Agreement on Safeguards

Agreement on Safeguards

Subject – Economy

Context – EU steel tariff extension: India may strike back

Concept –

• The Agreement on Safeguards (“SG Agreement”) sets forth the rules for application of safeguard measures pursuant to Article XIX of GATT 1994.
• Safeguard measures are defined as “emergency” actions with respect to increased imports of particular products, where such imports have caused or threaten to cause serious injury to the importing Member’s domestic industry.
• Such measures, which in broad terms take the form of suspension of concessions or obligations, can consist of quantitative import restrictions or of duty increases to higher than bound rates.
• Major guiding principles of the Agreement with respect to safeguard measures are that
  • such measures must be temporary;
  • that they may be imposed only when imports are found to cause or threaten serious injury to a competing domestic industry;
  • that they be applied on a non-selective (i.e., most-favoured-nation, or “MFN”, basis;
  • that they be progressively liberalized while in effect; and
  • that the Member imposing them must pay compensation to the Members whose trade is affected.
• The SG Agreement was negotiated in large part because GATT Contracting Parties increasingly had been applying a variety of so-called “grey area” measures (bilateral voluntary export restraints, orderly marketing agreements, and similar measures) to limit imports of certain products.
• In its own words, the SG Agreement, which explicitly applies equally to all Members, aims to:
  • (1) clarify and reinforce GATT disciplines, particularly those of Article XIX;
  • (2) re-establish multilateral control over safeguards and eliminate measures that escape such control; and
  • (3) encourage structural adjustment on the part of industries adversely affected by increased imports, thereby enhancing competition in international markets.