second written submission by the european unionus – offset act (byrd amendment) appellate body...

In the World Trade Organization

Panel Proceedings

United States — Certain Measures on Steel and

Aluminium Products

(DS548)

Second Written Submission

by the European Union

Geneva, 17 April 2020

Ref. Ares(2020)2109164 - 17/04/2020

United States — Certain Measures on Steel and Aluminium Products European Union (DS548) Second Written Submission _________________________________________________________________________

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TABLE OF CONTENTS

1. INTRODUCTION ........................................................................................ 1

2. THE EVOLUTION OF THE MEASURES AT ISSUE ................................................... 4

3. ORDER OF ANALYSIS AND BURDEN OF PROOF ................................................... 6

4. THE MEASURES AT ISSUE ARE SUBJECT TO THE DISCIPLINES OF THE AGREEMENT ON

SAFEGUARDS ........................................................................................... 8

4.1. The US arguments on “invocation” are misguided ............................ 11

4.2. The Appellate Body’s objective definition of a safeguard measure is

carefully set, and is not overinclusive............................................. 15

4.3. Regardless of whether they are safeguards, the steel and aluminium

measures are subject to and inconsistent with Article 11.1(b) of the

Agreement on Safeguards ............................................................ 20

5. THE EU HAS MADE A PRIMA FACIE CASE THAT THE MEASURES AT ISSUE ARE

INCONSISTENT WITH THE AGREEMENT ON SAFEGUARDS, WHICH THE US HAS NOT

REBUTTED ............................................................................................. 20


INCONSISTENT WITH THE GATT 1994, WHICH THE US HAS NOT REBUTTED ......... 22

7. THE MEASURES AT ISSUE ARE NEITHER EXEMPT FROM SCRUTINY NOR JUSTIFIED BY

ARTICLE XXI OF THE GATT 1994 ............................................................. 23

7.1. Introduction ............................................................................... 23

7.2. The self-judging reading is incorrect .............................................. 25

7.3. None of the elements in Article 31 of the VCLT support the US reading

of Article XXI(b) .......................................................................... 30

7.3.1. Ordinary meaning ............................................................. 30

7.3.2. Context ............................................................................ 31

7.3.3. Object and purpose ........................................................... 32

7.3.4. Preparatory works and other materials linked to various treaty negotiations...................................................................... 32

7.3.5. The 1949 GATT Council decision .......................................... 36

7.4. The views expressed by GATT Contracting parties and WTO Members

do not support the US position ...................................................... 37

7.5. The US “self-judging” reading of Article XXI(b) is unparalleled in other

provisions of the covered agreements ............................................ 39


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8. THE US HAS FAILED TO REBUT ANY OF THE EU’S CLAIMS AGAINST SECTION 232 AS

INTERPRETED ......................................................................................... 41

9. THE PANEL SHOULD COOPERATE WITH THE ADDITIONAL DUTIES PANELS ............. 42

10. CONCLUSIONS ........................................................................................ 43


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TABLE OF CASES CITED

Short Title Full Case Title and Citation

Argentina – Footwear (EC)

Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, p. 515

Australia – Apples Panel Report, Australia – Measures Affecting the Importation of Apples from New Zealand, WT/DS367/R, adopted 17 December 2010, as modified by Appellate Body Report WT/DS367/AB/R, DSR 2010:VI, p. 2371

Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p. 3327

China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, adopted 29 August 2014, DSR 2014:III, p. 805

Dominican Republic – Safeguard Measures

Panel Report, Dominican Republic – Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric, WT/DS415/R, WT/DS416/R, WT/DS417/R, WT/DS418/R, and Add.1, adopted 22 February 2012, DSR 2012:XIII, p. 6775

EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591

EC – Hormones Appellate Body Report, European Communities – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135

EC and certain member States – Large Civil Aircraft (Article 22.6 – EU)

Decision by the Arbitrator, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft – Recourse to Article 22.6 of the DSU by the European Union, WT/DS316/ARB and Add.1, 2 October 2019

Indonesia – Iron or Steel Products

Appellate Body Report, Indonesia – Safeguard on Certain Iron or Steel Products, WT/DS490/AB/R, WT/DS496/AB/R, and Add.1, adopted 27 August 2018

Korea – Radionuclides Appellate Body Report, Korea – Import Bans, and Testing and Certification Requirements for Radionuclides, WT/DS495/AB/R and Add.1, adopted 26 April 2019

Peru – Agricultural Products

Appellate Body Report, Peru – Additional Duty on Imports of Certain Agricultural Products, WT/DS457/AB/R and Add.1, adopted 31 July 2015, DSR 2015:VI, p. 3403

Russia – Traffic in Transit Panel Report, Russia — Measures Concerning Traffic in Transit, WT/DS512/R, adopted 26 April 2019

Thailand – Cigarettes (Philippines) (Article 21.5 – Philippines)

Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines – Recourse to Article 21.5 of the DSU by the Philippines, WT/DS371/RW and Add.1, circulated to WTO Members 12 November 2018 [appealed by Thailand 9 January 2019 – the Division suspended its work on 10 December 2019]

US – Fur Felt Hats GATT Working Party Report

US – Offset Act (Byrd Amendment)

Appellate Body Report, United States – Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003, DSR 2003:I, p. 375

US – Washing Machines (Article 22.6 – US)

Decision by the Arbitrator, United States – Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea –

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https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?DataSource=Cat&query=@Symbol=WT/DS432/AB/R%20&Language=English&Context=ScriptedSearches&languageUIChanged=true





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https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?DataSource=Cat&query=@Symbol=WT/DS495/AB/R*&Language=English&Context=ScriptedSearches&languageUIChanged=true

https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?DataSource=Cat&query=@Symbol=WT/DS457/AB/R*&Language=English&Context=ScriptedSearches&languageUIChanged=true

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Recourse to Article 22.6 of the DSU by the United States, WT/DS464/ARB and Add.1, 8 February 2019

US – Upland Cotton (Article 22.6 – US I)

Decision by the Arbitrator, United States – Subsidies on Upland Cotton – Recourse to Arbitration by the United States under Article 22.6 of the DSU and Article 4.11 of the SCM Agreement, WT/DS267/ARB/1, 31 August 2009, DSR 2009:IX, p. 3871

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https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?DataSource=Cat&query=@Symbol=WT/DS267/ARB/1&Language=English&Context=ScriptedSearches&languageUIChanged=true


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TABLE OF ABBREVIATIONS

AB Appellate Body

ALOP Appropriate Level of Protection

CP Contracting Parties Decision

DOD Department of Defense

DS Dispute Settlement

DSB Dispute Settlement Body

DSR Dispute Settlement Report

DSU Dispute Settlement Understanding

EU European Union

GATT 1994 General Agreement on Tariffs and Trade 1994

GATT General Agreement on Tariffs and Trade

ICJ International Court of Justice

ITO International Trade Organization

OIG Office of Inspector General

para Praragraph

SPS Sanitary and Phytosanitary Measures

SWS Second Written Submission

US United States

USDOC United States Department of Commerce

VCLT Vienna Convention on the Law of Treaties

WT World Trade

WTO World Trade Organization


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1. INTRODUCTION

1. The EU is surprised to find itself at the stage of the second written submission

without having truly debated the detailed facts, evidence, and arguments it

has brought forward. Instead, we continue to be largely discussing an

untenable US position that was already roundly rejected by the Russia –

Traffic in Transit panel. The EU did expected the US to at least try to rebut the

details of the EU’s case. It is, nevertheless, a choice the US has made. It has

put all of its cards on a single argument, and if that argument fails, so must its

case.

2. That argument is essentially this: the US gets to tell the Panel what the

applicable WTO law is, and all that the Panel is permitted to do is to take note

of what it has been told.

3. This is, really, what the US is telling the Panel with respect to both of the key

issues in these proceedings: whether the US steel and aluminium measures

are safeguards, and whether they are justified by Article XXI of the GATT

1994.

4. On the first issue, the US thinks its measures are not safeguards because the

US does not “invoke” Article XIX and the Agreement on Safeguards. For the

purposes of this dispute, this would seem to mean that the measures are not

safeguards because the US chose not to notify them to the WTO as

safeguards.

5. There can be no doubt about the right response to this. Yes, the absence of a

WTO notification, as well as the use of certain domestic procedures, are facts

that the Panel is entitled to consider in its analysis. Yet, these facts cannot be

determinative, for the simple reason that they are under the sole control of

the US, which has a clear interest to avoid the finding that the measure is a

safeguard. That interest is not just to prevail in this dispute, and thus to be

able to impose blatantly protectionist duties and quotas on other Members

(although this would be bad enough). Worse, the interest is also to preclude

the EU and other Members from exercising their rebalancing rights under

Article XIX of the GATT 1994 and the Agreement on Safeguards. If the US

“invocation” theory is right, then any Member can unilaterally decide that its

safeguard measure is not a safeguard measure, and that, because of that

purely unilateral decision, other Members cannot rebalance.

6. In order to prevent that outcome, all that this Panel must do is to conduct an

objective assessment of all the facts, including especially the two defining


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constituent features of a safeguard measure, following the guidance of the

Appellate Body in Indonesia – Iron or Steel Products. In doing so, the Panel

should pay particularly close attention to the fact that the US chose not to

rebut any of the facts and evidence the EU has placed before the Panel.

7. Regarding the second key issue in this dispute, the US similarly asserts that its

measures are justified by Article XXI simply because it says so, or in its words,

because it "invokes" Article XXI. That argument must fail for the same reasons

as the previous one: it is self-serving, divorced from the facts, and divorced

from the text, context, object and purpose of Article XXI. As we will explain in

further detail below, every single element of the US’ interpretation is either

unconvincing, contradictory, or works in favour of the contrary argument.

8. Thus, for example, the negotiating history raised by the US overwhelmingly

disproves the view that Article XXI is “self-judging”. The same is true of the

1949 GATT Council decision, even if it was a subsequent agreement within the

meaning of the VCLT (which it is not). Various statements by GATT contracting

parties made over the years are not relevant interpretative elements under

the VCLT, and in any event do not show a coherent or even a majority view.

9. The US also adopts contradictory and incoherent positions. For example, it is

simply contradictory to describe Article XXI as an affirmative defence while

arguing that the party raising it is not required to provide a shred of

explanation or evidence.

10. Similarly, it is incoherent to state that the “circumstances” listed in the three

subparagraphs are exhaustive1, and that an invocation of Article XXI(b) must

involve an invocation of at least one of the three subparagraphs, but to argue

at the same time that an “invocation” of Article XXI(b) is entirely self-judging,

such that the question of where and how the measure fits in the

subparagraphs cannot even be opened. There is no sense in which the

subparagraphs could be "exhaustive" if Article XXI(b) was self-judging in the

way the US argues.

11. Under the US logic, a measure would be protected by Article XXI(b) even if it

did not fall within the scope of Article XXI(b) at all. A Member could, for

example, assert that its measure is not covered by any of the subparagraphs,

but that it nevertheless invokes Article XXI(b). For the US, that would be

1 US’ opening statement at the first substantive meeting, paras. 20-21.


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sufficient. But of course, if that were true, the three subparagraphs would no

longer be exhaustive.

12. Given the nature of the US position, this case can be decided purely on the

basis of these two legal issues. On the first issue, the EU has clearly shown

that the measures are safeguards. The fact that they are not genuine national

security measures contributes to that conclusion. In any event, the US has not

even tried to rebut the EU’s arguments, other than by saying that the

measures are not safeguards because the US did not “invoke” the safeguard

provisions. To reject this simple argument means that the US’ case must fail,

and that the EU’s case stands unrebutted.

13. On the second issue, the US has not even raised an actual Article XXI defence,

beyond stating that it “invokes” Article XXI(b). If the correct legal position is,

as the EU believes it must be, that “invocation” does not suffice, then there is

nothing left to discuss. The US has not even tried to show that its measures

are actually justified by Article XXI. Nor could it, because those measures are

plainly not genuine national security measures.

14. The reading of the covered agreements put forward by the US in this case and

in the accompanying Additional Duties disputes is extreme and utterly

incompatible with a rules-based trading system. On the safeguards issue, the

US claims that the only “objective” assessment that the Panel may undertake

is whether the US itself “invokes” Article XIX and the Agreement on

Safeguards. Similarly, with respect to Article XXI, the US argues that the Panel

may only make an “objective assessment” of whether or not the US has

“invoked” that provision. Taken as a whole, these arguments form a perfect

circle of impunity for the US. Their measures are not safeguard measures, and

thus not subject to the disciplines of Article XIX and the Agreement on

Safeguards, because the US says so. They cannot be rebalanced under Article

XIX:3(a) and Article 8.2 of the Agreement on Safeguards, because the US

says so. They cannot be challenged under the GATT because they are national

security measures, for the mere reason that the US says so. We ask the Panel

not to condone this type of reasoning, for all the reasons we have already

given and those we will give in this submission.

15. One can debate the amount of “discretion” accorded by Article XXI. This is, of

course, a matter of great sensitivity, and the Panel would be right to be

cautious. But the parties are not exploring the fine points of Article XXI in

these proceedings. Instead, what the US puts forward is an extreme reading of

that provision. As soon as the Panel concludes that there are any objective


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elements in Article XXI at all, the US case collapses. Under any reading, for

instance, cows cannot be fissionable materials just because one Member

considers them so. In other words, to resolve this dispute, the Panel does not

need to go further than to reject the extreme “self-judging” reading.

16. This would not mean that the Panel is imposing its judgment on national

security matters on the US. Just like all other exceptions in the WTO

agreements, Article XXI provides for Members to set their own policy

objectives, and their own levels of protecting those objectives. What the WTO

adjudicator decides is much more limited: whether the measure meets the

objective standards set out in Article XXI, or whether the Member is rather

engaging in unjustified discrimination or protectionism under the guise of an

exception. This is obviously what took place in this case. Be that as it may, it

is perfectly sufficient for the Panel to reject the extreme US position as a

matter of legal interpretation.

17. Such a finding will send the message that a provision as critically important as

Article XXI cannot be abused. The US’ abusive reliance on Article XXI must be

rejected not in spite of, but because of the central importance of Article XXI in

the package of rights and obligations agreed by the Membership.

2. THE EVOLUTION OF THE MEASURES AT ISSUE

18. In response to Panel Question 1, the EU has summarised again which

measures it is challenging, and which legal instruments it has referred to in

connection to these two measures (corresponding to them, evidencing them,

or otherwise related to them). To recall, at issue are three measures: the steel

measure (the steel import adjustments), the aluminium measure (the

aluminium import adjustments), and Section 232 as interpreted.

19. The EU also recalls, as explained in the response to Question 1, certain factual

and legal developments of the measures at issue that occurred after the EU’s

first written submission. These can be described either as further evidence of

those measures, and/or “amendments, supplements, replacements,

extensions, implementing measures or other related measures” within the

meaning of the seventh paragraph of the EU’s Panel Request. Either way, the

Panel is required to consider those developments as part of its assessment.

20. Specifically, the following developments are further evidence of the existence

and content of all three measures at issue:


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• Proclamation 9980 of January 24, 2020, Adjusting Imports of

Derivative Aluminum Articles and Derivative Steel Articles Into the

United States, Federal Register vol. 85, no. 19, January 29, 2020

(“Proclamation 9980”) (Exhibit EU-70). This Proclamation introduces

further additional duties of 10 percent on certain derivative aluminium

products, and 25 percent on certain derivative steel products.

• A new official statement by President Trump, 2 December 2019: “Brazil

and Argentina have been presiding over a massive devaluation of their

currencies, which is not good for our farmers. Therefore, effective

immediately, I will restore the Tariffs on all Steel & Aluminum that is

shipped into the U.S. from those countries.” (Exhibit EU-71)

• United States Department of Commerce, Office of Inspector General,

Information Memorandum for Secretary Ross: “Management Alert:

Certain Communications by Department Officials Suggest Improper

Influence in the Section 232 Exclusion Request Review Process”, Final

Memorandum No. OIG-20-003-M, 28 October 2019 (Exhibit EU-72).

This document further shows that the product exclusion process is not

uniform, impartial and reasonable, in support of the EU’s claims under

Article X of the GATT 1994.

• The "agreements, arrangements and understandings" reached by the

United States with Canada and Mexico.2

21. The following development is further evidence of the existence and content of

the steel measure:

• Proclamation 9772 of August 10, 2018, Adjusting Imports of Steel Into

the United States, Federal Register vol. 158, no. 83, August 15, 2018

(“Proclamation 9772”) (Exhibit EU-73). This Proclamation increased the

rate of duty for steel imports from Turkey.

22. Finally, the EU refers to the following development as an amendment,

supplement, replacement, extension, implementing measure or other relate

measures, with respect to the steel and aluminium measures respectively,

with the consequence that Panel findings of WTO-inconsistency should

explicitly extend to it as well:

2 Joint Statement by the United States and Canada on Section 232 Duties on Steel and Aluminum

(Exhibit EU-75); Joint Statement by the United States and Mexico on Section 232 Duties on Steel and Aluminum (Exhibit EU-76); Proclamation on Adjusting Imports of Steel into the United States, 19 May 2019 (Exhibit EU-77); Proclamation on Adjusting Imports of Aluminum into the United States, 19 May 2019 (Exhibit EU-78). See also EU’s opening statement at the first substantive meeting, para. 63, as well as the EU’s responses to Panel Questions 2(g) and 17.


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• Proclamation 9980 of January 24, 2020, Adjusting Imports of

Derivative Aluminum Articles and Derivative Steel Articles Into the

United States, Federal Register vol. 85, no. 19, January 29, 2020

(“Proclamation 9980”) (Exhibit EU-70). This Proclamation introduces

further additional duties of 10 percent on certain derivative aluminium

products, and 25 percent on certain derivative steel products.

3. ORDER OF ANALYSIS AND BURDEN OF PROOF

23. With respect to the order of analysis, the US maintains that the Panel should

begin by addressing the US’ “invocation” of Article XXI(b) of the GATT 1994.3

However, at the same time the US agrees that in the context of dispute

settlement, Article XXI is an affirmative defence because it is “a provision that

a Member invokes in response to a claimed breach of its obligations under a

covered agreement—such as imposing duties above its bound rates”.4

24. However, this acknowledgment does not prevent the US to put the cart before

the horse and ask that an affirmative defence is dealt with before any

substantive analysis of possible violations.

25. There are many contradictions in the US position, and the only way to sensibly

deal with them is to apply the very legal texts at issue. It is not at all clearhow

the US links the order of analysis, the standard of review, the nature of Article

XXI as an affirmative defence and the burden of proof.

26. The US does not miss any opportunity to reiterate its blank cheque theory,

according to which:

because the United States has invoked Article XXI(b) as to the measures challenged, the appropriate findings under the DSU would be to note in the Panel’s report a recognition that the United States has invoked its essential security interests. No additional findings concerning the claims raised by the complaining Member in its submissions would be consistent with the DSU, in light of Article XXI(b).5

3 US’ responses to the Panel questions, para. 80. 4 US’ responses to the Panel questions, para. 116. 5 US’ responses to the Panel questions, para. 86.


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27. This case is different from Russia - Traffic in Transit, where Russia seemed to

argue that the respective panel had no jurisdiction.6 In fact, the US agrees

that the Panel has jurisdiction in the present case, as just recalled by the

above quote. However, the US’ proposed “blank cheque” standard of review

must undoubtedly fail, because there is no such thing as a blank cheque in the

WTO legal architecture.

28. The US takes its theory so far that the language it uses becomes hyperbolic:

The text of Article XXI(b) does not include any language requiring the invoking Member to provide an explanation or produce evidence. The text does not indicate the Member must notify the circumstances underlying the invocation, explain the action, or provide advance notice – as exists in other parts of the WTO Agreement.7

29. The EU would like to recall that the Decision of 30 November 1982 provides in

its first paragraph that:

Subject to the exception in Article XXI:a, [Members] should be informed to the fullest extent possible of trade measures taken under Article XXI.

30. Indeed, Members taking measures which they think may fall under Article XXI

should notify them to the WTO. While such notifications do no need to provide

top-secret information, they should provide information of the kind that allows

an understanding of the measure at issue, and certainly information that is

already in the public domain.

31. While that is a requirement at the time the measures are taken, once the

Article XXI(b) exceptions are raised in dispute settlement proceedings, the

burden of proof rests on the party invoking an affirmative defence.

Significantly, the US agrees that Article XXI is in the nature of an affirmative

defence.

32. The EU has already explained in its previous submissions why Article XXI(a)

cannot shelter the US from meeting its burden of proof. As the US has not met

its burden of proof with regard to its “invocation” of Article XXI in the present

proceedings, the work of the Panel is significantly alleviated and the US

defence can be easily dismissed, not requiring any discussion on substance.

33. At the end of the day, maybe this is the strategic litigation choice that the US

has consciously made. Not meeting its burden of proof may be preferable to a

6 Panel Report, Russia - Traffic in Transit, paras. 7.22 – 7.24. In addition, that was the first case

when the security exceptions were invoked and a panel report was issued. 7 US’ responses to the Panel questions, para. 86.


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finding that its invocation of the security exceptions is manifestly

inappropriate, and done for purely economic reasons.

34. The EU reiterates its position on the appropriate order of analysis to be

followed in this case. While panels enjoy a certain margin with regard to the

order of analysis, that should not lead to unreasonable results.

35. To recall, with respect to the import tariffs and import quotas imposed by the

steel and aluminium measures the EU brings claims both under the Agreement

on Safeguards and under the GATT, while with respect to country-wide tariff

exemptions and product exclusions the EU puts forward only GATT claims.

36. The EU considers that for the import tariffs and import quotas the Panel should

begin its analysis under the Agreement on Safeguards. This is the only path

that offers the prospect of judicial economy. On the one hand, if the measures

at issue are safeguard measures and comply with the relevant provisions of

the Agreement on Safeguards, then they cannot be inconsistent with Articles

II and XI of the GATT 1994. On the other hand, if the measures do not comply

with the relevant provisions of the Agreement on Safeguards (which is the

case), then the Panel does not need to go any further, as Article XXI is not

available to violations of the Agreement on Safeguards.

37. To the contrary, if the Panel starts its assessment with the GATT claims, even

were the Panel to find that the measures at issue are justified under Article

XXI (which is not the case), it will still need to make an assessment under the

Agreement on Safeguards (for the obligations for which Article XXI is not

available).

4. THE MEASURES AT ISSUE ARE SUBJECT TO THE DISCIPLINES OF THE AGREEMENT ON

SAFEGUARDS

38. The measures at issue are subject to the disciplines of the Agreement on

Safeguards. The EU has already explained that the appropriate legal standard

is the one set by the Appellate Body in Indonesia — Iron or Steel Products.8

39. In that case, the Appellate Body has correctly found that, in the context of

Article 1 of the Agreement on Safeguards, in order to be a safeguard measure,

a measure must have two constituent features. First, it must suspend, in

8 EU’s first written submission, Section 3.


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whole or in part, a GATT obligation or withdraw or modify a GATT concession.

Second, the suspension, withdrawal, or modification in question must be

designed to prevent or remedy serious injury to the Member's domestic

industry caused or threatened by increased imports of the relevant products.9

40. The test to be performed when deciding whether the Agreement on

Safeguards applies to a measure is not a “centre of gravity” test. According to

the Appellate Body’s findings in Indonesia – Iron or Steel Products,10 what

matters for the measure’s characterisation as a safeguard is whether it has “a

specific objective” of preventing or remedying serious injury to the

Member’s domestic industry (this can be referred to as a “safeguard

objective”). If so, even if the measure had some other “aspects” that suggest

that it also has another objective, this would not detract from the conclusion

that the measure is a safeguard. In such circumstances, whatever other

provisions of another agreement that might be applicable, this would not

exempt the measure from complying fully with the conditions set out in the

Agreement on Safeguards.11

41. In deciding whether “a specific objective” of the measure is a safeguard

objective, the measure must be examined as a whole. In particular, the Panel

must assess its “design, structure and expected operation”.12 That assessment

may, of course, reveal a number of different “aspects” or characteristics of the

measure. When addressing the question of whether “a specific objective” of

the measure is a safeguard objective, not all of those characteristics will

necessarily point in the same direction. It may therefore be relevant that

certain characteristics are more “central” than others, i.e. that they feature

more prominently in the measure or are more important to the measure.

While no facts are a priori excluded from such an analysis, what matters most

is the content of the measures themselves, i.e. their design, structure and

expected operation.

42. In this instance, as the EU has explained, such an analysis of the US’

measures shows that, regardless of the US’ own legal characterisation of its

safeguard measures, and regardless of whether or not those measures have

another objective apart from the safeguard objective, it is “a specific

9 Appellate Body Report, Indonesia – Iron or Steel Products, para. 5.60. 10 Appellate Body Report, Indonesia – Iron or Steel Products, para. 5.56. 11 EU’s first written submission, para. 148. 12 Appellate Body Report, Indonesia – Iron or Steel Products, para. 5.60.


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objective”, as well as one of the “most central aspects” of the US measures,

that they explicitly seek to prevent or remedy serious injury to the US

domestic steel and aluminium industries caused or threatened by increased

imports.13 This conclusion is supported by an analysis of the measures’ design,

structure and expected operation, as explained in the EU’s first written

submission.14 For example, while the steel and aluminium reports pay lip

service to defence-related production and so-called “critical infrastructure”,

they are overwhelmingly devoted to the question of “whether imports have

harmed or threaten to harm US producers writ large”, i.e. to a safeguard

objective.15 In the EU’s view, it is clear from any straightforward and objective

reading that this is “the most central aspect”, or in any event at least “a

specific objective” of the US measures.

43. Indeed, not just “a specific objective”, but the most central objective of the

measures is to protect the domestic steel and aluminium industry writ large,

as an end in itself. In addition, other objectives seem to be to collect

government revenue, to achieve leverage against its international partners in

various negotiations, and to reduce the US trade deficit. The US Department of

Defense has itself stated, in effect, that the measures are not national security

measures, when it explained that it “does not believe that the findings in the

reports impact the ability of DoD programs to acquire the steel or aluminium

necessary to meet national defence requirements.”

44. This is clear from the measures themselves. Their analysis of “national

defence” and “critical infrastructure” needs boils down to a consideration of

“domestic production and the economic welfare of the United States.”16

Moreover, they go beyond even these extremely broad interpretations of

“national defence” and “critical infrastructure”: their primary “focus” is the

“larger enquiry” of “whether imports have harmed or threaten to harm U.S.

producers writ large.”17 Their ultimate purpose is simply to improve the

13 EU’s first written submission, paras. 161 - 163. 14 EU’s first written submission, paras. 164-166. 15 EU’s first written submission, para. 166., referring to Steel Report (Exhibit EU-15), fn 22. 16 Steel Report (Exhibit EU-15), p. 24. 17 Steel Report (Exhibit EU-15), fn 22.


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domestic industry’s “commercial and industrial customer sales,”18

“manufacturing capability and commercial product portfolio.19

45. Thus, it is not necessary to find that the steel and aluminium measures have

no link whatsoever to security needs in order to characterise them as

safeguards. It suffices that the safeguard objective is “a specific objective” of

those measures. In this case, that requirement is more than fulfilled, since the

safeguard objective is, in fact, the most central objective of the US measures.

46. The US does not attempt to disprove these arguments on substance. For the

US, there can be no discussion of what the actual objectives of the measures

are, because the only live issue is what the US “considers” to be the case, and

even on that point, the Panel can do no more than take the US’ word for it.

The US considers that it is not required to “furnish reasons for or explanations

of an action for which Article XXI is invoked”.20 This means that the US has not

rebutted the EU’s showing concerning the objectives of the measures.

4.1. THE US ARGUMENTS ON “INVOCATION” ARE MISGUIDED

47. Curiously, the US seems to agree with each of the two constituent features of

a safeguard measure as set out by the Appellate Body in Indonesia – Iron or

Steel Products. It merely adds a third one: invocation, which is supposedly

done by providing notice in writing and affording affected Members an

opportunity to consult.21 The US acknowledges that the Appellate Body did not

refer to this as a constituent feature, but believes that it flows from the text of

Article XIX, even though there is no reference in the text to “invocation”.22 The

US also seems to consider that there are no other constituent features, other

than the three it proposes.

48. It must follow, logically, if the US is wrong about “invocation” (through

notification) being a constituent feature of a safeguard, that the correct test to

apply is the one set out by the Appellate Body, referring to the two constituent

features of a safeguard measure, as has been the EU’s position from the

outset.

18 Steel Report (Exhibit EU-15), p. 25. 19 Aluminium Report (Exhibit EU-31), p. 40. 20 US’ responses to Panel Questions, paras. 321-322. 21 US’ responses to Panel Questions, para. 13. 22 US’ responses to Panel Questions, para. 13.


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49. In this section, the EU recalls again why the US “invocation” argument is

wrong.

50. For the purposes of this dispute, it seems that “invocation” means “providing

notice in writing and affording affected Members an opportunity to consult”.23

This is, first, at odds with some of the positions the US has taken in the

accompanying Additional Duties disputes (although, even in the context of that

dispute, it is not entirely clear what the US position on “invocation” is).

Second, and more importantly, that view is untenable.

51. First, the US position is internally contradictory. In the Additional Duties

disputes, the US initially seemed to argue that, for the safeguard provisions to

apply, “a Member must invoke the protections of Article XIX” “with the

required notice”.24 Later on, however, the US seemed to backtrack. It stated

that “once the importing Member invokes Article XIX as the basis for a

proposed measure, the WTO’s safeguards disciplines for notifications attach to

that proposed action.”25 It also claimed that it did not notify its steel and

aluminium measures “because [it] did not invoke Article XIX”.26 These

statements suggest that “invocation” is something that occurs separately

from, and prior to the notification of a safeguard. The US also stated that, in

its view, invocation and notification are not synonymous; rather, “a Member

informs others of its decision to invoke… with the notification”, such that the

notification is “a procedural mechanism to inform other WTO Members” of that

“invocation”.27 In this version of the argument, “invocation” appears to be an

event independent from notification. Indeed, even in this dispute, the US

occasionally argues along these lines, stating for example that “a safeguard

measure is one taken by a Member exercising a right pursuant to Article

XIX”.28

23 US’ responses to Panel Questions, e.g. paras. 6 and 13. 24 US’ first written submission in DS559, available at

https://ustr.gov/sites/default/files/enforcement/DS/US.Sub1.(DS559).(public).pdf, paras. 60 and 63.

25 US responses to Panel Questions, available at https://ustr.gov/sites/default/files/enforcement/DS/US.As.Pnl.Qs1.(DS559).fin.pdf, at Question 20, para. 49.



28 US’ responses to Panel Questions, para. 5.


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52. The lack of coherence in the two positions speaks volumes. In any event, both

versions of the US argument are wrong.

53. The version of the US position in which “invocation” occurs through notification

is simply impossible to reconcile with the fact that Article XIX of the GATT

1994 and the Agreement on Safeguards impose an obligation to notify, as

confirmed in the jurisprudence. Notification is a prerequisite of consistency

with the Agreement on Safeguards, and not a prerequisite for its applicability.

If WTO-consistent notification is what made a measure into a safeguard, it

would be logically impossible for a safeguard to be inconsistent with the

notification obligations. In other words, the obligation to notify would be

redundant. In addition, the notification provisions themselves show that a

measure can be a safeguard measure even before it is notified. Another

reason why the US “invocation” argument is clearly wrong is that it would

mean that rebalancing under Article XIX:3(a) of the GATT 1994 and Article 8.2

of the Agreement on Safeguards would be impossible or WTO-inconsistent for

the mere reason that the safeguard-imposing Member chose not to label the

measure as a safeguard. The EU refers to its response to Panel Question 9 for

a more detailed explanation in this respect.

54. Furthermore, the version of the US argument in which “invocation” is distinct

from notification is also untenable, because it makes the notion of “invocation”

utterly empty. We no longer know when, how, and in what form this allegedly

crucial step of “invocation” is supposed to take place. Instead, this version of

“invocation” would appear to be little more than ex post rationalisation for

litigation purposes. It would seem to mean the qualification of a measure as a

safeguard by the adopting Member at the moment of its choosing, possibly

even in the context of WTO litigation. The US is not saying that any particular

past event connected to the US steel and aluminium measure could have

constituted or demonstrated that “invocation” took place. Rather, the US is

saying that, because it has so far not itself “invoked” Article XIX and the

Agreement on Safeguards, those measures are not safeguards.

55. There is no authority whatsoever for the US “invocation” argument, in either of

the two versions. Thus, for example, in Indonesia - Iron or Steel Products, the

Appellate Body explained that a Member is free to exercise its right to impose

a safeguard measure (which means it may, but need not do so) “if the

conditions set out in the first part of Article XIX:1(a) are met”.29 This is,

29 Appellate Body Report, Indonesia - Iron or Steel Products, para. 5.55.


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however, not a reference to “invocation” as a constituent feature of a

safeguard. Rather, it is simply a reference to the requirements for the WTO-

consistent imposition of a safeguard listed in Article XIX:1(a), i.e. to the WTO

obligations listed in that provision, such as those on unforeseen developments,

increased quantities, injury or threat of injury, etc.

56. It does not follow from the position that Article XIX can be said to create

“rights” that Members can avail themselves of,30 that it is up to the safeguard-

imposing Member to decide whether Article XIX and the Agreement on

Safeguards apply. Notification is a “prerequisite” or “precondition” for taking a

safeguard because it is a legal obligation that must be complied with before a

safeguard measure may be applied in conformity with the Agreement on

Safeguards. As the GATT Working Party Report in US - Fur Felt Hats cited by

the United States confirms explicitly, “the contracting party taking action

under Article XIX must give notice in writing to the Contracting Parties before

taking action.”31 Thus, the meaning of notification being a “condition that

qualifies the exercise of the right”32 is simply that it is an obligation that must

be complied with.

57. The US is not just misreading the jurisprudence, but also attempting to

confuse the obligations applicable to safeguard measures and the constituent

features of safeguard measures, something that the Appellate Body expressly

warned against in Indonesia-Iron or Steel Products.

58. To put it simply, the jurisprudence clearly shows that there is no “right” to

take a safeguard measure independently from the legal requirements that

apply to safeguard measures.

59. Thus, it is correct that notification is a “precondition”, not for the existence of

a safeguard, but for the WTO-consistency of a safeguard. Nothing in the text

of Article XIX suggests anything different. Nor is there any context in other

provisions of the GATT 1994 that would suggest otherwise. Neither Article XIX,

nor any other provision of the GATT 1994, speak of “invocation”.

60. For example, the various requirements listed in Articles XVIII,33 XXVIII and

XIX:3(a) of the GATT 1994 are obligations on the Member imposing the

30 US’ responses to Panel Questions, para. 6. 31 GATT Working Party Report, US – Fur Felt Hats, GATT/CP/106, paras. 3-4. 32 GATT Working Party Report, US – Fur Felt Hats, GATT/CP/106, para. 3. 33 US’ responses to Panel Questions, paras. 35 – 38.


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measure. If those requirements or “conditions” are not met, the conclusion is

not that those provisions do not apply, but that the Member acted

inconsistently with them. With respect to Article XVIII in particular, at least

one key difference between Articles XIX and XVIII of the GATT 1994 disproves

the US’ position. While a WTO-consistent safeguard measure produces legal

effects in WTO law (notably because it modifies or withdraws a concession),

and while it must follow certain WTO procedures (such as notification), it is

nevertheless a domestic measure. A modification of schedules under Article

XVIII:7(a) is a WTO measure, the essence of which is that it modifies the

content of a Member’s Schedule of Concessions. In practice, the Member

modifying its schedule would typically increase a duty to a level reflecting that

modification, but this is not an indispensable element of action taken under

Article XVIII. Thus, an “Article XVIII measure” is taken at the level of the

WTO, and may only be taken at the level of the WTO, whereas an “Article XIX

measure” (a safeguard) is necessarily taken within a Member’s legal order.

61. Furthermore, even if it was necessary to resort to supplementary means of

interpretation or other materials (quod non), they would provide no support

for the “invocation” argument. For example, a 1987 Background Note by the

GATT Secretariat uses the term “invoke”, but not in the meaning suggested by

the US. It discusses a dataset of notified safeguard measures. Then it refers to

those notifications, interchangeably, as instances of Contracting Parties

invoking or notifying34 “Article XIX actions”. The difference between “invoking

Article XIX” and invoking or notifying “Article XIX actions” is significant. The

second term suggests that, first, there is an Article XIX action, which a

Member then notifies or invokes. This makes sense, because whether or not a

Member took an “Article XIX action” is an objective question, and not a

question that depends on “invocation”, whether in the form of notification or

otherwise.

4.2. THE APPELLATE BODY’S OBJECTIVE DEFINITION OF A SAFEGUARD MEASURE IS

CAREFULLY SET, AND IS NOT OVER-INCLUSIVE

62. Under the approach set out by the Appellate Body in Indonesia – Iron or Steel

Products, it would not follow that any raised duty is a safeguard. If this was

the test, it would have been a simple matter for the EU to explain that,

34 Drafting History of Article XIX and its Place in GATT: Background Note by the Secretariat,

MTN.CNG/NG9/W/7 (September 16, 1987), para 12.


- 16 -

because the US duties on steel and aluminium products are over the bound

rate, which by definition benefits domestic producers, the measure is a

safeguard.

63. Instead, the constituent features of a safeguard measure described in

Indonesia – Iron or Steel Products, which the US seems to consider irrelevant

in this dispute35, are a great deal more detailed. First, in order to be a

safeguard, it is not enough for a measure to constitute a tariff barrier – it must

suspend GATT obligations, or withdraw or modify GATT concessions. Second, it

is precisely that suspension, withdrawal or modification (and not some other

aspect of the measure) that must have a nexus with the safeguard objective.

Third, that suspension, withdrawal or modification must be designed to

achieve the safeguard objective. In other words, the “design, structure, and

expected operation” of that suspension, withdrawal or modification must be

tailored towards achieving a precise safeguard objective; it is not enough to

simply raise trade barriers. Fourth, the safeguard objective is much more

specific than simply “protecting” a domestic industry. The objective of the

measure must be to address an alleged serious injury to an existing domestic

industry by the alleged occurrence of increased imports which allegedly caused

or threatened to cause that serious injury.

64. Furthermore, the EU has pointed to a number of reasons why the US

measures are safeguards. Most importantly, they are safeguards because they

possess the two constituent features of a safeguard set out by the Appellate

Body in Indonesia – Iron or Steel Products. First, they suspend at least one

GATT obligation, in whole or in part, or withdraw or modify a GATT concession.

Second, they are demonstrably linked to the objective of preventing or

remedying injury to the US domestic industries.

65. Regarding the first constituent feature, it should be noted that, first, the duties

are not just raised but are set above bound rates. Second, the obligation not

to exceed the bound rates is only one obligation that the US measures have

suspended, withdrawn or modified; in its first written submission, the EU has

focused on it without prejudice to others, such as the obligations in Articles I

and XI of the GATT 1994.36 Third, while it is true that suspending an

obligation, withdrawing or modifying a concession is not necessarily the same

as exceeding a bound rate of duty, the Appellate Body has previously based its

35 US’ responses to Panel Questions, para. 21. 36 EU’s first written submission, para. 154.


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enquiry of whether a measure suspends obligations, or withdraws or modifies

concessions on whether or not bound rates have been exceeded.37 Fourth, the

steel and aluminium measures at issue use as a legal basis a US statute the

purpose of which is to impose import restrictions through duties.38 Fifth, the

measures explicitly state that their purpose is to reduce the level imports to a

certain level through the use of increased duties and quotas.39 Thus, with

respect to the constituent feature of “suspending at least one GATT obligation,

in whole or in part, or withdrawing or modifying a GATT concession”, the US

measures do everything that a safeguard measure does. The only difference

from a typical safeguard measure is that the adopting Member characterises it

as something other than a safeguard.

66. With respect to the objective of preventing or remedying injury, the EU has

provided a wealth of evidence showing that a benefit to domestic producers

does not simply follow from an increased duty.40 Instead, the US authorities

based the steel and aluminium measure on a detailed analysis of alleged

existing and threatened injury to a well-defined domestic industry allegedly

caused by increased imports. They also tailored the measures in order to

achieve a particular capacity utilisation of domestic producers, as well as other

specific protective effects. The measures are overwhelmingly and expressly

concerned with improving the “economic welfare” of the domestic steel and

aluminium industries, and take specific steps to advance that objective. They

also purport to assess a number of injury factors that are typically associated

with a serious injury finding under Article 4.2(a) of the Agreement on

Safeguards (the rate and amount of the increase in imports, the share of the

domestic market taken by increased imports (import penetration), changes in

37 Appellate Body Report, Indonesia - Iron or Steel Products, para. 5.56 (“However, the imposition of

the specific duty does not suspend any of Indonesia's GATT obligations, nor does it withdraw or modify any of Indonesia's GATT concessions. This is because, as the Panel rightly found and no participant has contested, Indonesia "has no binding tariff obligation with respect to galvalume in its WTO Schedule of Concessions" and is, therefore, "free to impose any amount of duty it deems appropriate" on that product.”) See also Panel Report, Dominican Republic – Safeguard Measures, paras. 7.75 (“The complainants affirm that the impugned measures also suspend the application of Article II:1(b), second sentence, of the GATT 1994 in that they impose a tariff surcharge other than ordinary customs duties that is not recorded in the Dominican Republic's schedule of concessions...”) and 7.88 (“since the impugned measures are not "ordinary customs duties" nor any of the measures provided for in Article II:2 of the GATT 1994, by definition they must be other "duties or charges … not recorded in the Dominican Republic's schedule of concessions Consequently, since they result in the levying of such duties or charges, the impugned measures have suspended the obligations of the Dominican Republic under Article II:1(b), second sentence, of the GATT 1994 with respect to the import duties imposed on the imported products concerned.”)

38 EU’s first written submission, para. 152. 39 EU’s first written submission, para. 155. 40 EU’s first written submission, sections 2.5.3, 2.6.3 and 3.1.3.


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the level of domestic sales, production and productivity, capacity utilization,

profits and losses, and employment). On this score, the US steel and

aluminium measures shout “safeguard” from every page.

67. And there is more. The EU has provided at least five additional reasons why

the US steel and aluminium measures are safeguards:

• they purport to be based on a consideration typical to a safeguard

measure: whether there are increased imports of the product at

issue;41

• they repeatedly discuss whether imports take place "in such quantities

and under such circumstances" as to cause or threaten serious injury

and impair national security, i.e. in language corresponding to the

references to imports in certain “quantities” and under certain

“conditions” in Article XIX.1(a) of the GATT 1994 and Article 2.1 of the

Agreement on Safeguards;42

• they refer to a number of precedents (earlier trade remedy measures

against steel or aluminium products), which include safeguard

measures;43

• they affirm that unforeseen developments (e.g. in the form of

“dramatic changes in the steel industry since 2001”) occurred;44 and

• the agreements with Canada and Mexico implicitly recognize that the

US measures are in the nature of safeguards, and that they can be

rebalanced by the affected exporting party.45 Those agreements are

closely linked to the underlying safeguard measures, because they

were negotiated precisely in order to exempt Canada and Mexico from

the additional duties while ensuring that the US steel and aluminium

industries will be similarly protected. Moreover, they make provision

for the same level of additional duties on the same products. They are

also closely comparable to the several country exemptions previously

negotiated by the United States,46 because they are designed to

41 EU’s first written submission, sections 2.5.4 and 2.6.4, paras. 169-170. 42 EU’s first written submission, sections 2.5.4 and 2.6.4, paras. 171-173. 43 EU’s first written submission, sections 2.5.5 and 2.6.5, para. 174. 44 EU’s first written submission, section 2.5.6, paras. 175-176. 45 EU’s first written submission, paras. 214-215. 46 See EU’s responses to Panel Questions 2(g) and 17.


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achieve the same underlying safeguard objective: protecting the US

steel and aluminium industry, writ large, from alleged injury caused or

threatened by alleged increased imports. The agreements with Canada

and Mexico illustrate that particularly well because they explicitly

mimic the rules applicable to safeguards, and in particular Article 8.1

of the Agreement on Safeguards. Thus, the agreements show that

there is a Member proposing to apply a safeguard in response to a

surge of imports; a suspension of concessions; an action to “address”

the surge of imports in order to remedy injury; an attempt to maintain

equivalence; an agreement to that effect; and the prospect of specific

rebalancing.

68. It should be pointed out that the EU’s approach is not novel. It merely follows

the approach of the Appellate Body in Indonesia – Iron or Steel Products. On

top of that, it provides a number of reasons, grounded in the facts and

evidence, confirming the conclusion that the measures are safeguards.

69. The approach used by the Appellate Body and by the EU is not open to

criticism because it would allegedly catch DSB-authorised countermeasures.47

First, while DSB-authorised countermeasures do suspend concessions, they

are the result of an explicit DSB-authorisation, unlike a safeguard measure

which is a domestic measure par excellence. Already for that reason, the two

types of measures can be distinguished. Moreover, while countermeasures

may in practice be used by the imposing Member to protect a domestic

industry, their objective is not to protect domestic industries, but to induce

compliance.48 A countermeasure would still be a countermeasure even if it is

completely divorced from the protection of a domestic industry. Moreover, as

the EU explained above, the concept of “protection” is much broader than the

second constituent feature of a safeguard measure. For example, one could

imagine a measure that is designed to “protect” even though there is no

allegation that the domestic industry suffered any injury or is under threat of

injury.

47 US’ response to Panel Question 5. 48 Decisions by the Arbitration Panels, EC and certain member States — Large Civil Aircraft (Article

22.6), para. 5.2; US – Washing Machines (Article 22.6 – US), para. 1.17; and US – Upland Cotton (Article 22.6 – US II), para. 4.58.


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4.3. REGARDLESS OF WHETHER THEY ARE SAFEGUARDS, THE STEEL AND ALUMINIUM

MEASURES ARE SUBJECT TO AND INCONSISTENT WITH ARTICLE 11.1(B) OF THE

AGREEMENT ON SAFEGUARDS

70. In its first written submission, the EU has provided another, independent

reason why the steel and aluminium measures are subject to the disciplines of

the Agreement on Safeguards, irrespective of whether they are also

safeguards. The EU argues that the steel and aluminium measures (defined as

the tariff and non-tariff treatment of the relevant steel and aluminium

products respectively, i.e. including quota treatment) are, and give effect to

voluntary export restraints and/or "measures" "which afford protection" similar

to the measures referred to in Article 11.1(b) and footnote 4 of the Agreement

on Safeguards.49

71. As complex measures with multiple aspects, the steel and aluminium

measures each exhibit the characteristics both of a safeguard and of an Article

11.1(b) measure. The EU notes, indeed, the US agreement that “[t]here could

be some overlap in the scope of measures covered by Article XIX of the GATT

1994, Article 11.1(b) of the Agreement on Safeguards, and other

provisions.”50

72. The sole response of the US to the EU’s claims under Article 11.1(b) is to

assert, once again, that its measures were taken “pursuant to” Article XXI of

the GATT 1994, and that therefore Article 11.1(c) takes them out of the scope

of application of the Agreement on Safeguards. Both points are incorrect, as

the EU explains elsewhere. Beyond that, the US has failed to even address the

merits of the EU’s claims under Article 11.1(b). Therefore, the EU’s prima facie

case remains unrebutted.


INCONSISTENT WITH THE AGREEMENT ON SAFEGUARDS, WHICH THE US HAS NOT

REBUTTED

73. The EU notes that the US has not attempted to rebut the EU’s prima facie case

that the steel and aluminium measures are inconsistent with the Agreement

49 EU’s first written submission, sections 3.1.5 and 3.2.9; EU’s responses to Panel Questions 2(g)

and 17-19. 50 US’ responses to Panel Questions, para. 62.


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on Safeguards. In that sense, the EU refers to section 3.2 of its first written

submission.

74. The US submits that the lack of any explicit reference to Article XXI of the

GATT 1994 in the Agreement on Safeguards is not determinative. It thinks

that the fact that references to the GATT 1994 are made 14 times in the

Agreement on Safeguards should legally suffice.51 Then, the US seems to

focus on Article 1 of the Agreement on Safeguards, which provides that the

Agreement “establishes rules for the application of safeguard measures” under

Article XIX of GATT 1994.52

75. What the US puts forward basically amounts to an application of the GATT

general and security exceptions to all Annex 1 A agreements covering trade in

goods. Indeed, all those agreements are elaborating upon certain GATT

provisions and all contain several references in their texts to the GATT 1994.

76. To give but one example, the Customs Valuation Agreement, actually called

Agreement on Implementation of Article VII of the General Agreement on

Tariffs and Trade 1994, refers in its preamble to:

Desiring to further the objectives of GATT 1994 and to secure additional benefits for the international trade of developing countries;

Recognizing the importance of the provisions of Article VII of GATT 1994 and desiring to elaborate rules for their application in order to provide greater uniformity and certainty in their implementation;

77. Yet, the Article 21.5 panel in Thailand — Cigarettes (Philippines) found that

the general exceptions in Article XX of GATT 1994 are not applicable to the

obligations in the Customs Valuation Agreement.53 The US explains nowhere

why and how the language in the Agreement on Safeguards is different from

the relevant language in the Customs Valuation Agreement, and in particular

what makes it more specific within the meaning of the existing case-law.

78. The EU disagrees with the US’ approach. It is supported neither by the text of

the respective agreements nor by any of the existing panel and Appellate Body

reports. What is required is not just a general textual link between two given

agreements, but specific language clearly showing that the exceptions apply

also to the other agreement. Thus, what the US was required was to show the

51 US’ responses to the Panel’s questions, para. 358. 52 US’ responses to the Panel’s questions, para. 359. 53 Panel Report, Thailand — Cigarettes (Philippines) (Article 21.5 – Philippines), para. 7.757.


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specific language that supports it proposition, as opposed to general language.

Perhaps, the US might also try to show that the “balance” under the

Agreement on Safeguards is differently struck than under the TBT Agreement

or the GATS, for instance.54 The US did not do that. The EU also refers to its

previous explanations in its first written submission.55

79. Finally, contrary to what the US asserts,56 the EU has explained that Article

11.1(c) does not make Article XXI applicable in the context of safeguards.

Article 11.1(c) of the Agreement on Safeguards is mirrored in the case law of

the Appellate Body concerning safeguard measures. While that case law

identifies the defining features of a safeguard measure,57 Article 11.1(c) tells

us which measures are not safeguard measures. They are two sides of the

same coin.

80. Indeed, the measures at issue are not measures sought, taken or maintained

by a Member pursuant to provisions of GATT 1994 other than Article XIX.

81. The words “pursuant to” in Article 11.1(c) mean that a measure is “within the

scope” of one of the relevant provisions, which is an objective question. The

characterization of the measures at issue under the US domestic legislation is

not dispositive of their legal characterization under WTO law. Otherwise, by

simply invoking a certain provision in the GATT 1994 (e.g. the security

exceptions) a Member may unilaterally take measures out of the scope of the

Agreement on Safeguards .

82. The EU recalls that it is clear from the terms “other than” that it would only

be measures that are exclusively taken on the basis of other provisions of the

GATT that would fall outside the scope of the Agreement on Safeguards.

Measures taken pursuant to both Article XIX and some other provision are

clearly caught, because they are not taken pursuant to provisions “other

than” Article XIX.58


INCONSISTENT WITH THE GATT 1994, WHICH THE US HAS NOT REBUTTED

54 Panel Report, Thailand — Cigarettes (Philippines) (Article 21.5 – Philippines), paras. 7.755-7.756. 55 EU’s first written submission, paras. 464 -472. 56 US’ responses to the Panel’s questions, paras. 68 and 360. 57 Appellate Body Report, Indonesia - Iron or Steel Products, para. 5.60. 58 See also the EU’s response to Panel question no. 20.


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83. The EU notes that the US has not attempted to rebut the EU’s prima facie case

that the steel and aluminium measures are inconsistent with several provisions

of the GATT 1994. In that sense, the EU refers to Section 4.1 of its first

written submission.

84. The EU would like to draw the Panel’s attention on the further developments

relevant to certain claims under the GATT 1994.

85. First, Proclamation 9980 introduces further additional duties of 10 percent on

certain derivative aluminium products, and 25 percent on certain derivative

steel products, contrary to Articles II:1(a) and (b) of the GATT 1994.59

86. Second, the USDOC’s Memorandum “Management Alert: Certain

Communications by Department Officials Suggest Improper Influence in the

Section 232 Exclusion Request Review Process” confirms that the product

exclusion process is not uniform, impartial and reasonable, giving rise to an

inconsistency with Article X of the GATT 1994.60

87. Third, the US has made “deals” ("agreements or arrangements” within the

meaning of the Agreement on Safeguards) with Canada and Mexico,

inconsistently with Article I:1, because the advantage that products from

those countries enjoy is not extended immediately and unconditionally to like

steel and aluminium products from all WTO Members, including to the EU, and

with Article XI:1 of the GATT 1994, because those measures are prohibitions

or restrictions on imports or exports which have limiting effects.61

7. THE MEASURES AT ISSUE ARE NEITHER EXEMPT FROM SCRUTINY NOR JUSTIFIED BY

ARTICLE XXI OF THE GATT 1994

7.1. INTRODUCTION

88. The US’ case continues to be, in essence, that Article XXI is entirely self-

judging. For the US, the subparagraphs of Article XXI(b) are supposedly

exhaustive, but that does not matter a great deal, because the adopting

Member is still free to deem anything under the Sun to constitute an “essential

59 See Exhibit EU-70. 60 United States Department of Commerce, Office of Inspector General, Information Memorandum

for Secretary Ross: “Management Alert: Certain Communications by Department Officials Suggest Improper Influence in the Section 232 Exclusion Request Review Process”, Final Memorandum No. OIG-20-003-M, 28 October 2019 (Exhibit EU-72).

61 See Exhibit EU-75, Exhibit EU-76, Exhibit EU-77 and Exhibit EU-78.


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security interest”, and to declare any measure it sees fit as necessary for the

protection of such an interest.

89. The EU will address several specific arguments made by the US in the

following sections. By way of introduction, however, the EU would invite the

Panel to imagine four different versions of a national security exception.

90. The first version is the current Article XXI(b) of the GATT 1994.

91. The US argues that, when it “invokes” that provision, the Panel cannot engage

in any further objective assessment. It cannot find any WTO-inconsistency.

Instead, it can only state that Article XXI(b) was invoked and that ends the

matter.

92. The US thinks it can achieve that outcome without even telling the Panel which

“action” supposedly falls within Article XXI(b), whether or why it “considers

that necessary”, what it is “for”, which “security interest” is at issue, whether

and why it is “essential”, and which of the three subparagraphs (if any) is at

issue or why.

93. The second version we invite you to imagine is the same as the current Article

XXI(b) of the GATT 1994, but with no subparagraphs. That provision would

read, simply: “Nothing in this Agreement shall be construed… to prevent any

contracting party from taking any action which it considers necessary for the

protection of its essential security interests.”

94. Under the US approach, this provision would be interpreted in exactly the

same way. If the US invokes it, it is an end of the matter: no further objective

assessment, and no finding of WTO-inconsistency is possible.

95. This means that, for the US, the three subparagraphs may as well not be there

at all. The US seems to see no contradiction between that and its claim that

the three subparagraphs are, in fact, the exhaustive circumstances in which

Article XXI(b) can be invoked. To the EU, it is clear that this view is self-

contradictory, and that it impermissibly reads the three subparagraphs out of

the Agreement.

96. A third version of a national security exception would be as follows: “If the

respondent states, during panel proceedings, that it invokes national security

with respect to a measure, the panel shall not examine the matter any further,

and shall make no findings or recommendations other than to state that

national security has been invoked.”


- 25 -

97. Again, under the US approach, this provision would be interpreted in exactly

the same way. If the US invokes it, it is an end of the matter: no further

objective assessment, and no finding of WTO-inconsistency is possible.

98. This means that, for the US, not just the three subparagraphs of Article

XXI(b), but also the terms “action”, “necessary”, “for the protection of”,

“essential”, and “security interests”, may as well not be there at all.

99. To the EU, it is again clear that this interpretation makes a large portion of

Article XXI(b) useless and ineffective, not to speak of the fact that it

contradicts several provisions of the DSU, such as Articles 3.2, 3.3, 7.1 and

11.

100. Finally, the fourth version of the national security exception is as follows:

“Invoke me to prevent adverse panel findings.” There is no content at all.

Nevertheless, under the US approach, this provision would be interpreted in

exactly the same way as the previous three.

7.2. THE SELF-JUDGING READING IS INCORRECT

101. The US starts from the wrong premise that panels have a “dual” function

which would support its theory on the difference between jurisdiction and

“justiciability”:

[…] the function of a panel is to make “an objective assessment of the matter before it” and “such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements.” Therefore, although the Panel has jurisdiction over this dispute – because the DSB has established the Panel to examine the matter set out in the panel request – the dispute presents an issue that is not justiciable, meaning that, beyond noting the U.S. invocation, the Panel cannot make findings of WTO-inconsistency that would assist the DSB in making a recommendation on the matter.62

102. The US reading is manifestly incorrect. The panel in Russia- Traffic in Transit

has already rightly rejected the “justiciability” argument, similarly presented

by the US as a third party in that case:63

The Panel's interpretation of Article XXI(b)(iii) also means that it rejects the United States' argument that Russia's

62 US’ responses to the Panel’s questions, para. 104. 63 Panel Report, Russia- Traffic in Transit, para. 7.52.


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invocation of Article XXI(b)(iii) is "nonjusticiable", to the extent that this argument also relies on the alleged totally "self-judging" nature of the provision.64

103. The EU notes again one important aspect: the US agrees that the Panel has

jurisdiction in the present proceedings. At the same time, what the US catches

under its “justiciability” theory is the standard of review, which, according to

the US, is “self-judging”.

104. Let us have a closer look at the US reasoning. The US argument boils down to

the text of Article XXI(b): “the self-judging nature of the provision is reflected

in the text of Article XXI(b) itself”.65 Thus, it suffices for the EU to show that

there are at least certain objective elements in Article XXI(b), not self-judging,

and the whole US “blank cheque” theory falls apart. Let us recall an example

which has become a classic in this line of cases: cows are not fissionable

materials within the meaning of Article XXI(b)(i), even if the invoking Member

“considers” that to be the case.

105. The EU refers to its previous detailed submissions on this point, as well as to

the relevant findings of the panel in Russia-Traffic in Transit. In light of these,

there can be only one conclusion: the text of Article XXI itself does not support

the self-judging theory.

106. Importantly, the US agrees that “the main text and subparagraphs of Article

XXI(b) establish three circumstances in which the Member may act”,66 which

are exhaustive,67 as opposed to an open-ended provision.

107. However, the EU disagrees that the phrase “any action which it considers

necessary for the protection of its essential security interests” is a single

integral clause.68 The EU has already explained that “it considers” qualifies

only the necessity test, and that “for” also refers to the nexus between the

measure at issue and the value protected (essential security interests).

Moreover, whether the interests at issue are of a security nature and whether

they are essential are also elements which are not qualified by “it considers”.69

64 Panel Report, Russia- Traffic in Transit, para. 7.103. 65 US’ responses to the Panel’s questions, para. 261. 66 US’ responses to the Panel’s questions, para. 119. 67 US’ responses to the Panel’s questions, para. 155. 68 US’ responses to the Panel’s questions, para. 126. 69 EU’s opening oral statement at the first substantive meeting, Section 6.6.1.


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108. Contrary to what the US seems to suggest, acknowledging that there are

objective elements in the chapeau of Article XXI(b) does not amount to

substituting a panel’s views for those of the Member invoking the security

exceptions. Instead, all that a panel can and should do is an objective

assessment of the matter before it. The very text of the chapeau of Article

XXI(b) is drafted in such a way that does not support the extreme US

interpretation.

109. Similarly, the text of Article XXI(b) does not support the US’ extension of “it

considers” even beyond the chapeau, to sub-paragraphs (ii) to (iii). Such an

interpretation leads to manifestly absurd results, such as assimilating cows to

fissionable materials. Equally, such an interpretation reduces to inutility sub-

paragraphs (ii) to (iii). Why refer to certain goods (fissionable materials, arms

and ammunitions) or circumstances (war or other emergency in international

relations) if, at the end of the day, the invoking Member is the only judge of

what words mean? A provision has to be interpreted in a way that gives

meaning to its different elements, and not one rendering words devoid of

content.

110. Thus, the US extreme interpretation leads to manifestly absurd results and

does not give meaning to treaty terms. It is contra legem. In contrast, the

interpretation advanced by the EU and by most of the third parties leads to

rational and reasonable results, acknowledging a wide margin of appreciation

for the invoking Member, and at the same time recognizing that such

discretion is not unfettered.

111. The EU also refers to its detailed analysis of the text of Article XXI(b), which

leads to only one possible conclusion, namely that the drafters did not intend

to make of this article a self-judging provision.70

112. The US provides an interpretation of the phrase “other emergency in

international relations” which encompasses commercial or trade relations.71 In

other words, for the US economic security seems to be part of national

security. The US attaches great weight to the absence of the word “similar”

from Article XXI(b)(iii), while other enumerations in other provisions of the

GATT 1994 and other covered agreements refer to “similar” items.

70 See also infra, Section 7.3.1. on the ordinary meaning. 71 US’ responses to the Panel’s questions, para. 235.


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113. The EU does not think that the absence of the word “similar” is of any

particular significance.

114.

115. The US’ approach is dangerous, as it seeks to open Article XXI to virtually

anything under the sun. It is precisely because treaty drafters wanted to keep

economic emergency situations and national security situations apart, that

there are two distinct sedes materiae, dealing with two separate matters:

Article XIX, for emergency actions on imports of particular products and Article

XXI(b)(iii), which deals with a different type of emergency (war or other

emergency in international relations).

116. Furthermore, the US’argument that the principle of good faith is not relevant

for the interpretation of Article XXI is manifestly unacceptable.72

117. Of course this principle is relevant, as every treaty provision should be

interpreted in good faith. A reading of Articles 3.2 and 11 of the DSU, and 31

of the VCLT strongly confirms this understanding. Panels may “determine, in

an appropriate case, whether a Member had acted in good faith”.73

118. The fact that the EU stops short of stating that the US acted in bad faith does

not show agreement that the US acted in good faith. The EU is not making

such a statement because, while it may very well do so, the Panel does not

need to find that the US acted in bad faith in order to dismiss its defence

under Article XXI. Instead, the Panel should simply take note that the US has

not met its burden of making a prima facie case. In fact, it seems that the US

has made the strategic choice not to even attempt to make a prima facie case.

However, should the Panel consider that the US has somehow met its burden

of proof, then the Panel may easily dismiss the US alleged justification on the

basis of an objective assessment of the matter.

119. The corollary of good faith is the abuse of rights. Tellingly, the US is not

capable to provide an adequate response to the Panel’s question on how to

address possible abuses. In particular, the US explains that:

other WTO Members can take reciprocal actions themselves under a similar understanding of their inherent right to take action they consider necessary for the protection of their essential security interests. Indeed, Members frequently respond in this way to the

72 US’ responses to the Panel’s question no 32. 73 Appellate Body Report, US – Offset Act, paras. 297-298.


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imposition of economic sanctions they perceive to be unwarranted.74

120. While this may be true in practice, a very foundation of the multilateral trading

system is the prohibition of self-help and the duty of an objective assessment

by panels. An escalation of self-help is not the rule of law anymore, but the

law of the jungle. And the EU and other complainants would like to keep the

WTO away from becoming such a jungle.

121. To give the final touches to its self-judging theory, the US wrongly asserts that:

Imposing a requirement for a Member invoking Article XXI(b) to explain its action it considers necessary for the protection of its essential security interests would be inconsistent with its right under Article XXI(a) […].75

Article XXI(a) anticipates that there may not be facts on the record before a panel to permit any review of a Member’s invocation of Article XXI.76

122. The EU has already explained that Article XXI(a) cannot be read as so far-

reaching as to absolve a Member invoking Article XXI(b) from meeting its

burden of proof.77 The absence of facts makes a panel’s objective assessment

even more important.

123. To recall, Article XXI(a) does not provide that information regarding essential

security measures or the Member’s security interests does not have to be

provided at all. The invocation of Article XXI(a) should be objectively reviewed

in a similar manner that Article XXI(b) can be reviewed.

124. In addition, the EU considers that a Member cannot invoke Article XXI(a) in

order to escape its burden of proof obligations. Like Article XXI(b), Article

XXI(a) is also a provision whose invocation can be reviewed by a panel. The

discretion accorded under this provision is not unlimited.

125. Certain information may of course be of a highly sensitive nature. However,

the respondent is expected at a minimum to explain in sufficient detail why

such information cannot be shared with the panel. There is nothing that would

prevent a panel, if necessary, from adopting appropriate procedures to deal

with certain sensitive information in cases involving the invocation of Article

XXI. In this dispute, the US did not request such procedures, and even

74 US’ responses to the Panel’s questions, para. 120. 75 US’ responses to the Panel’s questions, para. 147. 76 US’ responses to the Panel’s questions, para. 247. 77 EU’s response to Panel question no 53.


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requested public hearings. Thus, the US reference to Article XXI(a) is not just

wrong, but also wholly irrelevant to these proceedings.

126. At any rate, even if a Member is justified in not providing certain information

pursuant to Article XXI(a), that would not discharge it from its burden of proof

in relation to Article XXI(b).

127. Thus, the US should have explained the “action” that it considers necessary to

protect its essential security interests, the “essential security interests” that it

claims to be at issue, the nature of the alleged “emergency in international

relations”, as well as any plausible connection between the “action” and the

“essential security interests”. The US did none of this.

7.3. NONE OF THE ELEMENTS IN ARTICLE 31 OF THE VCLT SUPPORT THE US READING OF

ARTICLE XXI(B)

128. As the EU has explained in its previous submissions, the US interpretative

arguments about Article XXI(b) fall flat. Neither the ordinary meaning, nor the

context, object and purpose, nor any other elements listed in Article 31 of the

VCLT support the US view.

7.3.1. Ordinary meaning

129. The ordinary meaning of the treaty terms does not support the US’ self-

judging theory.

130. The US asserts that “the most natural reading” of Article XXI(b) is that

subparagraph endings (i) and (ii) modify the phrase “essential security

interests”.78 However, it seems to agree that for subparagraph (iii) it is

“actions”—not “interests” — that are “taken”.79 All this should provide support,

in the US’ view, to its overarching theory of “a single relative clause”.

131. The EU has already explained that each of the subparagraphs (i) to (iii) relates

only to the word “action” in the chapeau and that the different linguistic

versions support the EU’s argument. Indeed, this clearly follows from the use

78 US’ responses to the Panel’s questions, para. 152. 79 US’ responses to the Panel’s questions, para. 154.


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of the feminine plural. Thus, “relativas” and “appliquées” can refer only to

“medidas” and “mesures”.

132. The EU also recalls that the panel in Russia – Traffic in Transit explained that

the ordinary meaning of Article XXI(b) is that the adjectival clause “which it

considers” in the chapeau of Article XXI(b) does not qualify the determination

of the circumstances in the subparagraphs.80

133. For detailed explanations on the ordinary meaning, the EU refers to its

responses to Panel questions no. 40 to 43.

7.3.2. Context

134. The US refers to the the GATT Contracting Parties’ Decision Concerning Article

XXI of the General Agreement of 30 November 1982 (1982 Decision) as

relevant context.81

135. However, the 1982 Decision is not what the US would like it to be, as it is far

from supporting a self-judging interpretation of Article XXI.

136. Indeed, the central feature of the decision is a notification requirement. On top

of that, it also mentions that Members “should take into consideration the

interests of third parties which may be affected” and, crucially, that “when

action is taken under Article XXI, all [Members] affected by such action retain

their full rights under the General Agreement.”

137. The EU has explained that “full rights under the [GATT]” includes also the right

to challenge a measure on the basis of what is now Article XXIII:1(a) of the

GATT 1994, i.e. in a “violation” complaint. Thus, contrary to the arguments of

the US, the 1982 Decision confirms the EU’s view that Article XXI does not

provide for an exception to the rules on jurisdiction laid down in the DSU or to

the special rules on consultations and dispute settlement contained in Articles

XXII and XXIII of GATT 1994, and that unilateral invocations do not prevent

panels from objectively reviewing whether the conditions in Article XXI are

met.82

80 Panel Report, Russia – Traffic in Transit, para. 7.82. 81 US’ response to Panel question no. 25. 82 EU’s responses to Panel’s questions, para. 168.


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7.3.3. Object and purpose

138. The US proposes a self-serving, incorrect version of how the object and

purpose of the GATT 1994 may inform the interpretation of Article XXI:

The object and purpose of the GATT 1994 supports an interpretation of Article XXI(b) as self-judging. The object and purpose of the GATT 1994 is set out in the agreement’s Preamble. That Preamble provides, among other things, that the GATT 1994 set forth “reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade.” Particularly with these references to arrangements that are “mutually advantageous” and tariff reductions that are “substantial” (rather than complete), the contracting parties (now Members) acknowledged that the GATT contained both obligations and exceptions, including the essential security exceptions at Article XXI.83

139. As already explained, an object and purpose of the GATT 1994 is to promote

“the security and predictability of the reciprocal and mutually advantageous

arrangements”.84 Thus, the scope of review of Article XXI(b) should take that

into account. Article XXI is not self-judging, as there is no security and

predictability of a system where a Member may unilaterally determine whether

a provision applies and what its meaning is.

140. The EU further refers to its response to Panel question no. 45, where it has

explained that when a panel objectively assesses facts and evidence

suggesting different possible outcomes, the test is always one of “plausibility”

or “more likely than not”.

7.3.4. Preparatory works and other materials linked to various

treaty negotiations

141. The EU refers to Section 6.4 of its opening statement at the first substantive

meeting, as well as its responses to Panel Questions 56-63, demonstrating

that the US reading of the negotiating history is wrong.

142. In particular, as the EU has already explained in detail:

• what arises from the ordinary meaning, object and purpose of Article

XXI(b) (notably, that the provision is not “self-judging”) is neither

83 US’ responses to Panel’s questions, para. 255. 84 EU’s response to Panel question no. 55.


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ambiguous, obscure, absurd, or unreasonable; therefore, there is no need

to resort to supplementary means of interpretation;

• in any event, supplementary means of interpretation strongly support the

EU’s position; there is nothing in those materials supporting a “self-

judging” reading of Article XXI(b) or its predecessors, and much of that

supports the opposite view;

• even if the available materials related to the negotiation of the GATT 1947

and the Havana Charter supported the US interpretation (quod non), the

US would also need to persuade the Panel that the interpretation remains

valid after the Uruguay Round, despite the numerous ways in which it

conflicts with the DSU;

• the negotiating history does not exhaustively or conclusively deal with the

standard and scope of review to be applied to an invocation of Article XXI

in dispute settlement proceedings under the DSU, but to the extent it

does, it supports the EU’s arguments;85 moreover, there are elements of

the negotiating history of the Uruguay Round agreements that further

explain that Article XXI is justiciable, and that an objective assessment of

an Article XXI is no different to an objective assessment under any other

provision of the covered agreements;

• nothing in the negotiating history suggests that disputes subject to

security exceptions could only be subject to non-violation complaints;

instead, both “violation” and “non-violation” complaints were always

meant to be available;

• all issues arising out of the Havana Charter were intended to be subject to

the dispute settlement procedures provided therein, whether involving the

ITO itself (Articles 93-95 of the Havana Charter), or the ICJ (Article 96 of

the Havana Charter); the references to “justiciability” therefore do not

support but rather disprove the US view;86

• the materials cited by the US show, at best, that the Contracting Parties

considered that non-violation complaints would be available even in cases

where the measure at issue is objectively within the scope of the security

85 See the US response to Panel Question 62 and the EU’s response to the same question. 86 See the US response to Panel Question 61, and the EU’s counterarguments in response to the

same question.


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exception, i.e. justified under it (and not simply where that exception is

unilaterally "invoked");87

• there is no reason why the Russia – Traffic in Transit panel should not

have taken into account, or why this panel should not take into account

internal documents of the US delegation at the time of the negotiations,

whether as preparatory work or otherwise; those documents support what

is already clear from the ordinary meaning, object and purpose, and other

aspects of the negotiating history: Article XXI is not self-judging.

143. The following two points can be added to rebut the US replies to Panel

Questions.

144. First, the US does not explain why the conclusions it draws from the

negotiating history of the Havana Charter and the GATT 1947 should also be

valid for the WTO agreements, especially given the existence of the DSU. The

provisions of the DSU cited by the US are not helpful. For example, the fact

that, under Article 3.2, dispute settlement should serve to preserve the rights

and obligations of Members under the covered agreements, and to clarify the

existing provisions of those agreements in accordance with customary rules of

interpretation,88 does not at all explain the extent to which Havana Charter

negotiations are relevant to the standard of review under the DSU. It merely

means that dispute settlement should be based on the rights and obligations

as existing under the covered agreements, i.e. the Uruguay round WTO

agreements. The EU recalls that, under Article II:2 of the WTO Agreement, the

agreements and associated legal instruments included in Annexes 1, 2 and 3

(the "Multilateral Trade Agreements") are integral parts of the WTO

Agreement, binding on all Members. This applies, of course, also to the DSU

and the GATT 1994, which form part of a single, inseparable package of rights

and obligations.89 Thus, any interpretative effects of the addition of the DSU

into the legal framework of the WTO cannot simply be assumed away (even if

the legal position under the GATT 1947 was the one the US advocates, quod

non).

145. Second, the reference to the statements made by Argentina and Nicaragua in

1987 and 1988 do not support the US position. A straightforward reading of

87 See the US response to Panel Question 59, paras. 274 – 279, and the EU counterarguments in its

response to Panel Question 59(a). 88 US’ response to Panel Questions, para. 269. 89 Appellate Body Reports, Argentina – Footwear (EC), para. 81; China – Rare Earths, para. 5.30.


- 35 -

the materials submitted by the US shows that Argentina and Nicaragua were,

indeed, concerned about possible abuses of Article XXI, and proposed different

ways to limit the reliance on the security exception by Members. However,

nothing in their statements suggests that either Argentina or Nicaragua at the

time understood Article XXI to be “self-judging”, or anything other than

justiciable.

146. For example, if Article XXI was indeed “self-judging” for the mere reason that

it uses the words “it considers” and regardless of whether the measure

objectively falls within one of the subparagraphs of Article XXI(b) (as the US

argues), it would make no sense whatsoever to add an interpretative note on

the meaning of “emergency in international relations”90 or to “interpret certain

terms of the provisions of Article XXI(b)(iii) in such a way as to limit possible

arbitrariness.”91

147. Instead of any perceived self-judging nature of the provision, the arguments

of Argentina and Nicaragua focused on the use of Article XXI in practice. For

example, the objective expressed by Argentina to “avoid future uses of Article

XXI that could continue to undermine the functioning of the General

Agreement”92 implies that what should change is not the meaning of Article

XXI, but the practice of Members. If the meaning of Article XXI that those

Members wished to change was that it was self-judging, it would make no

sense to speak of “abuse”, or to push for reinterpretations of particular

concepts. Such arguments imply that there is an objective meaning to the

provision, which can be objectively assessed.

148. In any event, the subsequent discussion was rather inconclusive, as it

reflected a wide variety of views on the proposals. Thus, it does not show any

sort of consensus or majority view on anything resembling the current US

position. If anything, it goes in the opposite direction, because not a single

delegation in the discussion cited by the US expresses the view that the

provision is self-judging. One delegation stated that “a great deal of discretion

was necessary”.93 Other delegations seemed to approach the US position when

they stated that Article XXI was “essentially a matter for unilateral decision”,

but even they immediately acknowledged that “the right of recourse to Article

90 Exhibit US-150, para. 2. 91 Exhibit US-151, para. VI. 92 Exhibit US-151, para. VI. 93 Exhibit US-153, para. 6.


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XXIII was the appropriate safeguard against abuse” (including, therefore,

“violation” claims).94 All of this is a far cry from what the US would like the

negotiating history to mean.

7.3.5. The 1949 GATT Council decision

149. In its responses to Panel Questions 64-68, the EU has explained that:

• the 1949 Decision is not a “subsequent agreement” on the interpretation

of GATT 1947, because it does not establish a common understanding

accepted by all parties to the treaty, and because it does not bear

specifically upon the interpretation of the agreement or some of its

provisions; it is instead simply an instance of the application of Article XXI

in a dispute;

• under well-established jurisprudence, the 1949 Decision is not one of the

“other decisions of the CONTRACTING PARTIES to GATT 1947” and is

therefore not incorporated into the GATT 1994;

• the 1949 Decision was taken under Article XXIII of the GATT 1947 and is

therefore the equivalent of an adopted panel report, meaning that it

cannot have the effects the US claims it has.

150. The US has not explained on what basis it thinks the Decision reflects a

common understanding accepted by all the parties to the GATT 1947 even

though certain contracting parties were absent or abstained. It is entirely

insufficient for the US to state that, at the time, GATT Council decisions were

taken by majority vote,95 because a GATT Council decision does not in itself

entail a subsequent agreement on the interpretation of the treaty.

151. Moreover, even assuming for the sake of argument that the 1949 Decision is a

subsequent agreement on the interpretation of the GATT 1947 (quod non), the

United States would have to show why and how that agreement remains

relevant in the context of the WTO Agreement, DSU, and the GATT 1994. It

fails to do so. The entirety of the US argument in that respect is that “the text

of Article XXI of the GATT 1947 is identical to the text of Article XXI of the

GATT 1994.”96 This is unhelpful. First, the US argument implies that, just

94 Exhibit US-153, para. 6. 95 US’ responses to Panel Questions, para. 303. 96 US Responses to Panel Questions, para. 308.


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because the text of a provision does not change, agreements prior to a treaty

automatically turn into subsequent agreements. Second, the US argument

implies that all the changes to the WTO legal framework in the Uruguay Round

come to nothing.

152. Finally, the US argument as to why the 1949 Decision allegedly concerns a

general interpretative question, as opposed to the application of the provision

to a particular set of facts, boils down to the following:

After the vote, the representative of Czechoslovakia inquired “whether the decision could not be communicated to all members of the Interim Commission of the International Trade Organization, so that they would be informed of the interpretation given by the CONTRACTING PARTIES of the provisions of the Havana Charter”. No Contracting Party disagreed with that statement. 97

153. This is not a serious argument. First, whenever a legal provision is applied in

any kind of dispute, whether by the GATT Council, a WTO panel, the Appellate

Body, or any other adjudicator, it must necessarily be interpreted. Thus, any

report or decision on a GATT dispute will also entail an “interpretation”. This

does not make the report or decision an authoritative interpretation of the

treaty being applied, or a subsequent agreement on the interpretation of that

treaty. Second, requesting (after the vote) that the decision be circulated such

that its content is made known is a rather anodyne act of transparency that

cannot turn the decision into an authoritative interpretation or a subsequent

agreement.

7.4. THE VIEWS EXPRESSED BY GATT CONTRACTING PARTIES AND WTO MEMBERS DO

NOT SUPPORT THE US POSITION

154. The views expressed by GATT Contracting parties and WTO Members are not

relevant under Article 31 of the VCLT and cannot be attached any particular

legal value.

155. The EU has explained that an analysis of those views in inconclusive, as there

were opposite views expressed by different GATT contracting parties or WTO

Members. All that those views show is that there was never a consensus or a

97 US Responses to Panel Questions, para. 301.


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common understanding on how Article XXI should be interpreted. They speak

for both sides of the argument.

156. The EU refers to its detailed explanations in its previous submissions.98

157. The EU has already answered to the US reference to a Report by the G20

Global Forum on Steel Excess Capacity.99 The respective document has no

legal relevance. The position of the EU on such matters is as stated or not

stated by its duly authorised representatives in these proceedings. The

document expresses a political opinion about certain economic matters, which

should properly be addressed through different economic tools.

158. In its response to Panel Question no. 74, the US quotes from different

documents pertaining to the national security strategies of different countries,

ranging from certain EU Member States such as Austria, Germany and Spain

to other WTO Members, such as China, Russia and Turkey.

159. The EU notes, first, that what a domestic document of a WTO Member states

about national security is one thing, while what may be covered by the Article

XXI exceptions, as agreed by the whole WTO membership, is a different

matter.

160. If a Member states in its national security strategy that it is a matter of

national security for it to have a big apple pie factory with a monopoly in its

internal market, that does not mean that such an interest can automatically fit

under any of the subparagraphs (i) to (iii) of Article XXI(b). You can't fit a

round peg in a square hole.

161. Second, while the EU does not want to speculate on the meaning of national

security strategy documents of other WTO Members, the EU believes that such

documents may be understood as acknowledging a link, in certain limited

circumstances, between national security and a specific and substantiated

security of supply issue. In that case, such considerations may be the means,

but not the ends in themselves.

162. To the contrary, if a panel finds that a measure seeks to protect a domestic

industry as an end in itself, as the facts and evidence in this case

overwhelmingly establish, as opposed to doing so as a means to a security

98 See the EU’s response to Panel’s question no. 51(d). 99 See the EU’s response to Panel’s question no. 69.


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objective, then the panel must find that the measure is controlled by the

safeguards disciplines in any event.

163. Finally, the EU notes that all those statements the US quotes from different

national documents are not statements of those WTO Members in the context

of WTO dispute settlement proceedings, which could have taken into account

the actual language of Article XXI.

7.5. THE US “SELF-JUDGING” READING OF ARTICLE XXI(B) IS UNPARALLELED IN OTHER

PROVISIONS OF THE COVERED AGREEMENTS

164. In Question 48, the Panel asked the US whether there are other provisions of

the covered agreement that might be interpreted in the way in which the US

interprets Article XXI(b), and in particular its subparagraphs. In its responses,

the US either had to concede that the provisions mentioned by the Panel

cannot be interpreted in that way, or resorted to incorrect interpretations of

those provisions.

165. First, the US agrees that Article 22.3 of the DSU is not “self-judging” in the

way in which the US claims Article XXI(b) to be, even though that provision

also uses the term “considers”, followed by a requirement (comparable to the

subparagraphs of Article XXI(b)) to take into account certain factors.100

166. For the other three provisions mentioned by the Panel, it is not fully clear if

the US considers them all to be “self-judging”. In any event, that view would

be incorrect.

167. The provision that seems, on its terms, to provide the largest amount of

discretion to Members is Article 3.7 of the DSU, referring to Members’ own

“judgment”. And indeed, the Appellate Body has explained that Members are

expected to be “largely self-regulating” in its application.101 Nevertheless, even

that provision is not “self-judging”. Thus, in Peru – Agricultural Products, the

Appellate Body found:

[A]lthough the language of the first sentence of Article 3.7 of the DSU states that 'a Member shall exercise its judgement', the considerable deference accorded to a Member's exercise of its judgement in bringing a dispute is not entirely unbounded. For example, in order to

100 US’ responses to Panel Questions, para. 214. 101 Appellate Body Report, EC – Bananas III, para. 135.


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ascertain whether a Member has relinquished, by virtue of a mutually agreed solution in a particular dispute, its right to have recourse to WTO dispute settlement in respect of that dispute, greater scrutiny by a panel or the Appellate Body may be necessary.102

168. In that dispute, the Appellate Body went on to conduct an objective

assessment of whether the complainant “could be considered as having acted

contrary to its good faith obligations under Articles 3.7 and 3.10 of the DSU

when it initiated these proceedings.”103

169. Therefore, while that provision does entail a considerable amount of discretion,

it is certainly not “self-judging”, and it leaves intact the possibility of a panel

to conduct an objective assessment of whether a Member infringed it, and

whether it acted in line with good faith, unlike the interpretation of Article XXI

proposed by the US.

170. Annex A(5) of the SPS Agreement defines the concept of the “appropriate level

of protection” in SPS measures. It is correct that, under that provision, it is up

to each Member to set its own desired level of protection. The same would be

true under Article XX, and indeed under Article XXI of the GATT 1994: in

principle, it is for each Member to decide the legitimate policy objective it

pursues, and the extent to which it must be protected. This does not,

however, mean total discretion. To the contrary, none of those provisions

entitles Members to adopt measures that are inappropriate, unnecessary, or

incoherent with their objective. Thus, not only are those provisions not self-

judging, but they are designed to be subject to adjudication, in order to

prevent abuse and differentiate protectionism from legitimate regulation.

171. Accordingly, the following has been clearly established in the jurisprudence

concerning Annex A(5) of the SPS Agreement:

• A panel would typically be expected to accord weight to the respondent's articulation of its ALOP, particularly where that appropriate level of protection was specified in advance of the adoption of the SPS measure, where the ALOP is specified with sufficient precision, and where it has been consistently expressed by the responding Member. A panel, however, is not required to defer completely to a respondent's characterization of its own ALOP, particularly where the respondent has not expressed its ALOP with sufficient precision. Rather, a panel must ascertain the respondent's ALOP on the basis of the totality of the

102 Appellate Body Report, Peru – Agricultural Products, paras. 5.18-5.19. 103 Appellate Body Report, Peru – Agricultural Products, para. 5.28.


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arguments and evidence on the record, which may include the level of protection reflected in the SPS measure actually applied.104

• The right of a Member to define its appropriate level of protection is not […] an absolute or unqualified right.105

• Even if [a Member] has the right to establish its ALOP and to devise risk management measures if necessary to achieve such ALOP, [it] has to do so consistently with the SPS Agreement.106

172. All this makes clear that Annex A(5) is not a self-judging provision. A WTO

panel is entitled and required to objectively scrutinise and determine what the

regulating Member’s ALOP is, as well as whether the measure is consistent

with the SPS Agreement. A Member could not avoid that scrutiny by simply

asserting that it “invokes” a certain provision, as the US is doing here, and

expecting the panel’s task to be done at that point.

173. Finally, it is correct that previous panels have found that Article 5.4 of the SPS

Agreement does not impose a positive obligation, due to its “hortatory”

wording. Nevertheless, this does not suggest that this provision is in any way

“self-judging”. It does not leave any room for a unilateral determination by a

Member of what the applicable disciplines are or of which WTO provisions

apply. Thus, there is no parallel between that provision and the interpretation

proposed by the US for Article XXI(b). Indeed, the provision has had

consequences for the objective assessment of the applicable rights and

obligations by panels. For example, in Australia – Salmon, the Appellate Body

based its reasoning that “the SPS Agreement contains an implicit obligation for

a WTO Member maintaining an SPS measure to establish and articulate its

appropriate level of protection” in part on Article 5.4.107

174. Thus, the jurisprudence on various provisions of the covered agreements

containing wording which might suggest a measure of Member discretion

comparable to that suggested by the text of Article XXI(b) shows that those

provisions are not “self-judging”.

8. THE US HAS FAILED TO REBUT ANY OF THE EU’S CLAIMS AGAINST SECTION 232 AS

INTERPRETED

104 Appellate Body Report, Korea - Radionuclides (Japan), paras. 5.24 and 5.34. 105 Appellate Body Report, EC – Hormones, para. 173. 106 Panel Report, Australia – Apples, para. 7.1134. 107 Appellate Body Reports, Australia – Salmon, para. 206; Australia – Apples, fn. 509.


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175. With respect to the EU’s claims against Section 232 as interpreted, the EU

refers to its earlier submissions, which set out detailed facts, evidence and

argument on the content and nature of that measure, all the reasons why it is

WTO-inconsistent, as well as factual and legal developments relevant to that

measure post-dating the EU’s first written submission.108 The US has not even

addressed this measure, and has therefore failed to rebut the EU’s prima facie

case of WTO-inconsistency.

176. The US has so far mentioned this measure only in a very brief and vague

paragraph of its responses to questions. The US states as follows:

The United States has invoked Article XXI(b) as a basis for the challenged measures. The challenged measures are therefore justified under Article XXI(b).

177. Apart from the fact that this statement is obviously legally incorrect

(“invocation” does not amount to justification), it is incorrect as a factual

matter. Given that the US has not even mentioned this measure in its

submissions, it has in fact not even “invoked” (whatever that term actually

means) Article XXI(b) or any other provision as a defence in respect of that

measure.

178. Alternatively, if the Panel considers that the US has in fact invoked Article

XXI(b) in respect of Section 232 as interpreted, whether by this statement in

its responses to questions or otherwise, then this invocation means that the

US acknowledges the existence of the measure as challenged and described by

the EU, as otherwise the US would not be invoking Article XXI in respect of it.

9. THE PANEL SHOULD COOPERATE WITH THE ADDITIONAL DUTIES PANELS

179. The EU has explained at the first substantive meeting why it is crucial that the

Panels in the Additional Duties disputes do not work in “clinical isolation” from

the Panel in DS548 – as well as all the other panels in the Steel and

Aluminium disputes. The EU reiterates its concerns and refers to the

respective part of its opening oral statement.109

108 EU’s FIRST WRITTEN SUBMISSION, section 5; EU’s opening statement at the first substantive

meeting, para. 37; EU’s responses to Panel Questions 1 (paras. 13-16), 2 (paras. 20, 36 and 39), 3(a) and 73(c).

109 EU’s opening oral statement at the first substantive meeting, paras. 27 – 35.


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10. CONCLUSIONS

180. For the reasons set out in this submission, the European Union requests the

Panel to find that the measures at issue are inconsistent with the US'

obligations under the Agreement on Safeguards and the GATT 1994 as

detailed in the EU’s submissions.

second written submission by the european unionus – offset act (byrd amendment) appellate body...

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