1. United States — Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tires from China
By Firas Bannourah, Judith Bartkowski and Hennewaah Asomah 

2. Foreign Disruption of Domestic Industry
USITC determined that there was market disruption resulting from rapidly increasing imports of certain passenger-vehicle and light-truck tires from China that were a significant cause of material injury to the domestic industry.
Following Obama’s Presidential decision additional duties were imposed on subject tires imports for a three year period in the amount of 35 per cent ad valorem in the first year, 30 per cent ad valorem in the second year and  25 per cent ad valorem in the third year, ending in 2012.
It was reported that the “tariff saved 1,200 U.S. tire jobs, which had been in sharp decline. And U.S. tire production rose after a major decline.”
-CNN Money

3. The First Appeal: WTO DSB
September 2009 Complaint: US initiated safeguards in the form of significantly high tariffs on imports of tires from China, compared to other importers. China requests that the WTO Dispute Settlement Body (DSB) form a panel to review the complaint. DSB establishes panel: The European Union, Japan, Chinese Taipei, Turkey and Viet Nam reserving their third-party rights. China claims that the US had seven specific violations in the dispute based on Article 16 of the Accession Chinese Protocol and GATT 1994.

4. Accession Chinese Protocol
China alleges that these measures are inconsistent with the United States' obligations under China's Protocol of Accession, specifically:
the United States failed to evaluate properly whether imports from China were in “such increased quantities” and “increasing rapidly” as required by paragraphs 16.1 and 16.4 of the Protocol;  
the US statute implementing the causation standard of paragraph 16 into US law was inconsistent “as such” with paragraphs 16.1 and 16.4 of the Protocol; 
the United States failed to evaluate properly whether imports from China were a “significant cause” as required by paragraphs 16.1 and 16.4 of the Protocol; 

5. Accession Chinese Protocol
the United States imposed a transitional safeguard measure that went beyond the “extent necessary”, and thus it was inconsistent with paragraph of the Protocol;  
the United States imposed a transitional safeguard measure for a three-year period that went beyond “such period of time” that was “necessary”, and thus it was inconsistent with paragraph 16.6 of the Protocol.

6. GATT 1994
According to China, US increased tariffs are inconsistent with the GATT 1994 and the Agreement on Safeguards.
the transitional safeguard measure (increased tariff) was inconsistent with Article I:1 of the GATT 1994 as the United States did not accord the same treatment that it grants to passenger vehicle and light truck tyres originating in other countries to like products originating in China;
Most-favoured-nation (MFN): WTO agreement that member countries cannot discriminate in offerings between WTO members. China claims that the increase of tariffs on Chinese imports is inconsistent with other WTO countries and violates agreement.
The transitional safeguard measure is inconsistent with Article II:1(b) of the GATT 1994 as the tariffs consist of unjustified modifications of US concessions on passenger vehicle and light truck tyres under the GATT 1994.

7. Panel’s Findings and Conclusions
China argued that despite the absolute increases in subject imports, a decline in the rate of increase in the final year of the period of investigation (2008) meant that subject imports were not “increasing rapidly” in accordance with paragraph 16.4 of the Protocol.  The panel disagreed and found that subject imports were increasing rapidly, both absolutely and relatively, in accordance with the Protocol.
China asserted that the United States' “contributes significantly” definition in its statute was at odds with the ordinary meaning of the “significant cause” standard in paragraph 16.4 of the Protocol.  The panel rejected this “as such” argument.
China claimed that the USITC failed to properly demonstrate that subject imports were a “significant cause” of market disruption.  China's claim was based on three principal arguments: (1) a failure by the USITC to show conditions of competition between subject imports and the domestic product to support a finding of causation; (2) a failure by the USITC to establish any temporal correlation between rapidly increasing subject imports and material injury to the domestic industry; and (3) a failure by the USITC to address alternative causes of material injury to the domestic industry.  The panel rejected all of China's arguments.

8. Panel’s Findings and Conclusions
China claimed that the remedy applied in this case was inconsistent with paragraph 16.3 of the Protocol as it was not limited to the market disruption caused by rapidly increasing imports; and that, contrary to paragraph 16.6, the three year duration exceeded the period of time necessary to prevent or remedy the market disruption.  The panel found that China had failed to establish a prima facie case in relation to both of these remedy claims.
The panel found that China's claims under GATT 1994 were dependent on its claims under paragraph 16 of the Protocol.  They were, therefore, similarly unsuccessful.

9. Article 16 Specific WTO agreement and specific provisions involved:
16. Transitional Product-Specific Safeguard Mechanism
1. “In cases where products of Chinese origin are being imported into the territory of any WTO Member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products, the WTO Member so affected may request consultations with China with a view to seeking a mutually satisfactory solution, including whether the affected WTO Member should pursue application of a measure under the Agreement on Safeguards. Any such request shall be notified immediately to the Committee on Safeguards.”
4. ”Market disruption shall exist whenever imports of an article, like or directly competitive with an article produced by the domestic industry, are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury to the domestic industry. In determining if market disruption exists, the affected WTO Member shall consider objective factors, including the volume of imports, the effect of imports on prices for like or directly competitive articles, and the effect of such imports on the domestic industry producing like or directly competitive products.”

10. The Second Appeal: Appellate Body
May 2011, China notified the DSB of its decision to appeal aspects of the Panel's finding that in imposing the safeguard measure in respect of imports of certain passenger vehicle and light truck tyres from China, the United States did not act inconsistently with its obligations under Section 16 of China's Accession Protocol.
Appellate Body of the World Trade Organization is a standing body that hears appeals from reports issued by panels in disputes brought by WTO members.
The Appellate Body upheld the Panel's finding that the USITC did not fail to properly evaluate whether imports from China met the specific threshold under Paragraph of China's Accession Protocol of “increasing rapidly”.

11. THE SECOND APPEAL: Appellate Body
The Appellate Body found that the Panel did not err in concluding that the USITC properly found that imports from China had injurious effects independent of changes in demand;  and did not improperly attribute to Chinese imports the effects of imports from third countries.
The Appellate Body said the Panel's analysis was sufficient particularly given that, under Paragraph 16.4 of the Protocol, rapidly increasing imports from China may be one of several causes that contribute to producing or bringing about material injury to the domestic industry.

12. IMPLEMENTATION
The rules in the transitional safeguards agreement were upheld. That is the additional tariffs for the three-year period on the tires was continued.
There were no sanctions.

13. OBSERVATION
Article illustrating that the industry did not improve after the safeguards were implemented. This begs the argument: Chinese increased imports did not have an impact on the US domestic industry because the safeguards had no reversal impact.
Political Context of 2009, right after the recession of Could the Chinese have argued that the recession was the key factor in the injury of the industry.

14. CONCLUSION
 What is unique is that the steel workers labor union was the one who brought the case to the USITC.
 Furthermore, China's own accession agreement made it possible for the US to implement the higher tariffs under the Safeguards agreement
 Though on first look the higher tariffs may appear to violate Article I of the GATT, the WTO gave credibility to the US authorities and their assessment of this tariff protecting the tire industry of the US.

15. END OF PRESENTATION
QUESTIONS?

16. REFERENCE