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Following a safeguards investigation initiated in June 2001, the United States imposed safeguard measures on a broad range of imported steel products effective from 20 March 2002. This included products in the 'certain carbon flat-rolled steel' (CCFRS) category which are exported by New Zealand to the United States. Thus, an initial tariff of 30% was imposed on plate, hot-rolled steel, cold-rolled steel and coated steel, reducing to 18% in the third and final year of the measure. Slabs were subjected to a tariff rate quota of 30% on imports exceeding 5.4 million short tons, decreasing to 18% in the third year on imports exceeding 6.4 million short tons.
Certain types of CCFRS and other steel products, narrowly defined technically but amounting to a large percentage of total import volumes, were excluded from the measure at the time it was imposed and also subsequently pursuant to an exclusions application process which is ongoing. No New Zealand exports benefited from product exclusions.
On 7 March 2002, New Zealand requested consultations with the United States under Article 12.3 of the WTO Agreement on Safeguards. These took place in Geneva on 19 March 2002. On 21 May 2002, New Zealand requested dispute settlement consultations with the United States which took place in Geneva on 13 June 2002. These failed to resolve the dispute, so on 28 June 2002 New Zealand requested the establishment of a WTO panel. This was achieved on 8 July 2002 and the case brought by all eight principal complainants (Brazil, China, the European Communities, Japan, Korea, New Zealand, Norway and Switzerland) referred to a single panel. The members of this Panel were appointed by the WTO Director-General on 25 July 2002.
New Zealand, along with most of the other complainants, claimed that the United States had breached the GATT 1994 Article XIX, and Articles 2, 3, 4, and 5 of the Agreement on Safeguards. Canada, Chinese Taipei, Cuba, Mexico, Thailand, Turkey and Venezuela participated as third parties.
The first substantive hearing of the Panel took place in Geneva from 29-31 October 2002. The second substantive hearing of the Panel took place in Geneva from 10-12 December 2002. Complainants coordinated their oral statements to the Panel at both hearings, dividing the heads of claim between them. The Panel, which estimated that it received over 3,500 pages of submissions and 3,000 pages of exhibits, issued its final report on 11 July 2003. It found that the United States had acted inconsistently with its obligations under the GATT 1994 Article XIX, and with Articles 2.1, 3.1, and 4.2 of the Agreement on Safeguards. It also exercised “judicial economy” (i.e. did not rule) on a number of claims made by the complainants, including the claims that the United States had not complied with its obligation under Articles 2.1 and 4.1 to define correctly the “domestic industry” allegedly injured by increased imports; its obligation to demonstrate serious injury to that industry; and its obligation to apply safeguard measures proportionate to that serious injury as required by Article 5.1.
The United States appealed the Panel’s ruling to the WTO Appellate Body, filing its Notice of Appeal on 11 August and its Appellant Submission on 21 August. New Zealand and the other complainants filed their Other Appellant’s Submissions on 26 August, and all complainants and the United States filed Appellee submissions on 5 September. The Appellate Body held oral hearings in Geneva on 29 and 30 September, and issued its decision on 10 November 2003. It upheld the Panel's conclusions that the United States had acted inconsistently with its obligations under the GATT 1994 Article XIX, and under Articles 2.1, 3.1 and 4.2 of the Agreement on Safeguards. On 4 December 2003, the United States President announced that the safeguard measures would be removed, effective from 5 December. On 10 December, the WTO Dispute Settlement Body adopted the Panel Report as modified by the Appellate Body.
