08 Autom
ne
M y C o u r s e s e r i e s
OBJECTIVES
Overview of Trade Remedies in the WTO framework;
Explain the disciplines related to Safeguards in the WTO.
WTO E-LEARNING COPYRIGHT © 12
Introduction to Safeguards in the WTO
2
I. INTRODUCTION
Safeguard measures
A WTO member may take a “safeguard” action (i.e., restrict imports of a product temporarily) to protect a
specific domestic industry from an increase in imports of any product which is causing, or which is threatening
to cause, serious injury to the industry.
Safeguard measures were always available under the GATT (Article XIX). However, they were infrequently
used, and some governments preferred to protect their industries through “grey area” measures (“voluntary”
export restraint arrangements on products such as cars, steel and semiconductors).
The WTO Safeguards Agreement broke new ground in prohibiting “grey area” measures and setting time limits
(“sunset clause”) on all safeguard actions.
The WTO Agreements include provisions which allow Members to depart from The WTO Agreements include
provisions which allow Members to depart from
the basic principles on non-discrimination applicable to trade between WTO Members (the Most-
Favoured-Nation (MFN) and National Treatment principles),
rules related to tariff and non-tariff barriers (NTBs), including the disciplines related to commitments on
maximum bound tariff rates, and
the general prohibition on quantitative restrictions (QRs) (such as quotas), subject to certain conditions.
In this Module, you will study those provisions concerned with the application of safeguard measures in case
of a surge of imports that causes, or threatens to cause, serious injury.
World Trade Organization (WTO) Members have retained their right to impose trade remedies, such as
anti-dumping and countervailing duties, to correct the competitive imbalances created by unfair trade practices
- dumping and subsidies -,when these cause injury. They have also agreed on multilateral disciplines
governing the granting of subsidies. Members are also allowed to apply safeguard measures in case of a surge
of imports that causes, or threatens to cause, serious injury. Unlike anti-dumping and countervailing
measures, the application of safeguard measures does not depend on unfair trade practices.
This Module will present an overview of the WTO disciplines and conditions for the application of safeguard
measures.
Disputes arising regarding the granting of subsidies and the application of anti-dumping, countervailing and
safeguard measures are subject to the Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU).
3
Rationale behind trade remedies – A policy perspective
At first sight, it might seem that trade remedies "go against" trade liberalization. One may ask: Why have
Members agreed on rules that provide them the right to restrict trade temporarily? What role do trade
contingency measures -in the form of trade remedies- play in trade agreements?
Trade liberalization around the world has reduced tariff rates to low levels, producing "winners" and "losers"
in each country. However, countries typically do not have identifiable mechanisms for extracting part of the
income gains from the "winners" in order to compensate the "losers" from trade liberalization. Furthermore,
economic circumstances may evolve in a way which makes the maintenance of policies in favour of trade
liberalization untenable because of large adjustment costs.
In light of these considerations, trade agreements may provide governments with a means to depart
temporarily from certain core obligations contained therein under well defined conditions. Safeguard,
anti-dumping and countervailing measures are alike to the extent that they can be used temporarily to
"shield" vulnerable sectors from the consequences of lower tariff protection in certain circumstances. Without
the possibility of applying these measures, political pressures may build up to a point where protectionist
forces would be able to engineer a permanent reversal of trade liberalization. Accordingly, trade remedies
may be considered as a pragmatic –- and temporary -- tool to deal with the costs of adjustment resulting
from trade liberalization as well as to deflate the build-up of domestic pressures against liberalization.
Based on: World Trade Organization (WTO), World Trade Report 2007, Geneva: WTO p. 152-153.
4
II. IN BRIEF: TRADE REMEDIES
Members are allowed to apply trade defence mechanisms to remedy a situation of unfair trade practices
(anti-dumping and countervailing measures) or a surge of imports (safeguard measures) when these cause
injury to the domestic industry and subject to certain requirements. Even if these measures are not referred
to as exceptions, they also allow Members to depart – temporarily - from certain core WTO obligations, for
example, to impose tariffs above the bound levels or QRs (depending on the measure).
Anti-dumping, countervailing and safeguard measures have some common features, but also differ in some
aspects. A common feature is that they can be applied only after conducting a domestic investigation where
certain substantive and procedural requirements provided in the respective agreement are met. Many Members
handle anti-dumping and countervailing procedures under a single law, apply a similar process to deal with
them and give a single authority responsibility for investigations. From the three mechanisms, anti-dumping
and countervailing measures are more frequently used than safeguard measures.
Dumping is an action by private firms and thus, it is not prohibited by the Anti-Dumping Agreement. Instead,
the Agreements governs the use of anti-dumping measures. By contrast, in the case of subsidies, it is the
government or a private body following government's instructions which provides the subsidy. Therefore, the
Agreement on SCM includes both disciplines on the use of subsidies as well as upon the use of countervailing
measures by WTO Members. Rather, the application of safeguard measures does not depend on unfair
practices.
With regard to the substantive requirements applied to these measures, in the case of anti-dumping and
countervailing measures, it is necessary to demonstrate that dumped imports or subsidized imports are
causing or threatening to cause material injury to the domestic industry producing the like products. Instead,
for the application of safeguard measures, it is necessary to show that increases imports are causing or
threaten to cause serious injury (imposes a higher standard than material injury) to the domestic industry
producing the like or directly competitive products (a concept which is broader than just "like" products).
Moreover, safeguard measures must be applied as a result of unforeseen developments and of the effect of the
obligations incurred by a contracting party under the GATT 1994.
In addition, investigating authorities have to comply with a number of procedural requirements (conditions for
the initiation of investigations, evaluation of evidence, application of provisional measures, transparency
provisions, duration and review of the measures, etc). The procedural requirements provided for the three
measures are fairly similar, although there are also important differences, especially in the context of
safeguard measures.
While anti-dumping duties would be applied to the products of enterprises found to be practicing dumping,
countervailing duties would be placed on products of enterprises benefiting from the subsidies. Since
safeguard measures have to be applied, in principle, on an MFN basis, they will have to target the imports of
the like or directly competitive products of all WTO Members concerned (in the context of special and
differential treatment, only products coming from developing countries may be excluded under certain
circumstances). In addition, in the case of safeguard measures, the Member will offer compensation to the
affected Members.
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ANTI-DUMPING
MEASURES
COUNTERVAILING
MEASURES
SAFEGUARD MEASURES
Objective To counteract dumping
causing injury to the
domestic industry.
To counteract
subsidization causing
injury to the domestic
industry.
To prevent or remedy
serious injury to the
domestic industry caused
by a surge of imports and
give time to facilitate
adjustment.
Substantive
Requirements
Dumped imports
Material injury
Causal link
Subsidized imports
Material injury
Causal link
Increased imports
Serious injury
Causal link
The measure must be
applied as a result of
unforeseen developments
and of the effect of the
obligations incurred by a
contracting party under
the GATT 1994.
Recipient of the
Measure
Products of enterprises
practicing dumping.
Products of enterprises
benefiting from
subsidies granted by
Members.
Products of enterprises of
Members.
Form of the Measures Anti-dumping duty (may
exceed bound tariff rate).
Countervailing duty
(may exceed bound
tariff rate).
Among others, tariff duty
increase (may exceed
bound tariff rate) or
quota.
6
III. SAFEGUARD MEASURES
III.A. INTRODUCTION
A WTO member may take a “safeguard” action (i.e., restrict imports of a product temporarily) to protect a
specific domestic industry from an increase in imports of any product which is causing, or which is threatening
to cause, serious injury to the industry.
Safeguard measures were always available under the GATT (Article XIX). However, they were infrequently
used, and some governments preferred to protect their industries through “grey area” measures (“voluntary”
export restraint arrangements on products such as cars, steel and semiconductors).
The WTO Safeguards Agreement broke new ground in prohibiting “grey area” measures and setting time limits
(“sunset clause”) on all safeguard actions.
IN BRIEF
Article XIX of the GATT 1994 and the Agreement on Safeguards (or "Safeguards Agreement") allow Members
to apply safeguard measures only after determining, pursuant to an investigation carried out in accordance
with such rules, that a product is being imported in such increased quantities and under such conditions as to
cause or threaten to cause serious injury to the domestic industry producing like or directly competitive
products. While the Safeguards Agreement does not expressly delimit the possible form of a safeguard
measure, it envisages that safeguard measures may take the form of tariffs above the bound rate or
quantitative restrictions.
Unlike anti-dumping and countervailing measures, the application of safeguard measures does not require an
unfair trade action. Instead, the objective of safeguard measures is to provide a temporary remedy while
facilitating structural adjustment of the industry adversely affected by increased imports, thereby enhancing
competition in international markets. An affected WTO Member may challenge another Member's failure to
comply with any of the requirements provided for the imposition of safeguard measures through the WTO
dispute settlement mechanism.
The provisions on safeguard measures apply to all products, including agricultural goods. The Agreement on
Agriculture also contains rules for the application of a special safeguard for agricultural goods subject to
certain requirements; this differs from the provisions governing the application of the general safeguard
mechanism.
III.B. RELATIONSHIP BETWEEN ARTICLE XIX OF THE GATT
1994 AND THE AGREEMENT ON SAFEGUARDS
Safeguard measures were available under Article XIX of the GATT 1947 (the so-called "escape clause"). The
general provisions on safeguards contained in Article XIX of the GATT 1947 (superseded by Article XIX of the
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GATT 1994) were clarified and reinforced by the Agreement on Safeguards adopted during the Uruguay
Round.
Some clarity about the relationship between Article XIX of the GATT 1994 and the Agreement on Safeguards is
provided in Articles 1 and 11.1(a) of the Agreement on Safeguards: the Safeguards Agreement establishes
rules for the application of safeguard measures (i.e. those measures provided for in Article XIX); and a Member
shall not take or seek any emergency action on imports of particular products as set forth in Article XIX of
GATT 1994 "unless such action conforms with the provisions of that Article applied in accordance with [the
Safeguards Agreement]".
Thus, any safeguard measure imposed after the entry into force of the WTO Agreements must
comply with the provisions of both the Agreement on Safeguards and Article XIX of the GATT 1994
(Korea - Dairy, Appellate Body Report, para. 77).
In addition to the conditions provided in the Agreement on Safeguards (explained below), Article XIX of the
GATT 1994 provides that the increase in imports has to occur as a result of unforeseen developments and
of the effect of the obligations incurred by a Member under the GATT 1994, including tariff
concessions.
III.C. PROCEDURE FOR THE APPLICATION OF SAFEGUARD
MEASURES
III.C.1. SUBSTANTIVE REQUIREMENTS
Article 2.2 of the Agreement on Safeguards provides that safeguard measures shall be applied to a product
being imported irrespective of its source. Thus, safeguard measures must be applied, in principle, on an
MFN basis. Article 2 also sets forth the conditions under which safeguard measures may be applied.
Conditions for the Application of Safeguard Measures
Safeguard measure may only be applied as a result of unforeseen developments and of the effect of the
obligations incurred by a contracting party under the GATT (Article XIX of the GATT 1994). According to
Article 2 of the Agreement on Safeguards, a Member may apply a safeguard measure only after determining,
pursuant to an investigation, the existence of the following conditions:
Increased quantity of imports in absolute or relative terms;
Serious injury caused, or threatened to be caused, to the domestic industry producing the "like or
directly competitive" products; and,
Causal link between the increased imports and the injury.
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a. RESULT OF UNFORESEEN DEVELOPMENTS AND OF THE EFFECT OF THE OBLIGATIONS
INCURRED UNDER THE GATT 1994
According to Article XIX of the GATT 1994, a safeguard measure may only be applied as a result of unforeseen
developments and of the effect of the obligations incurred by a Member under the GATT, including tariff
concessions.
In this regard, the Appellate Body has stated that safeguard measures may only be taken in circumstances not
reasonably expected when the Member bound its tariff levels (Argentina- Footwear, Appellate Body
Report, paras. 91-96). According to the Appellate Body, the existence of unforeseen developments is a
"pertinent issue of fact and law" under Article 3.1 of the Safeguards Agreement; hence, the published report
of the competent authorities must contain a "finding" or "reasoned conclusion" on unforeseen
developments (US- Lamb, Appellate Body Report, para. 76).
b. INCREASED IMPORTS
As noted, the determination of increased quantity of imports that a Member must make before it may apply a
safeguard measure can be of either an absolute increase or an increase relative to domestic production.
In Argentina – Footwear, the Appellate Body stated that the increase in imports must have been recent,
sudden, sharp and significant enough, both quantitatively and qualitatively, to cause or threaten to
cause injury (Argentina – Footwear, Appellate Body Report, para. 131).
c. SERIOUS INJURY
Before a safeguard measure can be imposed, the WTO Member must have determined that serious injury is
caused or is threatened to be caused to the domestic industry producing the like or directly
competitive product. Article 4.1(a) of the Agreement on Safeguards defines serious injury as "a
significant overall impairment in the position of a domestic industry" and a "threat of serious injury" as
"serious injury that is clearly imminent", "based on facts, and not merely on allegation, conjecture or remote
possibility". If serious injury is not found, a safeguard measure nevertheless can be applied if a threat of
serious injury is found.
In determining injury or threat thereof, a "domestic industry" shall be understood to mean "the producers as a
whole of the like or directly competitive products operating within the territory of a Member, or those whose
collective output of the like or directly competitive products constitutes a major proportion of the total
domestic production of those products" (Article 4.1(c)). This definition is broader than the one provided for
the application of anti-dumping and countervailing measures, since it may include not only producers of "like
products" but also producers of "directly competitive products".
In determining whether serious injury is present, investigating authorities are to "evaluate all relevant
factors of an objective and quantifiable nature having a bearing on the situation of that industry"
(Article 4.2(a); see e.g. Argentina – Footwear, Appellate Body Report, paras. 136, 138). Article 4.2(a)
provides that competent authorities shall evaluate, in particular: the rate and amount of the increase in
imports of the product concerned in absolute and relative terms, the share of the domestic market taken by
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increased imports, changes in the level of sales, production, productivity, capacity utilisation, profits and losses
and employment of the domestic industry.
The standard of "serious injury" required for the application of safeguard measures is higher than
the "material injury" envisaged in the Anti-Dumping Agreement and the SCM Agreement. According
to the Appellate Body, this accords with the object and purpose of the Agreement on Safeguards since the
application of a safeguard measure does not depend upon "unfair" trade actions, as is the case with
anti-dumping or countervailing measures (US – Lamb, Appellate Body Report, para. 124).
d. CAUSAL LINK BETWEEN THE INCREASED IMPORTS AND INJURY
The determination of serious injury cannot be made unless there is objective evidence of the existence of a
causal link between increased imports of the product concerned and serious injury.
Further, when factors other than increased imports are causing injury to the domestic industry at the
same time, such injury must not be attributed to increased imports (the so-called "non-attribution
requirement") (Article 4.2(b)).
However, this does not require that increased imports be ''sufficient'' to cause, or threaten to cause, serious
injury. Nor does this require that increased imports ''alone'' be capable of causing, or threatening to cause,
serious injury. The causal link between increased imports and serious injury may exist, even though
other factors are also contributing, at the same time, to the situation of the domestic industry.
According to the Appellate Body, the non-attribution language in Article 4.2(b) means "that the effects of
increased imports, as separated and distinguished from the effects of other factors, must be examined to
determine whether the effects of those imports establish a "genuine and substantial relationship of cause and
effect" between the increased imports and serious injury" (US – Wheat Gluten Safeguard, Appellate Body
Report, para. 67; and, US – Lamb, Appellate Body Report, paras. 168-170).
III.C.2. PROCEDURAL REQUIREMENTS
As mentioned above, as with the other trade remedy measures, a crucial pre-condition to be satisfied before a
safeguard measure can be imposed is that an investigation must be conducted by competent authorities in
accordance with established procedures (Article 3). The investigations under the Agreement on Safeguards
have to fulfil certain requirements, which are similar to those provided for the investigations on anti-dumping
and countervailing measures. The main rules applicable to safeguard investigations are the following:
TRANSPARENCY, DUE PROCESS PROVISIONS AND PUBLIC INTEREST: the Agreement on
Safeguards requires publication of a report on the case explaining the investigating authorities'
findings and reasoned conclusions on all pertinent issues of fact and law, including a demonstration of
the relevance of the factors examined. In addition, investigating authorities are required to provide
reasonable public notice of the investigation to all interested parties (importers, exporters,
producers, etc.) and hold public hearings or provide other appropriate means for interested parties
to present their views, including on the issue of whether or not the application of a safeguard
measure would be in the public interest (see Articles 3.1 and 4.2(c)).
PROVISIONAL MEASURES: in critical circumstances where delay would cause damage which it
would be difficult to repair, a provisional safeguard measure may be imposed if there is clear
10
evidence and a preliminary determination that increased imports have caused or are threatening
to cause serious injury. Such measures should take the form of tariff increases to be promptly
refunded if the subsequent investigation does not determine that increased imports have caused or
threatened to cause serious injury to the domestic industry. The duration of the provisional measure
shall not exceed 200 days. The period of application of any provisional measure must be included
in the total period of application of the safeguard measure (Article 6).
CONFIDENTIAL INFORMATION: the Agreement contains specific rules for the handling of
confidential information in the context of an investigation. In general, there is a basic obligation to
respect the confidentiality of any information which is by nature confidential or which is provided on a
confidential basis, upon good cause being shown (Article 3.2).
CONSULTATIONS: a Member proposing to apply or extend a safeguard measure shall provide
adequate opportunity for prior consultations with those WTO Members having a substantial
interest as exporters of the product concerned (Article 12.3).
APPLICATION OF SAFEGUARD MEASURES: other than the general requirement that safeguard
measures be applied only to the extent necessary to remedy or prevent serious injury to facilitate
adjustment, the Agreement provides no guidance as to how the level of safeguard measures in the
form of an increase in the tariff above the bound rate should be set. In the case of
quantitative restrictions, the level must not be below the actual import level of the most recent
three respresentative years for which statistics are available, unless there is clear justification that a
different level is necessary to prevent or remedy serious injury (Article 5.1). The Agreement governs
how quota shares are to be allocated among supplier countries based on past market shares
(Article 5.2(a)).
MAXIMUM DURATION: the maximum duration of any safeguard measure is four years, unless it is
extended in consistency with the Agreement's provisions. In particular, a measure may be extended
only if it is found, through a new investigation, that its continuation is necessary to prevent or
remedy serious injury, and only if evidence shows that industry is adjusting (Articles 7.1 and 7.2).
The total period generally cannot exceed eight years (Art. 7.3), although for developing countries
it may last a maximum of 10 years (Article 9.2). Safeguard measures in place for longer than
one year must be progressively liberalized at regular intervals during the period of application. Any
measure of more than three years duration must be reviewed at mid-term. If appropriate, based on
that review, the Member applying the measure must withdraw it or increase the pace of its
liberalization (Article 7.4).
PAYMENT OF COMPENSATION: a Member proposing to apply a safeguard measure must
endeavour to maintain a substantially equivalent level of concessions and other obligations with
respect to affected exporting Members. To do so, any adequate means of trade compensation may
be agreed among the affected Members through consultations. Absent such agreement on
compensation within 30 days, the affected exporting Members individually may suspend equivalent
concessions and other obligations, unless the Council for Trade in Goods disapproves (Articles 8.1
and 8.2). The right to suspend concessions cannot be exercised during the first three years of
application of a safeguard measure if the measure is taken based on an absolute increase in imports,
and otherwise conforms to the provisions of the Agreement (Article 8.3).
RE-APPLICATION OF SAFEGUARD MEASURES: special rules limit re-application of safeguard
measures to a given product (Articles 7.5 and 7.6).
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III.C.3. PROVISIONS ON SPECIAL AND DIFFERENTIAL TREATMENT
Developing country Members receive special and differential treatment with respect to other Members'
safeguard measures, in the form of a "de minimis" import exemption. That is, where imports from a single
developing country Member account for no more than three per cent of the total imports of the product
concerned, and provided that developing country Members below this threshold on an individual basis do not
collectively account for more than nine per cent of those imports, such imports shall be excluded from the
measure (Article 9.1).
As Members applying these measures, developing country Members also receive special and differential
treatment with regard to permitted duration of extensions, and with respect to re-application of
measures (Article 9.2).
EXERCISES
1. Explain the difference between the objective of the Agreement on Safeguards and the objective of
Agreement on Anti-Dumping.
2. Enumerate the substantive requirements for the application of safeguard measures. How do they differ
from the substantive requirements provided for the application of anti-dumping and countervailing
measures?
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IV. MONITORING BODIES AND NOTIFICATION
REQUIREMENTS
MONITORING BODIES AND NOTIFICATION REQUIREMENTS
ANTI-DUMPING
MEASURES
SUBSIDIES AND
COUNTERVAILING
MEASURES
SAFEGUARD
MEASURES
MONITORING
BODY
Committee on Anti-
Dumping Practices
Committee on Subsidies and
Countervailing Measures
Committee on
Safeguards
Reporting to the Council for Trade in Goods, these Committees provide Members with
the opportunity to discuss any matters relating to the Agreements, including Members'
notifications of laws and regulations and the application of
anti-dumping/countervailing/safeguard measures (Article 16 of the Anti-Dumping
Agreement, Article 24 of the SCM Agreement and Article 13 of the Agreement on
Safeguards).
MAIN
NO
TIF
ICATIO
N R
EQ
UIR
EM
EN
TS
LEGISLATION Notify to the relevant Committee domestic laws and procedures governing the initiation
and conduct of investigations concerning the application of
anti-dumping/countervailing/safeguard measures (including the texts of the
regulations), as well as any modification to such measures (Articles 16.5 and 18.5 of the
Anti-Dumping Agreement, Articles 25.12 and 32.6 of the SCM Agreement, and
Article 12.6 of the Agreement on Safeguards).
In addition, for SUBSIDIES:
Notify all specific subsidies (at all
levels of government and covering
all goods sectors, including
agriculture) to the Committee
(Articles 25 and 26). On the
periodicity of notifications,
Article 25.1 provides for annual
submission; at past SCM
Committee meetings, the Chair
has noted Members' views that
their resources would be best
utilized by giving maximum
priority to submitting new and full
subsidy notifications every two
years and by de-emphasizing the
review of updating notifications in
the intervening years.
ADOPTION OF
MEASURES
Notify to the Committee, without delay, all preliminary or final anti-
dumping/countervailing/safeguard actions taken. Members shall also submit, on a
semi-annual basis, reports of any action taken within the preceding six months
(Article 16.4 of the Anti-Dumping Agreement, Article 25.11 of the SCM Agreement.)
(See also Article 12 of the Agreement on Safeguards).
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In addition:
Notify domestic authority
competent to initiate and
conduct AD investigations
(Article 16.5 of the
Anti-Dumping Agreement).
In addition:
Notify domestic authority
competent to initiate and
conduct countervailing
duty investigations
(Article 25.12 of the SCM
Agreement).
In addition:
Notify initiation of an
investigation and results
of consultations
(Articles 12.1 and 12.5 of
the Agreement on
Safeguards). Also if a
measure does not apply to
one or more developing
countries in accordance to
Article 9 (Article 9.1 of the
Agreement on Safeguards).
Table 1: Monitoring bodies and notification requirements
NOTIFICATION FORMATS
Anti-Dumping Agreement: Semi-annual report (G/ADP/1), Preliminary and final anti-dumping actions
(G/ADP/2).
SCM Agreement: Subsidies (G/SCM/6, Rev. 1), Laws and regulations (G/SCM/N/1), Semi-annual report
(G/SCM/2).
Agreement on Safeguards: Initiation of an Investigation (G/SG/N/6), Safeguard measure not applied to one
or more developing countries (G/SG/1), Decision to apply measures, including provisional measures and
consultations with Members (G/SG/1).
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V. COMPARATIVE CHART: ANTI-DUMPING,
COUNTERVAILING AND SAFEGUARD
MEASURES
ANTI-DUMPING
MEASURES
COUNTERVAILING MEASURES SAFEGUARD MEASURES
Objective To counteract dumping
causing injury to the
domestic industry
To counteract subsidization that
is causing injury to the domestic
industry
To prevent or remedy
serious injury to the
domestic industry caused
by a surge of imports (no
unfair practice) and give
time to facilitate
adjustment to
competition
Nature of the
Measure
Discriminatory (non-MFN) Discriminatory (non-MFN) Non-discriminatory (MFN,
in principle)
Substantive
Requirements
1.Dumped Imports
2. Material Injury
3. Causal link
1. Subsidized Imports
2. Material Injury
3. Causal link
1. Increased Imports
2. Serious Injury
3. Causal link
In addition, the measure
must be applied as a
result of unforeseen
developments and of the
effect of the obligations
incurred by a contracting
party under the GATT.
Product
Coverage
Like Products Like Products Like or Directly
Competitive Products
Basis of the
Measure
Margin of Dumping Margin of Subsidy Necessity to prevent or
remedy serious injury and
facilitate adjustment
Recipient of the
Measure
Products of Enterprises
practicing dumping
Products of Enterprises
benefiting from subsidies
granted by Members
Products of Enterprises of
Members
Form of the
Measure
Anti-dumping duty (may
exceed bound tariff rate)
Countervailing duty (may
exceed bound tariff rate)
Among others, tariff duty
increase (may exceed
bound tariff rate) or
quota
Duration of the
Measure
Provisional Measure:
a maximum of 4 months or
6 months (on decision of
the authority and upon
Provisional Measure:
a maximum of 4 months
Provisional Measure:
a maximum of 200 days
15
request)
Final Measure:
in principle, only as long as
and to the extent necessary
to counteract dumping
causing injury; however,
termination no later than
5 years from imposition
unless determination, in a
review initiated prior to that
date, that expiry of the duty
would be likely to lead to
continuation or recurrence
of dumping and injury.
Final Measure:
in principle, only as long as and
to the extent necessary to
counteract subsidization causing
injury; however, termination no
later than 5 years from
imposition unless determination,
in a review initiated prior to that
date, that expiry of the duty
would be likely to lead to
continuation or recurrence of
subsidization and injury.
Final Measure:
4 years
(can be extended to 8
years – 10 years for
developing country
Members).
Compensation
to affected
Members
NO NO YES (sometimes)
Special and
Differential
Treatment
special regard to the
situation of developing
countries
De minimis: exclusion of imports
from developing countries if less
than 4% of total imports and
9% collectively.
De minimis: exclusion of
imports from developing
countries if less than 3%
of total imports and 9%
collectively.
As Members applying
measures: duration of
extensions; and re-
application of measures.
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VI. SUMMARY
The WTO Agreements allow Members to apply three types of trade remedies (anti-dumping, countervailing
and safeguard measures), which permit them to depart from certain obligations contained in the WTO
Agreements. However, such remedies may only be applied after a domestic investigation is conducted and
certain substantive and procedural requirements provided in the respective Agreement are met.
These three mechanisms share many similarities, but also differ in some aspects. While anti-dumping
measures are applied against injurious "dumping", the objective of countervailing measures is to offset the
injurious effect of "subsidies". Both "dumping" and "subsidies" are considered unfair trade practices.
Dumping is an action by private firms, and thus, is not prohibited by the Anti-Dumping Agreement; the
Agreement governs the imposition of anti-dumping measures.
In contrast, in the case of subsidies, it is the government, a government agency or a private body following
government's instructions which provides the subsidy. Thus, the SCM Agreement includes both disciplines on
the use of subsidies as well as upon the use of countervailing measures by WTO Members. In this regard, it
classifies subsidies into two categories: prohibited and actionable. Both types of subsidies might be
challenged through the WTO dispute settlement mechanism; although in the case of actionable subsidies, it
must be demonstrated that these cause adverse effects.
On the other hand, unlike anti-dumping and countervailing measures, the application of safeguard measures
does not depend on unfair trade practices. Rather, safeguard measures may be imposed when a surge of
imports causes injury to a domestic industry. The objective of safeguard measures is to prevent or remedy
serious injury and facilitate structural adjustment of the industry adversely affected by an increase of
imports.
The similarities between these measures extend to the substantive requirements for their application. In the
case of anti-dumping and countervailing measures, it is necessary to show that dumped imports/subsidized
imports are causing or threatening to cause material injury to the domestic industry producing the like
products. For the application of safeguard measures these requirements differ. Instead, it is necessary to
show that increased imports are causing or threaten to cause serious injury to the domestic industry
producing the like or directly competitive products.
Before the imposition of anti-dumping, countervailing or safeguard measures, investigating authorities must
determine that the three substantive elements mentioned above are met. Moreover, investigating authorities
have to comply with a number of procedural requirements (conditions for the initiation of investigations,
evaluation of evidence, application of provisional measures, transparency provisions, duration and review of
the measures, etc). The procedural requirements provided for the three measures are fairly similar, although
there are also important differences, especially in the context of safeguard measures.
Members may decide to apply an anti-dumping, countervailing or safeguard measure, as the case may be,
only if the investigation establishes that the three substantive requirements are met. For all three
mechanisms, the measures may take the form of an increased tariff above the bound level. In addition, the
Agreement on Safeguards allows Members to apply a quantitative restriction, subject to certain conditions.
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There are also important differences with respect to whom the measures will apply. While anti-dumping
duties would be applied to the products of enterprises found to be practicing dumping, countervailing duties
would be placed on products of enterprises benefiting from the subsidies. Since safeguard measures have to
be applied, in principle, on an MFN basis, they will have to target the imports of the like or directly
competitive products of all affected WTO Members (in the context of special and differential treatment, only
products coming from developing countries may be excluded under certain circumstances). In addition, a
Member applying safeguard measures would have to offer compensation to the affected Members according
to the provisions of the Agreement.
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PROPOSED ANSWERS
1. Both the Anti-Dumping Agreement and the Agreement on Safeguards grant Members the right to impose
measures inconsistent with certain provisions of the GATT. However, the former aims to remedy the
injury to domestic industries caused by unfair trade practices, while the latter is intended to prevent or
remedy serious injury and facilitate structural adjustment of the industry injured by increased imports.
2. Safeguard measures must be applied as a result of unforeseen developments and of the effect of the
obligations incurred by a Contracting Party under the GATT. Three conditions are required to be met
before the application of a safeguard measure:
Increased quantity of imports in absolute or relative terms;
serious injury caused or threatening to be caused to the domestic industry of "like or directly
competitive" products; and,
causal link between increased imports and injury caused to the domestic industry.
Four main differences can be identified: 1. while dumping and subsidies have to be found before the
imposition of anti-dumping and countervailing measures respectively, increased quantity of imports are
the first requirement for the application of a safeguard measure; 2. the application of a safeguard
measure requires the finding of unforeseen developments which is not required in the anti-dumping and
countervailing investigation; 3. while the imposition of anti-dumping and countervailing measures require
the finding of material injury to a domestic industry of like product, the application of a safeguard
measure will require that serious injury caused not only to the like product, but also to directly
competitive products; and, 4. while anti-dumping and countervailing measures can be applied to a
particular source of imports, safeguard measures must be applied, in principle, on an MFN basis.
