EPRS Admin By / October 27, 2017

Safeguard initiation 1995-2016, and EU total safeguard initiation

Beyond renegotiations under Article XXVIII GATT, WTO Contracting Parties can raise their tariffs on a product introducing a safeguard measure…

Safeguard initiation 1995-2016, and EU total safeguard initiation

Beyond renegotiations under Article XXVIII GATT, WTO Contracting Parties can raise their tariffs on a product introducing a safeguard measure (Article XIX GATT and the Agreement on Safeguards). A safeguard measure is a trade remedy which entails the temporary introduction of a higher duty or a quantitative restriction (or a combination of both instruments) against all trading partners, whenever an industry faces a serious threat of injury due to a sudden increase in imports. This rule embodies the acknowledgement of those drafting the GATT, that although trade leads to efficient distribution and growth, it may provoke some adjustments that have social and economic cost for the economy. As Bourgeois mentions, the possibility of applying safeguard measures represents the safety-valve introduced into the agreement by the GATT’s authors. At the same time, the introduction of safeguards is limited by strict conditions:
(a) The Contracting Party must prove the sudden increase in imports; such an increase must be due to unforeseen developments, and that this increase is due to the effect of the obligations incurred by a member.
(b) The Contracting Party must prove a serious injury or a threat of serious injury to its domestic economy due to the increase in imports. The Contracting Party must prove causality.
(c) The application of the measure must be proportional, in other words the measure must not be more restrictive than the level needed to remedy or prevent the injury from happening. Moreover the measure is temporary, it must be subject to a four year limit that can be extended for another four. In other words, safeguard measures (including any preceding provisional application of a measure before the end of the investigation in critical circumstances or following evidence of threat or injury), should not be applied for more than eight years.
(d) As in the case of renegotiation in GATT, the Safeguard Agreement envisages the maintenance of the initial negotiating balance. That means that if a Contracting Party introduces a safeguard measure raising protection in one industry, the Party must compensate affected Contracting Parties by lowering barriers in other industries, to achieve a level of openness of the economy equivalent to that which existed before the introduction of the safeguard. In a case where the Contracting Party introducing the safeguard measure fails to provide compensation, affected parties are allowed to retaliate.

Because of the above condition, safeguard measures have not been used in similar quantities to other trade remedy measures (such as antidumping or antisubsidy – see below). The graph below represents all countries that have initiated safeguard investigations more than 10 times over the period 1995-2016, compared to the European Union, which used it on only 5 occasions.


Related Articles

Be the first to write a comment.

Leave a Reply