UNITED STATES – SAFEGUARD MEASURE ON IMPORTS OF
LARGE
RESIDENTIAL WASHERS
Report of
the Panel
TABLE OF CONTENTS
1 Introduction.. 9
1.1
Complaint by Korea. 9
1.2
Panel establishment and composition. 9
1.3
Panel proceedings. 9
1.3.1
General 9
2 Factual aspects. 10
2.1
The measure at issue. 10
3 Parties' requests for findings. 10
4 Arguments of the parties. 11
5 Arguments of the third parties. 11
6 Interim review.. 11
7 Findings. 12
7.1
General principles regarding standard of review, treaty interpretation, and
burden of
proof 12
7.1.1
Standard of review. 12
7.1.2
Treaty interpretation. 12
7.1.3
Burden of proof 12
7.2
"Unforeseen developments" and "the effect of obligations
incurred" under
the GATT 1994. 13
7.2.1
Demonstration of factual circumstances set out in Article XIX:1(a) of
the GATT 1994. 14
7.2.2
Unforeseen developments. 16
7.2.3
Effect of the obligations incurred under the GATT 1994. 17
7.2.4
Conclusion. 19
7.3
The USITC's definition of the domestic industry. 19
7.3.1
Inclusion of belt‑driven washers within the scope of the domestically produced
good. 21
7.3.2
Likeness of domestically produced parts and imported parts of LRWs. 23
7.3.3
Product line approach. 27
7.3.3.1
Whether the USITC applied the product line approach to define the
domestic industry. 28
7.3.3.2
Whether the USITC acted inconsistently with Article 4.1(c) in applying
the product line approach. 29
7.3.4
Conclusion. 29
7.4
The USITC's determination of increased imports. 30
7.4.1
The USITC's cumulation of LRW parts and LRWs in its increased imports
analysis. 31
7.4.2
The significance of the increase in imports relative to domestic consumption. 32
7.4.3
The USITC's explanation regarding its determination on increased imports. 33
7.4.4
Conclusion. 35
7.5
The USITC's serious injury determination. 36
7.5.1
Evaluation of all the injury factors set out in
Article 4.2(a) as part of
the serious injury finding. 37
7.5.2
The USITC's alleged failure to objectively examine profits and losses. 39
7.5.3
The USITC's alleged failure to objectively examine the share of domestic
market
taken by increased imports. 41
7.5.4
The effect of the USITC's domestic industry definition on its serious
injury findings. 42
7.5.5
The USITC's alleged failure to undertake an objective examination of the
significant
overall impairment of the domestic industry and its decision to base its
serious injury determination on declining profitability alone. 45
7.5.6
Conclusion. 45
7.6
The USITC's causation determination. 46
7.6.1
First stage of the USITC's causation determination. 47
7.6.1.1
The USITC's price effects analysis. 47
7.6.1.1.1
The USITC's findings regarding the costs incurred by the domestic industry. 49
7.6.1.1.2
The USITC's finding regarding the depressive and suppressive effects of
imports
on prices of domestically produced goods. 50
7.6.1.2
The USITC's analysis on coincidence in trends. 55
7.6.1.3
The USITC's analysis of non‑price related aspects of competition. 56
7.6.1.3.1
Differences in the product mix between imported and domestic LRWs. 56
7.6.1.3.2
Competition between imported and domestic parts. 56
7.6.1.4
Conclusion regarding the first stage of the USITC's causation
determination. 57
7.6.2
Second stage of the USITC's causation determination. 57
7.6.2.1
The USITC's rejection of the Korean respondents' joint‑pricing theory. 59
7.6.2.1.1 Whether the USITC found joint pricing
to be a factor causing injury to the
domestic industry. 59
7.6.2.1.2 Whether the USITC provided a
reasoned and adequate explanation that
joint pricing was not causing any injury to the domestic industry. 59
7.6.2.2
The USITC's rejection of the "deterioration of US brands"
theory. 62
7.6.2.2.1 Whether the USITC found deterioration
of US brands to be a factor causing injury
to the domestic industry. 62
7.6.2.2.2 Whether the USITC provided a
reasoned and adequate explanation that
deterioration of US brands was not a factor causing any injury to the
domestic industry. 62
7.6.2.3
Substantial cause test 65
7.6.2.4
Conclusion regarding the second stage of the USITC's causation
determination. 65
7.6.3
Consequential claims on causation. 66
7.7
Claims under Articles 5.1 and 7.1 of the Agreement on Safeguards. 66
7.7.1
Korea's claims regarding the United States' alleged failure to
limit the application of
the safeguard measure to the alleged serious injury caused by increased imports. 67
7.7.2
Korea's claims concerning the form and level of the safeguard measure. 67
7.7.2.1
Safeguard measure on LRW parts. 67
7.7.2.2
Level of the safeguard measure. 68
7.7.3
Korea's claim regarding the United States' alleged failure to
take into account existing import restrictions from anti‑dumping and
countervailing duty measures. 69
7.7.4
Korea's claim that the safeguard measure went beyond what was necessary to
facilitate adjustment of the domestic industry. 70
7.7.5
Conclusion. 71
7.8
Claims under Articles 12.1 and 12.2 of the Agreement on Safeguards. 71
7.8.1
Initiation notification. 72
7.8.2
Serious injury notification. 73
7.8.2.1
Providing all pertinent information. 74
7.8.2.2
Immediacy of notification. 75
7.8.3
Decision notification. 76
7.8.3.1
Providing all pertinent information. 76
7.8.3.2
Immediacy of notification. 77
7.8.4
Conclusion. 78
7.9
Claims under Articles 8.1 and 12.3 of the Agreement on Safeguards. 78
7.10
Claim under Article 11.1(a) of the Agreement on Safeguards. 81
7.11
Claim under Article II:1 of the GATT 1994. 81
8 Conclusions and Recommendation.. 82