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Explain the Multilateral Trade Agreement on Safeguards (SG).

Explain the Multilateral Trade Agreement on Safeguards (SG).

Course: M.Com

1 Answer

Safeguards are described as temporary measures designed to slow imports to enable a particular industry to adjust to heightened competition from foreign suppliers under GATT 1947, safeguards were regulated by Article XIX and it was the Uruguay Round that created the agreement on safeguards. The safeguards agreement explicitly applies equally to all WTO members. Following are the aims of Safeguards Agreement:

  • To clarify and reinforce GATT disciplines.
  • To reestablish multilateral control over safeguards and eliminate measures that escape such control.
  • To encourage structure.

Agreement on safeguards discussed under following headings:

General Rules:

Following are some important provisions of agreements on safeguards:
Measures contained in the agreement will be applied an MFN basis.

Agreements sets forth the conditions under which safeguards measures may be applied. These conditions include the following:

  • Increased imports.
  • Serious injury or threat thereof caused by such increased imports.

The term “serious injury” is defined in Article 4.1 of the Agreement. According to Article 4.1 serious injury refers to “significant overall impairment in the position of a domestic industry.” It must be established that imports are causing such injury to the domestic industry, defined as “the producers as a whole of the like or directly competitive products” or those “whose collective output of the like or directly competitive products constitutes a major proportion of the total domestic production of these products.” It implies that it is not permissible to take safeguard measures to restrict imports where only a few producers find it difficult to meet import competition.

The safeguard measures may take the form of an increase in import tariff over bound rates i.e. safeguard duty or the imposition of quantitative restrictions on imports of the items from all the sources from different countries in the world.

The maximum initial period for the application of a safeguard measure is 4 years. This initial period may be extended upto a maximum of 8 years and it May be 10 years for developing countries.

Monitoring Bodies:

Article 13 of the SG Agreement provides for a committee on safeguards to monitor the implementation and operation of the Agreement. As such, following are monitoring bodies:

  • Committee on Safeguards.
  • Council for Trade in Goods.
  • General Council.
  • Ministerial Conference.

Notification Obligations:

The notification of national laws and regulations on safeguards is to be made once, upon entry into force of the WTO Agreement for the notifying member for existing laws and regulations, and thereafter on an ad hoc basis, as and when laws/regulations are established or changes effected. Member must notify the full integrated text’s of their laws, regulations and administrative procedures in one of the WTO languages (English, French, or Spanish). Any modification to the laws, regulations or administrative procedures must be notified promptly. A notification must be made even where a member does not maintain such laws/ regulations.

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March 12, 2019