USTR - USTR Says Retaliation against U.S. Safeguard Measure Would be Unprecedented
                 
The Office of the United States Trade Representative

USTR Says Retaliation against U.S. Safeguard Measure Would be Unprecedented
Contact: Ricardo Reyes (202) 395-3230 04/29/2002


WASHINGTON - The Office of the United States Trade Representative said today that any immediate unilateral retaliation against the United States for its recent temporary safeguard action on steel would be unprecedented in the history of World Trade Organization (WTO) dispute settlement procedures, and would strike at the heart of the multilateral trading system.

Both Japan and the European Union have threatened immediate retaliation against the United States for imposing temporary tariffs on imported steel under safeguard provisions of the WTO without waiting for a WTO ruling by an independent, neutral panel.

A review of 32 WTO safeguard cases over eight years shows only one example of a country unilaterally retaliating against a safeguard measure that a WTO member imposed prior to a WTO ruling. That retaliation, by Poland against Slovakia's safeguard on imported sugar, prompted such widespread criticism among WTO members that Poland quickly withdrew its retaliation.

Moreover, in none of these 32 cases did the country taking the safeguard action notify the WTO of any rebalancing - a step that the EU and Japan insist is required.

Two of the cases dealt with the question of whether there was an absolute increase in imports - an issue the EU has raised with the United States in the steel case. "Absolute" refers to the volume of goods imported, rather than the amount imported relative to domestic production.

In a 1998 case involving imported footwear from Argentina, the EU contested Argentina's claim that there was an absolute increase in imports, but recognized that the dispute settlement process was the appropriate venue for resolving the case. The question of whether there was an absolute increase in imports rose again last year when Korea was challenging the U.S. safeguard measure on line pipe. Korea did not seek unilateral retaliation, and the dispute panel eventually decided that the United States was correct.

"As the EU itself has said, no nation should take justice in its own hands without a prior review by an independent and neutral panel," said Josette Shiner, Associate U.S. Trade Representative for Policy and Communications. "To ignore this long string of precedent would undermine the integrity of the WTO rules and processes."

The EU made its statement in a 1999 case, United States - Import Measures on Certain Products from the European Communities, in which it criticized the United States for an effort "to be judge and jury . . . and take justice in its own hands without a prior review by an independent and neutral panel."

Taking unilateral action will encourage other WTO members to ignore the dispute settlement process, which both Europe and Japan have vigorously defended in dispute settlement cases before the WTO. The WTO's Dispute Settlement Understanding (DSU) does not contain any exceptions that would allow a member to deviate from normal dispute settlement procedures when resolving issues under Article 8.3 of the Safeguards Agreement.

Europe and Japan have gone on the record denouncing the use of unilateral trade action in dispute settlement procedures. Japan took the following position in a recent dispute settlement case before the WTO: "The renunciation of unilateral trade measures in the WTO Dispute Settlement is one of the most important rules of the WTO. WTO Members are prohibited from unilaterally suspending concessions or other obligations under the WTO Agreement."