EU – PET (Pakistan): The Appellate Body confirms the validity of the traditional "break the causal link" approach

In a previous post, I indicated that Pakistan lodged an appeal  regarding the "break the causal link" approach adopted by the European Commission in  EU – PET (Pakistan).  

In this case, the EU Commission began, as usual, its causation analysis by considering first  that a causal link existed between subsidized imports and injury to its domestic industry. The Commission then assessed the “effect of other factors” and found that none broke this link. Thereafter, the Commission concluded that the imports from Pakistan have caused material injury to the EU industry.  

Before the Panel,  Pakistan argued  that the  EU Commission should have adopted the reverse approach. Namely, ensuring in  a  first stage that “the injurious effects caused to the domestic industry by increased imports are distinguished from the injurious effects caused by other factors” and then in a second  stage, determining that subsidized imports cause injury to its domestic industry. The Panel rejected Pakistan's claim that such a reverse approach was necessary for satisfying  the non-attribution requirements of Article 15.5/ SCM. 

The Appellate Body has recently  upheld  this Panel' s rejection:

Article 15.5 does not prescribe any particular methodology an investigating authority must use in carrying out such analysis. Thus, it is possible for an investigating authority to address the two components of causation in two separate steps. In doing so, an investigating authority can consider a "causal link" to exist between the subsidized imports and the injury on the basis of the first step of its analysis, provided that the authority compares the significance of such a "causal link" with the significance of the injurious effects of other known factors and objectively assesses whether this link qualifies as a "genuine and substantial" causal relationship in light of those other factors. We have observed that the Panel correctly found that, while the Commission stated that a "causal link" existed between the subsidized imports and the injury before it turned to its non-attribution analysis, such consideration of a "causal link" was not a final conclusion, and it had not necessarily prejudged the Commission's assessment of the effects of the other known factors.