Statements by the United States at the October 5, 2011 DSB Meeting

-as delivered-

1. UNITED STATES – MEASURES AFFECTING IMPORTS OF CERTAIN PASSENGER VEHICLE AND LIGHT TRUCK TYRES FROM CHINA

A. REPORT OF THE APPELLATE BODY (WT/DS399/AB/R) AND REPORT OF THE PANEL (WT/DS 399/R)

• Madam Chair, the United States is pleased to propose the adoption of the Panel and Appellate Body reports in this dispute.

• We would first like to thank the members of the Panel and the Secretariat assisting them for their work and compliment the Panel on its thorough evaluation of the issues in the dispute and for a clear and well-reasoned report.

• We likewise thank the Appellate Body and the Appellate Body Secretariat for their work on the dispute. With one minor exception that did not affect the conclusions, the Appellate Body affirmed all of the Panel’s analysis and conclusions.

• The United States takes its WTO obligations seriously, and we are obviously pleased with this confirmation that, as we had said all along, our imposition of additional duties on Chinese tires was fully consistent with our WTO obligations.

• The evidence demonstrating a surge in Chinese tire imports was overwhelming. Over the period of investigation imports of tires from China grew by 215 percent, increasing from some 14 million tires in 2004 to almost 46 million tires in 2008. Chinese tire imports more than tripled their share of the U.S. market, growing from 4.7 percent in 2004 to 16.7 percent in 2008.

• The evidence also demonstrated a clear coincidence in trends between the rapidly increasing imports and their effects on the U.S. domestic industry. Given such a massive increase, and the market disruption that resulted, the United States had a clear basis to impose the safeguard measure to protect U.S. workers and businesses.

• Before the panel, China challenged the tires investigation by the U.S. International Trade Commission, the remedy imposed by President Obama, and the U.S. Section 421 legislation. The panel rejected all of China’s claims.

• China then appealed some, but not all, of the Panel’s legal conclusions and interpretations. The Appellate Body rejected all of China’s appeals.

• As a result, China has not prevailed on any of its challenges to the U.S. tires safeguard or the U.S. safeguard legislation.

• This is the first time under the WTO that any kind of safeguard measure has been completely upheld. Indeed, you have to reach back to 1951 for the last such occurrence under the GATT system.

• And so, we commend both the Panel and the Appellate Body for their well-reasoned reports, with analysis firmly grounded on the text of China’s Protocol of Accession. The reports also reflect a clear appreciation and understanding of the practical issues that administering authorities must grapple with as they conduct investigations consistent with a Member’s obligations.

• While the United States is obviously very pleased with the substantive content of the Panel and Appellate Body reports, and will welcome their adoption by the DSB today, we nonetheless believe it is important to draw Members’ attention to certain systemic issues related to the delay in issuance of the Appellate Body report beyond the 90 days specified in the DSU.
• In this dispute, the United States would like to affirm the value both of transparency and of meaningfully consulting with, and obtaining the agreement of, the parties to the dispute with respect to any delay in issuing the report beyond 90 days. We recall that DSU Article 17.5 provides, in its last sentence: “In no case shall the proceedings exceed 90 days.”
• Concerns with regard to a lack of transparency have been expressed by the United States and other Members in prior DSB meetings. Pursuant to DSU Article 17.5, the Appellate Body notified the DSB through a letter circulated on 27 July that it would not be able to complete its report within 60 days.1 While the notice informed the DSB of the expected circulation date, it did not note that this date was beyond the 90-day deadline. Moreover, contrary to past practice, the notification made no mention of whether the parties had been consulted on this issue or whether each party had agreed. Neither does the Appellate Body report mention these issues.

• And in fact, both parties had not agreed that the report could be provided beyond the 90-day deadline specified in Article 17.5 of the DSU. On July 30, following receipt of the 60-day notice, the United States wrote to the Appellate Body Division hearing the appeal, seeking further information as to why it would not be possible to circulate its report within the 90-day deadline.

• On August 12, the Division replied that it “considers the DSB should be notified of the reasons for the delay . . . and will furnish such reasons when it circulates the Report.”
This letter together with the September 5 communication2 from the Appellate Body to the DSB furnishing those reasons suggests that the Appellate Body knew at the time of the 60-day notice and the U.S. inquiry what the reasons for the delay were and could have provided them to the DSB and to the parties at that time.

• This lack of transparency on the reasons for the delay and whether there was agreement of the parties is unfortunate.

• Members of course are well aware of the workload of the Appellate Body and have been cooperating, including through DSB decisions to extend the time period for adoption or appeal of panel reports, in the scheduling of appeals. This year, for example, the United States has joined with other Members to propose three such DSB decisions, including in this very dispute.

• In certain appeals, these mechanisms have not been sufficient. For example, where the issues raised on appeal have been numerous or complex or the Appellate Body’s workload has indicated a need for more time, the Appellate Body has in the past made a request to the parties for time beyond the 90 days. In those instances, parties have in our experience always engaged constructively with the Appellate Body to agree on an overall
time period and suitable filing dates for the appeal. The United States has so agreed in two appeals just this year.

• The Appellate Body has then been able to inform the DSB that, with the agreement of the parties, its report would be issued beyond the 90-day deadline. Members have not objected to such an arrangement.

• In this case, however, the Appellate Body did not seek the agreement of the parties or even consult meaningfully with them on this issue.

• This is the first time that the Appellate Body has operated in this fashion. The United States considers that the issuance of a report by the Appellate Body beyond the 90-day deadline in DSU Article 17.5 without meaningful consultation with the parties, and even more importantly without the affirmative agreement of the parties, should not be repeated in the future.

• In sum, the United States is very pleased with the substantive content of the Panel and Appellate Body reports. And it would have been easier for us to focus only on the positive elements today. Where systemic issues are implicated, however, we consider that Members should seek to act systemically, and that is what we have tried to do in this statement.

• With this said, given the circumstances of this dispute, we welcome the adoption of the reports today.