Ambassador Linnet F. Deily made the following statements at the December 10, 2003 meeting of the WTO Dispute Settlement Body.

Item 1. UNITED STATES - ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN

A. REQUEST FOR MODIFICATION OF THE REASONABLE PERIOD OF TIME (WT/DS184/17)

At the November 28, 2002, meeting of the DSB, the United States reported that it had implemented the recommendations and rulings of the DSB with respect to the calculation of antidumping margins in the subject antidumping investigation of hot-rolled steel from Japan, but that it had not yet addressed all of the DSB's recommendations and rulings.

The U.S. Administration has worked with Congress over the past year to complete our implementation of the DSB's recommendations and rulings. We intend to renew our efforts to complete implementation when Congress resumes its activities in January.

Therefore, after consultations with the Government of Japan, the United States is requesting that the DSB modify the "reasonable period of time" for implementation of the DSB's recommendations and rulings so as to expire on July 31, 2004.

The United States believes that such an extension of time would promote a principal aim of the dispute settlement system, which is to provide mutually satisfactory solutions to disputes.

We intend to continue discussions with Japan on implementation of the recommendations and rulings of the DSB.

Item 2. JAPAN - MEASURES AFFECTING THE IMPORTATION OF APPLES

A. REPORT OF THE APPELLATE BODY (WT/DS245/AB/R) AND REPORT OF THE PANEL (WT/DS245/R)

Mr. Chairman, the United States is pleased to request that the DSB adopt the reports of the panel and Appellate Body today. These reports confirm that Japan's measures with respect to fire blight disease in apples are not supported by scientific evidence, nor are they based on a risk assessment. Accordingly, they are inconsistent with Japan's obligations under the SPS Agreement.

Both the panel and Appellate Body undertook a thorough, well-reasoned analysis of the applicable WTO obligations at issue and the detailed scientific record before them. We are gratified that each agreed that this record indeed demonstrated what we have been saying for well over a decade, namely that Japan's burdensome and trade-restrictive requirements are not justified.

We also appreciate the care and clarity with which the reports set forth the applicable WTO obligations in this dispute. In particular, the reports addressed for the first time several provisions of SPS Agreement Article 5.7 involving provisional measures, and, with one exception which we will address shortly, correctly described and applied the analysis involved in determining whether a case is one in which "relevant scientific evidence is insufficient." These were important findings which properly respected the balance of rights and obligations reflected in Article 5.7.

We also wish to acknowledge the reports for the findings they did not make. Both the panel and Appellate Body correctly limited their findings to those necessary to resolve the dispute, based on the facts before them. This careful approach to dispute resolution ensures that legal findings are made with the benefit of a full understanding of their implications in light of concrete facts.

Mr. Chairman, while these reports are on the whole excellent, we would like to address two concerns. The first is the panel's inclusion in its Article 2.2 analysis of a statement that Japan's measure is disproportionate to the scientific risk. The Appellate Body noted that this was merely one way in which the panel in this particular dispute chose to examine whether there was a rational relationship between the measure and the scientific evidence. However, we consider that this approach risks changing the nature of the obligation under Article 2.2 from one in which Members are required to meet a threshold of evidence "sufficient" to maintain a measure to one in which evidence is weighed, in a relative sense, against the measure. The panel included this concept for the first time in its final report, after the parties had an opportunity to comment, and it was unnecessary given the panel's other factual findings on the absence of evidence supporting the measure.

The second point we wish to note is the panel's conclusion that the Member maintaining the measure has the burden of establishing that it meets the requirements of Article 5.7. Neither Japan nor the United States supported this conclusion, taking the position that here, as with other claims, the complaining party bears the burden of proving that the measure does not meet the obligations set forth in a WTO provision. This situation provides an example of how the U.S.-Chilean proposals to provide greater flexibility and control in dispute settlement could have operated to good effect. Under those proposals, the parties could have agreed to delete those findings, or the DSB could have chosen not to adopt them. Had the parties agreed to delete the findings, it would merely have left the issue to a future panel proceeding in which the issue was actually joined.

Notwithstanding these criticisms, the United States wishes to reiterate that it considers these to be very high quality reports. We wish to thank the panel, Appellate Body and Secretariat for their efforts.

We hope that, with the benefit of the clear guidance contained in these reports, Japan will now remove its WTO-inconsistent measures.

Item 3. UNITED STATES - DEFINITIVE SAFEGUARD MEASURES ON IMPORTS OF CERTAIN STEEL PRODUCTS

A. REPORT OF THE APPELLATE BODY (WT/DS248/AB/R; WT/DS249/AB/R; WT/DS251/AB/R; WT/DS252/AB/R; WT/DS253/AB/R; WT/DS254/AB/R; WT/DS258/AB/R; WT/DS259/AB/R) AND REPORTS OF THE PANEL (WT/DS248/R AND CORR.1; WT/DS249/R AND CORR.1; WT/DS251/R AND CORR.1; WT/DS252/R AND CORR.1; WT/DS253/R AND CORR.1; WT/DS254/R AND CORR.1; WT/DS258/R AND CORR.1; WT/DS259/R AND CORR.1)

Mr. Chairman, the United States recognizes the complexity and scale of the task confronting the Panel and Appellate Body in this dispute. We appreciate their willingness, and that of the Secretariat, to undertake this task. We particularly wish to thank the Panel and the Secretariat for the work involved in issuing eight separate panel reports in a manner that was both flexible and creative.

The United States wishes to focus on several aspects of the Panel and Appellate Body findings in its statement today. We are pleased that the Appellate Body reversed the Panel's unsupported finding that the Agreement on Safeguards prohibits a Member's competent authorities from supporting a single determination with different explanations. In adopting this incorrect view, the Panel injected into the Safeguards Agreement a requirement that is not there, namely, that the reasoning of multiple members in a decision-making body must be "reconcilable." The Appellate Body correctly rejected this view, and recognized that "a panel must ascertain whether a reasoned and adequate explanation for the [competent authorities'] determination is contained in the report, even if only in one of the Commissioner's individual findings."

We are also pleased that the Appellate Body rejected the views that Article XIX of GATT 1994 and Article 2.1 of the Safeguards Agreement impose a simple arithmetic standard for determining increased imports, or that those articles require a certain pattern of imports. Rather, whether imports are recent, sudden, sharp, and significant enough to cause serious injury is a question answered by a consideration of serious injury and causation. This finding disproves the view of some Members that they may judge for themselves whether another Member's safeguard measure has been taken as a result of an absolute increase in imports and take action under Article 8.2 of the Safeguards Agreement on the basis of that judgment.

That being said, we have a number of concerns with the reports. To take only one example, we are disappointed in the Appellate Body's finding that the Safeguards Agreement requires the competent authorities to provide "explicit" findings that are "clear and unambiguous" and "[do]" not merely imply or suggest an explanation." None of these terms appear in the Safeguards Agreement, which requires only publication of the "findings and reasoned conclusions reached on all pertinent issues of fact and law." The ordinary meaning of these terms does not establish any level of clarity for the competent authorities or require that they state their findings with a particular explicitness. The Appellate Body compounded its error by interpreting its "explicit" standard in a manner that led it to reject findings merely because they were not expressed in the words the Appellate Body was looking for. The Appellate Body's discussion of parallelism is a good example of this. Such an exaltation of form over substance should be of concern to all Members.

Mr. Chairman, I also want to take this occasion to inform Members that, on December 4, 2003, the President issued a proclamation that terminated all ten of the safeguard measures subject to this dispute, pursuant to section 204 of the U.S. Trade Act of 1974.

In making this decision, the President took into account the midterm report of the U.S. International Trade Commission and sought the advice of the U.S. Secretaries of Commerce and Labor. The President based the decision to terminate the safeguard measures on his determination that the effectiveness of the safeguard measures had been impaired by changed economic circumstances.

The United States stands by the decision to apply the safeguard measures in March 2002. We note that the reports under consideration today endorsed our competent authorities' finding that there was a causal link between increased imports and serious injury for seven of ten products. For two other products, the Appellate Body reversed the panel's finding of no causal link.

The United States also notes that the safeguard measures achieved the objectives of the Safeguards Agreement - to prevent or remedy serious injury and to facilitate adjustment for industries that experience serious injury by reason of increased imports. Over the past 20 months, U.S. steel producers have used the breathing space provided by the safeguard measures to restructure, consolidate, and negotiate labor contracts that helped them adjust to import competition.

Mr. Chairman, in light of the many troubling aspects of the reports under consideration today, we cannot support adoption of those reports, although we understand that the DSB will do so today. Nevertheless, because of the President's action of December 4, 2003, no action is necessary to implement the DSB recommendations and rulings in this dispute.