The guidelines for using safeguard measures under Article XIX of the GATT 1994 are laid out in the Agreement on Safeguards (SG Agreement). Safeguard measures are referred to as emergency measures when increasing imports of a particular commodity have hurt or threaten to seriously hurt the domestic industry of the importing Member. Quantitative import restrictions or duty rises to higher than bound rates can be included in such actions, which in general take the form of suspending concessions or commitments.
Principles of the agreement
The Agreement’s major guiding principles for safeguard measures are that they must be temporary, and they can only be implemented when imports are determined to seriously harm or threaten to seriously harm a domestic industry competitor. The measures must be applied uniformly i.e on a most-favorable-nation basis and they must gradually liberalize while in force. The Member imposing them must compensate the Member whose trade is affected.
Areas covered by the agreement
According to Article 1 of the SG Agreement, it is possible to implement measures under GATT 1994’s Article XIX through the SG Agreement. This means that any action that invokes the use of Article XIX, which permits the suspension of GATT concessions and responsibilities under the specified emergency circumstances, must be performed in conformity with the SG Agreement’s rules.
Rules regulating new safeguard measures
These rules were applied after the WTO Agreement entered into force:
Investigative conditions
Only after an examination by relevant authorities carried out under previously stated processes may further safeguard measures be implemented. Despite the Agreement’s lack of specific procedural criteria, it does call for reasonable public notice of the investigation and the ability for interested parties (importers, exporters, producers, etc.) to express their opinions and counter those of others. The public’s interest in a safety measure is one of the subjects on which opinions are to be solicited. The responsible authorities are required to produce a report outlining their conclusions on all relevant concerns, together with evidence supporting the applicability of the criteria considered. The Agreement also specifies guidelines for how confidential information should be handled during an investigation.
The factual basis for determining serious injury or threat of serious injury
According to the Agreement, severe injury is defined as a material decline in a domestic industry’s position. A threat of serious injury refers to a threat that is demonstrably impending and supported by evidence, as opposed to a threat that is only an allegation or a remote possibility. Investigating authorities must consider all pertinent factors that have an impact on the state of the industry when determining whether serious injury or threat is present. Injury caused by other factors should not be attributed to imports.
Use of the measures
Within specific parameters, safeguard measures may only be used to the degree required to treat or prevent significant injury and to ease the adjustment. Unless there is a compelling reason to do otherwise, a quantitative restriction must not be lower than the actual import level of the most recent three sample years. Rules also apply to the distribution of quota shares among supply nations, compensation for Members whose trade is impacted, and consultations with Members who are affected. Any safety measure may not last longer than four years unless it is extended under the terms of the Agreement. For example, a measure may only be continued if it is determined that doing so is required to stop or rectify substantial harm, and only if there is evidence that the industry is adapting. The initial application term plus any extensions are typically limited to eight years.
Concessions and other obligations
The Member shall continue to provide essentially equal levels of concessions and other responsibilities to the Affected Exporting Members while implementing a safeguard measure. With the impacted Members, any suitable kind of trade compensation may be decided. Without such an agreement, any of the affected exporting Members may separately suspend concessions and other commitments that are substantially identical. This latter entitlement is not exercisable for the first three years following the implementation of a safeguard measure if the measure is based on an absolute increase in imports and otherwise complies with the Agreement’s terms.
Members of developing countries
Members from developing countries are given special consideration when applying their safeguard measures as well as the safeguard measures of other Members. When a single developing country Member’s products make up no more than 3 percent of the total relevant imports, a safeguard measure won’t be imposed as long as the products from those low-import-share developing country Members collectively don’t account for more than 9 percent of imports. Developing nation Members may extend the use of a safeguard measure for an additional two years past what is typically allowed. For developing nation Members, there are also fewer restrictions on re-applying safeguard measures concerning a certain product.
Institutions and global surveillance
A Committee on Safeguards was established and given the responsibility of, among other things, assessing safeguard notifications to perform multilateral supervision of the application of safeguard measures. Members must inform the Committee when investigations into the existence of serious injury or threat, along with their justifications, are launched. The committee must also be informed when serious injury or threat is discovered to have been caused by increased imports, and when safeguard measures are decided to be applied or extended. Such notices must include the pertinent data upon which the determinations are based.
