ibid., para. 131.
718 We wish to emphasize that in making these observations it was
the CDC's responsibility to identify a discernable upward trend in imports at
the time it recommended that definitive safeguard measures be applied.
719 Article 2.1 of the Agreement does not detract from this
obligation on the investigative authorities by requiring that a safeguard
measure may only be applied if "a product is being imported into its territory
in such increased quantities, absolute or relative to domestic
production, [�]". Article 4.2(a) provides how the investigating
authorities must determine whether increased imports threaten to cause serious
injury, whereas Article 2.1 provides that the investigative authorities may
decide to apply a safeguard measure only when such a determination has
been arrived at.
720 Although to the Minutes of Session No. 224 tables regarding
sown surface and domestic output have been attached, the Minutes of Session No.
193 - in which adoption of the definitive measure is recommended by the CDC - do
not contain any analysis in relative terms. Argentina has argued that this
increase in imports of wheat during 1999 was due to extreme drought in Chile,
severely affecting domestic output that year. We note in this respect that table
13 annexed to the Minutes of Session No. 224 shows a drop of 28 per cent in
crop, 19.8 per cent in output of wheat, and 10.2 per cent in the sown surface
during 1999.
721 Chile's response to question 35 of the Panel.
722 Chile's rebuttal submission, para. 63.
723 The CDC states in the Minutes of Session No. 193 that "even
so, there has been an increase in imports".
724 Emphasis added.
725 Appellate Body report on US - Lamb, para. 103.
Emphasis added.
726 Appellate Body report on Argentina - Footwear (EC),
paras. 135-136. Emphasis added.
727 Chile's response to question 21(a) of the Panel. In addition,
Chile has informed the Panel that the injury data in the minutes of CDC session
No. 193 regarding production, employment and "marginalization" of producers
concern the agricultural production of rape-seed, and not "the oils industry"
(Chile's response to question 38 of the Panel). As indicated above, unless
rape-seeds are shown to be like or directly competitive with oils, rape-seed
growers should not be included in the domestic industry. Absent this
demonstration, injury data relating to rape-seed growers would be irrelevant.
728 Chile's response to question 21 of the Panel.
729 Chile's response to question 17(c) of the Panel.
730 [original footnote] We observe that the projections made must
relate to the overall state of the domestic industry, and not simply to certain
relevant factors.
731 Appellate Body report on US - Lamb, paras. 136-138.
732 We note that the CDC's threat of injury analysis is also
flawed since its report does not provide historical data on the "relevant
factors" (other than data on import growth), and thus it is impossible to assess
the significance of the projected drops against the background of the data for
the most recent past. This approach is inconsistent with Article 4.2(a), as
interpreted by the Appellate Body in its report on US - Lamb, para. 138.
733 Chile's response to question 7(b) of the Panel. Emphasis
added.
734 Minutes of CDC session No. 193.
735 Appellate Body report on Argentina - Footwear (EC),
para. 145.
736 See the Panel report on Canada - Countervailing Duties on
Grain Corn from the United States, BISD 39/411, at 433-435 (paras. 5.2.6 and
5.2.9-5.2.10).
737 Appellate Body report on US - Wheat Gluten, para. 69.
See also Appellate Body report on US - Lamb, paras. 167-168.
738 Annex ARG-39.
739 Oficina de Estudios y Politicas Agrarias, Ministerio de
Agricultura, Temporada Agricola, No. 13, primer semestre de 1999 (Exhibit
ARG-30). Although we do not know with certainty that this publication was in the
record of the investigation, Chile indicated to the Panel that it used the
publication "Temporada Agr�cola (semestral)" as a basis for its
investigation (Chile's reply to question 17(b) by te Panel).
740 (new footnote) We note, on the other hand, that table 13
annexed to the minutes of session No 224 shows a drop of 28% in crop, 19.8% in
output of wheat, and 10.2% in the sown surface during 1999.
741 Appellate Body report, Korea - Definitive Safeguard
Measure on Imports of Certain Dairy Products ("Korea - Dairy "),
WT/DS98/AB/R, adopted 12 January 2000, para. 96.
742 Chile's reply to Panel question 29.
743 Appellate Body report, United States - Definitive
Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from
Korea ("US - Line Pipe"), WT/DS202/AB/R, adopted 8 March 2002.
744 Ibid., para. 260.
745 Ibid., para. 261.
746 Ibid, para. 262.
747 See para. 7.179 above.
748 We recall in this respect that, according to the Appellate
Body, no formal requirement for an explanation in the decision of the
investigating authorities flows from the provision of Article 5.1 for a
safeguard measure other than a quantitative restriction which reduces the
quantity of imports below the average of imports in the last three
representative years. (See Appellate Body report, Korea - Dairy, paras.
98-99, and Appellate Body report, US - Line Pipe, paras. 230-235) Since
the safeguard measures at issue are not in the form of a quantitative
restriction reducing the quantity of imports below the average of imports in the
last three representative years, Chile was under no obligation pursuant to
Article 5.1 to give a justification for those measures at the time of the CDC's
decision.
749 We recall in this respect that, for each stage of the
investigation, the CDC receives a "technical report" from its Secretariat. Chile
has explained that this technical report is an internal working document which
is not binding vis-�-vis the decisions taken by the CDC. The technical
report is restricted and not part of the public record because it includes the
confidential information contributed by the interested parties. According to
Chile, in the case at issue, the technical report did not contain any
confidential information. See Chile's second submission, paras. 63-65.
750 Argentina second submission, para. 109.
751 We recall that Argentina had explicitly reiterated its
Article 3.1 claim with respect to those aspects of the CDC's report.
752 We note that the panel in Argentina - Footwear (EC),
in light of its findings of the inconsistency of the definitive safeguard
measure with Articles 2 and 4 SA, did not consider it necessary to make a
finding on a claim raised under Article 6 with respect to the provisional
safeguard measure (panel report, para. 8.292).
753 See our comments at paras. 7.112-7.113 and para. 7.124.