## Facts

- U.S. labor unions petitioned for safeguard relief concerning imports of certain motor vehicles and certain chassis and bodies therefor.
- The U.S. International Trade Commission (USITC) instituted Investigation No. TA-201-44 under Section 201 of the Trade Act of 1974.
- The investigation occurred during an overall economic recession marked by inflation, unemployment, rising interest rates, and higher energy costs.
- The USITC compiled and reviewed data on import levels, domestic production, capacity utilization, employment, profitability, demand conditions, and other industry indicators.
- The record showed a marked decline in U.S. demand for automobiles, with multiple contributing macroeconomic causes identified.
- The Commission transmitted its report and determination to the President on December 3, 1980.

## Issues

1. Whether the domestic industry producing the covered motor vehicles and related chassis and bodies was suffering “serious injury” (or threat thereof) under Section 201.
2. Whether increased imports of the covered products were a “substantial cause” of any serious injury, as distinct from other non-import factors depressing demand.
3. If the statutory standards were satisfied, what form and level of safeguard relief should be recommended to the President.

## Decision

- The USITC determined that the domestic automobile industry was experiencing pronounced distress, including decreased demand.
- The USITC concluded that the decline in industry performance had multiple important causes, including inflation, unemployment, rising interest rates, and higher energy costs.
- Applying the Section 201 “substantial cause” standard, the USITC majority found increased imports were not an important cause that was not less than any other cause of the serious injury.
- Because the statutory causation requirement was not met, the USITC did not recommend the broad safeguard measures requested in the petition.
- Separate views were filed, including a concurrence by one commissioner and a dissent by two commissioners.

## Legal Principles

- Section 201 relief requires (1) serious injury (or threat) to a domestic industry and (2) increased imports that are a “substantial cause” of that injury.
- “Substantial cause” requires import causation that is important and not less than any other cause; industry distress alone is insufficient.
- In evaluating causation, the USITC considers multiple economic indicators (e.g., production, capacity utilization, employment, profitability, inventories, and import penetration) to separate import effects from broader demand shocks.
- Macroeconomic downturns and other non-import factors may defeat a Section 201 petition when they are at least as important as imports in explaining injury.

## Conclusion

The USITC found that the U.S. automobile industry was suffering significant distress but determined that increased imports were not a substantial cause of serious injury under Section 201, so it declined to recommend safeguard relief to the President.


Report to the President on Certain Motor Vehicles and Certain Chassis and Bodies Thereof, Inv. No. TA-201-44, USITC Pub. 1110 (Dec. 3, 1980)