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The Law and Policy of the World Trade Organization.
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Article contents
The Determination of Causation in the Application of Trade Remedies
Published online by Cambridge University Press: 30 June 2020
Abstract
In order for one Member to implement trade remedies against another, it must be satisfied that the harm to its domestic industry was the result of imports, rather than some other factor(s). In order for a Member to be satisfied in this way, it must perform both: (1) a causal link analysis, and (2) a non-attribution analysis. In interpreting the relevant provisions concerned with the causal link and non-attribution analysis, the Appellate Body (AB) has consistently found that injury to the domestic industry need not be the product of imports alone – that is, it may be the result of a combination of imports and other factors. Accordingly, many commentators have queried the utility of separating imports from other causal factors at the non-attribution stage. This article argues that these two apparently contradictory positions may be reconciled if they are interpreted such that the causal contribution from imports must reach a minimum threshold, whilst also providing some tolerance for other factors. This article argues in favour of using econometric tests as a means of measuring and separating the causal contributions of imports vis-à-vis other factors and allocating responsibility to each. The article concludes by proposing a three-step non-attribution and causal link analysis.
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- Copyright © The Author(s), 2020. Published by Cambridge University Press
Footnotes
*
The author would like to thank Dr Lorand Bartels, University of Cambridge, Prof. L Alan Winters (Editor) and two anonymous reviewers for their valuable comments on an earlier draft of this article. All errors and omissions remain the responsibility of the author.
References
1 Agreement on Safeguards 1994 (1995) LT/UR/A-1A/8 (Safeguards Agreement).
2 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 1994 (1995) LT/UR/A-1A/3 (Antidumping Agreement or AD Agreement).
3 Agreement on Subsidies and Countervailing Measures 1994 (1995) LT/UR/A-1A/9 (SCM Agreement).
4 Article 2.1, Safeguards Agreement, supra note 1.
5 Article VI:1, General Agreement on Tariffs and Trade 1994, 1994 (1995) LT/UR/A-1A/1/GATT/1 (GATT 1994). See generally, R.D. Boltuck (1987), ‘An Economic Analysis of Dumping’, Journal of World Trade, 21(5): 45.
6 Article 15.5, SCM Agreement, supra note 3.
7 See generally, A. Sykes (2007), ‘International Trade: Trade Remedies’, in A. Guzman and A. Sykes (eds.), Research Handbook in International Economic Law, Northampton: Edward Elgar, 62; P. Mavroidis, P. Messerlin, and M. Wauters (2008), The Law and Economics of Contingent Protection in the WTO, Northampton: Edward Elgar, in respect of Antidumping measures, see pp. 7–29; in respect of countervailing duties, see pp. 399–400; and in respect of safeguard measures, see pp. 468–475; see generally, T. Voon (2010), ‘Eliminating Trade Remedies from the WTO: Lessons from Regional Trade Agreements’, International and Comparative Law Quarterly, 59(3): 625.
8 This term is used in the Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, 24 July 2001, WT/DS184/AB/R, para. 226. Various other terms are used in the jurisprudence to mean the same thing, for example: ‘known factors’ is used in Panel Report, Mexico – Definitive Countervailing Measures on Olive Oil from the European Communities, 4 September 2008, WT/DS341/R, para. 7.297; Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, 28 September 2000, WT/DS122/R, para. 7.273; Panel Report, European Union – Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia, 16 December 2016, WT/DS442/R, para. 7.196. ‘Other factors’ is used in Panel Report, European Union – Anti-Dumping Measures on Biodiesel from Indonesia, 25 January 2018, WT/DS480/R, para. 7.438, Panel Report, Argentina – Safeguard Measures on Imports of Footwear, 25 June 1999, WT/DS121/R, paras. 8.264–8.267; Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, 14 December 1999, WT/DS121/AB/R, para. 134; Panel Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, 21 December 2000, WT/DS177/R; WT/DS178/R, paras. 7.259–7.279; Panel Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, 11 July 2003, WT/DS248/R; WT/DS249/R; WT/DS251/R; WT/DS252/R; WT/DS253/R; WT/DS254/R; WT/DS258/R; WT/DS259/R, para. 10.332; Panel Report, Indonesia – Safeguard on Certain Iron or Steel Products, 18 August 2017, WT/DS490/R; WT/DS496/R, para. 7.5.4.3.1; Appellate Body Report, European Union – Countervailing Measures on Certain Polyethylene Terephthalate from Pakistan, 16 May 2018, WT/DS486/AB/R, para. 5.151; Panel Report, United States – Anti-Dumping and Countervailing Measures on Certain Coated Paper from Indonesia, 6 December 2017, WT/DS491/R, para. 7.222; Panel Report, China – Countervailing and Anti-Dumping Duties on Grain-Oriented Flat-Rolled Electrical Steel from the United States, 15 June 2012, WT/DS414/R, para. 7.62. The term ‘other known factors’ has been chosen because it captures the meaning of both other terms used.
9 For this view, see generally, A. Sykes (2006), ‘The Causation Requirement and “Non-Attribution”’, in The WTO Safeguards Agreement: A Commentary, Oxford University Press, p. 156; A. Sykes (2003), ‘The Safeguards Mess: A Critique of WTO Jurisprudence’, World Trade Review, 2(3): 261; F. Piérola (2014), ‘Causal Link’, in The Challenge of Safeguards in the WTO, Cambridge University Press, p. 226; K. Kelly (1988), ‘An Analysis of Causality in Escape Clause Cases’, Journal of Industrial Economics, 37(2): 187; R. Pindyck and J. Rotemberg (1987), ‘Are Imports to Blame? Attribution of Injury under the 1974 Trade Act’, The Journal of Law and Economics, 30: 101; and R. Cass and M. Knoll (1997), ‘The Economics of “Injury”’ in Antidumping and Countervailing Duty Cases: A Reply to Professor Sykes’, in J. Bhandari and A.O. Sykes (eds.), Economic Dimensions in International Law: Comparative and Empirical Perspectives, Cambridge University Press, p. 126; and R.D. Boltuck (1987), ‘An Economic Analysis of Dumping’, Journal of World Trade, 21(5): 45.
10 For a general overview of the jurisprudence related to temporal and other sources of correlation between imports and other injurious factors, see generally, Jorge Miranda (2010), ‘Causal Link and Non-Attribution as Interpreted in WTO Trade Remedy Disputes’, Journal of World Trade, 44(4): 729.
11 Sykes, ‘The Causation Requirement’, supra note 9, at 191.
12 D.A. Irwin, ‘Causing Problems? The WTO Review of Causation and Injury Attribution in US Section 201 Cases’, World Trade Review, 2(3): 297, at 309; A. Sapir and J. Trachtman, ‘Subsidization, Price Suppression, and Expertise: Causation and Precision in Upland Cotton’, World Trade Review, 7(1): 183 at 199; Sykes, ‘The Causation Requirement’, supra note 12, at 179; and Mavroidis, Messerlin, and Wauters, The Law and Economics of Contingent Protection in the WTO, supra note 9, at 122.
13 Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, 22 December 2000, WT/DS166/AB/R, para. 69.
14 Appellate Body Report, European Union – Countervailing Measures on Certain Polyethylene Terephthalate from Pakistan, 16 May 2018, WT/DS486/A/R, para. 5.178.
15 Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada (Recourse to Article 21.5 of the DSU by Canada), 13 April 2006, WT/DS277/AB/RW, para. 132. To this end, it also cited paragraph 69 from the Appellate Body Report, US–Wheat Gluten, supra 13.
16 Appellate Body Report, United States – Subsidies on Upland Cotton, 3 March 2005, WT/DS267/AB/R, para. 438, quoting US–Wheat Gluten, supra note 13, para. 69.
17 Appellate Body Report, US–Upland Cotton, supra note, para. 438.
18 Ibid.
19 Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), 12 March 2012, WT/DS353/AB/R, para. 914 (emphasis original; footnotes omitted).
20 Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, 5 September 2011, WT/DS399/AB/R.
21 (2001) WT/L/432.
22 Ibid., para. 181.
23 Article 4(1)(a) Safeguards Agreement, supra note 1.
24 Anti-Dumping Agreement, n 9, supra note 2.
25 Article 3.1, Anti-Dumping Agreement, supra note 2.
26 SCM Agreement, n 45, supra note 3.
27 Although causation under the Safeguards Agreement was first considered by the Panel in, Argentina – Safeguard Measures on Imports of Footwear (Argentina–Footwear (EC)), WT/DS121/R, adopted 25 June 1999, the Panel was not technically required to consider it. As the AB observed, the Panel had found no increased imports and no serious injury or threat thereof, and therefore it was ‘surpris[ing]’ that the Panel went on to consider causation in that Panel report: Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear (Argentina–Footwear (EC)), WT/DS121/AB/R, adopted 14 December 1999, para. 145.
28 Panel Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities (US–Wheat Gluten), 31 July 2000, WT/DS166/R.
29 Ibid., [8.138] (emphasis original).
30 Ibid.
31 Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia (US–Lamb), 21 December 2000, WT/DS177/R and WT/DS178/R (US–Lamb), para. 7.238.
32 Appellate Body Report, US–Wheat Gluten, supra note 16, para. 67 (emphasis original).
33 See, e.g., Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia (US–Lamb), 1 May 2001, WT/DSS177/AB/R; WT/DS178/AB/R, para. 170.
34 Panel Report, United States – Antidumping Measures on Certain Hot-Rolled Steel Products from Japan (US–Hot Rolled Steel), 28 February 2001, WT/DS184/R, paras. 7.258–7.261.
35 Appellate Body Report, United States – Antidumping Measures on Certain Hot Rolled Steel Products from Japan (US–Hot Rolled Steel), 24 July 2001, WT/DS184/AB/R, paras. 226–227.
36 See, e.g., Panel Report, European Commission – Antidumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil (EC–Tube or Pipe Fittings), 7 March 2003, WT/DS219/R; and Appellate Body Report, European Commission – Antidumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil (EC–Tube or Pipe Fittings), 22 July 2003, WT/DS 219/AB/R.
37 Appellate Body Report, European Union – Countervailing Measures on Certain Polyethylene Terephthalate from Pakistan (EU–PET (Pakistan)), 16 May 2019, WT/DS486/AB/R, para. 5.175.
38 Appellate Body Report, US–Large Civil Aircraft (Second Complaint), supra note 19, para. 914 (emphasis original; footnotes omitted).
39 Appellate Body Report, US–Wheat Gluten, supra note 13, para. 68. This process was reaffirmed in Appellate Body Report, US–Lamb, supra note 32, paras. 167–168; Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea (US–Line Pipe), 15 February 2002, WT/DS202/AB/R, para. 215.
40 Appellate Body Report, US–Wheat Gluten, supra note 13, para. 69; Appellate Body Report, US–Lamb, supra note 32, paras. 179–180.
41 Irwin, supra note 12, at 309.
42 Sapir and Trachtman, supra note 12, at 199.
43 Sykes, ‘The Causation Requirement’, supra note 9, at 179.
44 Mavroidis, Messerlin, and Wauters, supra note 12, at 122 (footnotes omitted).
45 Appellate Body Report, US–Wheat Gluten, supra note 13, para. 67 (emphasis original).
46 Appellate Body Report, US–Large Civil Aircraft (2nd Complaint), supra note 19, para. 914 (emphasis original; footnotes omitted).
47 The Senate Finance Committee Report, in United States Code Congressional and Administrative News No. 1298, 120.
48 19 US Code §1671(a)(2).
49 E.R. Easton and W.E. Perry (1989), ‘Countervailing Duty Investigations’, in Johnston Jr (ed.), Law and Practice of United States Regulation of International Trade, New York: Oceana Publications, at 44. For an overview of the law concerning the determination of causation in respect of Antidumping cases under US law, see generally, W.D. Degrandis (1986), ‘Proving Causation in Antidumping Cases’, International Lawyer (Int'l Lawyer), 20(2), at 563.
50 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community, OJ (L 343) 51; see Annex 1.
51 Van Bael and Bellis (2011), EU AD and Other Trade Defence Instruments (5th edn), Kluwer Law International, at 335.
52 imposing provisional safeguard measures with regard to imports of certain steel products [2018] OJ L 181/39 (70)–(81).
53 Commission Implementing Regulation (EU) 2018/1013 of 17 July 2018, OJ 2018 L 181/39 (70)–(77).
54 Ibid. (79).
55 Ibid. (80).
56 Ibid. (96).
57 Council Implementing Regulation (EU) No. 1194/2013 of 19 November 2013, OJ 2013 L 315/2, Recital 189.
58 Commission Implementing Regulation (EU) 2018/1570 of 18 October 2018, OJ 2018 L 262/40 (82)–(95).
59 Ibid. (83).
60 Ibid. (83).
61 Ibid. (84).
62 Ibid. (85).
63 Ibid. (82)–(95).
64 Appellate Body Report, US–Wheat Gluten, supra note 13, para. 69.
65 Ibid.
66 Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, 17 June 2005, WT/DS299/R, para. 7.405.
67 Ibid. (emphasis in original).
68 It is worth noting, however, that panels and the AB have upheld non-attribution findings by domestic competent authorities relying on the ‘order of magnitude’ test, which can be useful depending on the factual pattern in question: see Miranda, n 13, 755–759.
69 Para. 7.405.
70 See generally, M. Grossman (1986), ‘Imports as a Cause of Injury: The Case of the US Steel Industry’, Journal of International Economics, 20: 201; K. Kelly (1988), ‘The Analysis of Causality in Escape Clause Cases’, Journal of Industrial Economics, 37(2), 187; D. Ahn and W.J. Moon (2010), ‘Alternative Approach to Causation Analysis in Trade Remedy Investigations: “Cost of Production” Test’, Journal of World Trade, 44(5): 1023; R.S. Pindyck and J.J. Rotemberg (1987), ‘Are Imports to Blame? Attribution of Injury under the 1974 Trade Act’, The Journal of Law and Economics, 30: 101; Irwin, supra note 12; and D.C. Sharp and K. Zantow (2005), ‘Attribution of Injury in the Shrimp Antidumping Case: A Simultaneous Equations Approach’, Economic Bulletin, 6(5): 1; and T.J. Prusa and C. Sharp (2001), ‘Simultaneous Equations in Antidumping Investigations’, Journal of Financial Economics, 14(1): 63.
71 Understanding on Rules and Procedures Governing the Settlement of Disputes, 1994 (1995) LT/UR/A-2/DS/U/1 (DSU).
72 Mavroidis, Messerlin, and Wauters, supra note 12, 465–466.
73 Appellate Body Report, US–Wheat Gluten, supra note 13, para. 69.
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