Copyright 1995 NLCIFT
Title:AGREEMENT ON SAFEGUARDS
MTN/FA II-A1A-14
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AGREEMENT ON SAFEGUARDS
AGREEMENT ON SAFEGUARDS
Members,
Having in mind the overall objective of the Members to
improve and strengthen the international trading system based on
the GATT 1994;
Recognizing the need to clarify and reinforce the
disciplines of the GATT 1994, and specifically those of its
Article XIX (Emergency Action on Imports of Particular Products),
to re-establish multilateral control over safeguards and
eliminate measures that escape such control;
Recognizing the importance of structural adjustment and the
need to enhance rather than limit competition in international
markets; and
Recognizing further that, for these purposes, a
comprehensive agreement, applicable to all Members and based on
the basic principles of the GATT 1994, is called for;
Hereby agree as follows:
SECTION I
General
1. This Agreement establishes rules for the application of
safeguard measures which shall be understood to mean those
measures provided for in Article XIX of the GATT 1994.
SECTION II
Conditions
2. A Member1 may apply a safeguard measure to a product only
1A customs union may apply a safeguard measure as a single
unit or on behalf of a member state. When a customs union
applies a safeguard measure as a single unit, all the
requirements for the determination of serious injury or threat
thereof under this Agreement shall be based on the conditions
existing in the customs union as a whole. When a safeguard
measure is applied on behalf of a member state, all the
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AGREEMENT ON SAFEGUARDS
if that Member has determined, pursuant to the provisions set out
below, that such product is being imported into its territory in
such increased quantities, absolute or relative to domestic
production, and under such conditions as to cause or threaten to
cause serious injury to the domestic industry that produces like
or directly competitive products.
3. (a) A Member may apply a safeguard measure only following
an investigation by the competent authorities of that
Member pursuant to procedures previously established
and made public in consonance with Article X of the
GATT 1994. This investigation shall include reasonable
public notice to all interested parties and public
hearings or other appropriate means in which importers,
exporters and other interested parties could present
evidence and their views, including the opportunity to
respond to the presentations of other parties and to
submit their views, inter alia, as to whether or not
the application of a safeguard measure would be in the
public interest. The competent authorities shall
publish a report setting forth their findings and
reasoned conclusions reached on all pertinent issues of
fact and law.
(b) Any information which is by nature confidential or
which is provided on a confidential basis shall, upon
cause being shown, be treated as such by the competent
authorities. Such information shall not be disclosed
without permission of the party submitting it. Parties
providing confidential information may be requested to
furnish non-confidential summaries thereof or, if such
parties indicate that such information cannot be
summarized, the reasons why a summary cannot be
provided. However, if the competent authorities find
that a request for confidentiality is not warranted and
if the party concerned is either unwilling to make the
information public or to authorize its disclosure in
generalized or summary form, the authorities would be
free to disregard such information unless it can be
demonstrated to their satisfaction from appropriate
sources that the information is correct.
4. In critical circumstances where delay would cause damage
which it would be difficult to repair, a provisional safeguard
requirements for the determination of serious injury or threat
thereof shall be based on the conditions existing in that member
state and the measure shall be limited to that member state.
Nothing in this Agreement prejudges the interpretation of the
relationship between Article XIX and Article XXIV:8 of GATT 1994.
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AGREEMENT ON SAFEGUARDS
measure may be taken pursuant to a preliminary determination that
there is clear evidence that increased imports have caused or are
threatening to cause serious injury. The duration of the
provisional measure shall not exceed 200 days, during which
period the pertinent requirements of this Section and Section VII
shall be met. Such measures should take the form of tariff
increases to be promptly refunded if the subsequent investigation
referred to in paragraph 7 below does not determine that
increased imports have caused or threatened to cause serious
injury to a domestic industry. The duration of any such
provisional measure shall be counted as a part of the initial
period and any extension referred to in paragraphs 10, 11 and 12
below.
5. Safeguard measures shall be applied to a product being
imported irrespective of its source.
6. For the purposes of this Agreement:
(a) serious injury shall be understood to mean a
significant overall impairment in the position of a
domestic industry;
(b) threat of serious injury shall be understood to mean
serious injury that is clearly imminent, in accordance
with the provisions of paragraph 7 below. A
determination of the existence of a threat of serious
injury shall be based on facts and not merely on
allegation, conjecture or remote possibility; and
(c) 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.
7. (a) In the investigation to determine whether increased
imports have caused or are threatening to cause serious
injury to a domestic industry under the terms of this
Agreement, the competent authorities shall evaluate all
relevant factors of an objective and quantifiable
nature having a bearing on the situation of that
industry, 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 increased imports, changes in the level
of sales, production, productivity, capacity
utilization, profits and losses, and employment.
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(b) The determination referred to in sub-paragraph 7(a)
shall not be made unless this investigation
demonstrates, on the basis of objective evidence, the
existence of the causal link between increased imports
of the product concerned and serious injury or threat
thereof. When factors other than increased imports are
causing injury to the domestic industry at the same
time, such injury shall not be attributed to increased
imports.
(c) The competent authorities shall publish promptly, in
accordance with the provisions of paragraph 3 above, a
detailed analysis of the case under investigation as
well as a demonstration of the relevance of the factors
examined.
8. Safeguard measures shall be applied only to the extent as
may be necessary to prevent or remedy serious injury and to
facilitate adjustment. If a quantitative restriction is used,
such a measure shall not reduce the quantity of imports below the
level of a recent period which shall be the average of imports in
the last three representative years for which statistics are
available, unless clear justification is given that a different
level is necessary to prevent or remedy serious injury. Members
should choose measures most suitable for the achievement of these
objectives.
9. (a) In cases in which a quota is allocated among supplying
countries, the Member applying the restrictions may
seek agreement with respect to the allocation of shares
in the quota with all other Members having a
substantial interest in supplying the product
concerned. In cases in which this method is not
reasonably practicable, the Member concerned shall
allot to Members having a substantial interest in
supplying the product shares based upon the
proportions, supplied by such Members during a previous
representative period, of the total quantity or value
of imports of the product, due account being taken of
any special factors which may have affected or may be
affecting the trade in the product.
(b) A Member may depart from the provisions in (a) above
provided that consultations under paragraph 27 are
conducted under the auspices of the Committee on
Safeguards established in paragraph 36 of this
Agreement and that clear demonstration is provided to
the Committee that (i) imports from certain Members
have increased in disproportionate percentage in
relation to the total increase of imports of the
product concerned in the representative period, (ii)
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the reasons for the departure from the provisions in
(a) above are justified, and (iii) the conditions of
such departure are equitable to all suppliers of the
product concerned. The duration of any such measure
shall not be extended beyond the initial period under
paragraph 10 below. The departure referred to above
shall not be permitted in the case of threat of serious
injury.
10. Safeguard measures shall be applied only for a period of
time as may be necessary to prevent or remedy serious injury and
to facilitate adjustment. The period shall not exceed four
years, unless it is extended under paragraph 11 below.
11. The period mentioned in paragraph 10 above may be extended
provided that the competent authorities of the importing Member
have determined, in conformity with the procedures set out in
this Section, that the safeguard measure continues to be
necessary to prevent or remedy serious injury; that there is
evidence that the industry is adjusting; and provided that the
pertinent provisions of Sections III and VII below are observed.
12. The total period of application of a safeguard measure
including the period of application of any provisional measure,
the period of initial application and any extension thereof,
shall not exceed eight years.
13. In order to facilitate adjustment, if the expected duration
of a safeguard measure as notified under the provisions of
paragraph 25 is over one year, it shall be progressively
liberalized at regular intervals during the period of
application. If the duration of the measure exceeds three years,
the Member applying such a measure shall review the situation not
later than the mid-term of the measure and, if appropriate,
withdraw it or increase the pace of liberalization. A measure
extended under paragraph 11 above shall not be more restrictive
than it was at the end of the initial period, and should continue
to be liberalized.
14. No safeguard measure shall be applied again to the import of
a product which has been subject to such a measure, taken after
the date of entry into force of the Agreement Establishing the
MTO, for a period of time equal to that during which such measure
had been previously applied, provided that the period of non-
application is at least two years.
15. Notwithstanding the provisions of paragraph 14 above, a
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safeguard measure with a duration of 180 days or less may be
applied again to the import of a product if:
(a) at least one year has elapsed since the date of
introduction of a safeguard measure on the import of
that product; and
(b) such a safeguard measure has not been applied on the
same product more than twice in the five-year period
immediately preceding the date of introduction of the
measure.
SECTION III
Level of concessions and other obligations
16. A Member proposing to apply a safeguard measure or seeking
an extension of a safeguard measure shall endeavour to maintain a
substantially equivalent level of concessions and other
obligations to that existing between it and the exporting Members
which would be affected by such a measure under the GATT 1994, in
accordance with the provisions of paragraph 27 below. To achieve
this objective, the Members concerned may agree on any adequate
means of trade compensation for the adverse effects of the
measure on their trade.
17. If no agreement is reached within 30 days in the
consultations under paragraph 27 below, then the affected
exporting Members are free, not later than 90 days after the
measure is applied, to suspend, upon the expiration of 30 days
from the day on which written notice of such suspension is
received by the Council for Trade in Goods, the application of
substantially equivalent concessions or other obligations under
the GATT 1994, to the trade of the Member applying the safeguard
measure, the suspension of which the Council for Trade in Goods
does not disapprove.
18. The right of suspension referred to in paragraph 17 above
shall not be exercised for the first three years that a safeguard
measure is in effect, provided that the safeguard measure has
been taken as a result of an absolute increase in imports and
that such a measure conforms to the provisions of this Agreement.
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SECTION IV
Developing country members
19. Safeguard measures shall not be applied against a product
originating in a developing country Member as long as its share
of imports of the product concerned in the importing Member does
not exceed 3 per cent, provided that, developing country Members
with less than 3 per cent import share collectively account for
not more than 9 per cent of total imports of the product
concerned.2
20. A developing country Member shall have the right to extend
the period of application of a safeguard measure for a period of
up to two years beyond the maximum period provided for in
paragraph 12 above. Notwithstanding the provisions of
paragraph 14 above, a developing country Member shall have the
right to apply a safeguard measure again to the import of a
product which has been subject to such a measure, taken after the
date of entry into force of the Agreement Establishing the MTO,
after a period of time equal to half that during which such a
measure has been previously applied, provided that the period of
non-application is at least two years.
SECTION V
Pre-existing Article XIX measures
21. Members shall terminate all safeguard measures taken
pursuant to Article XIX of the GATT 1947 that were in existence
at the date of entry into force of the Agreement Establishing the
MTO not later than eight years after the date on which they were
first applied or five years after the date of entry into force
of the Agreement Establishing the MTO, whichever comes later.
SECTION VI
Prohibition and elimination of certain measures
22. (a) A Member shall not take or seek any emergency action on
imports of particular products as set forth in
Article XIX of the GATT 1994 unless such action
2A Member shall immediately notify an action taken under
paragraph 19 to the Committee on Safeguards.
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conforms with the provisions of that Article applied in
accordance with this Agreement.
(b) Furthermore, a Member shall not seek, take or maintain
any voluntary export restraints, orderly marketing
arrangements or any other similar measures on the
export or the import side.3,4 These include actions
taken by a single Member as well as actions under
agreements, arrangements and understandings entered
into by two or more Members. Any such measure in
effect at the time of entry into force of the Agreement
Establishing the MTO shall be brought into conformity
with this Agreement or phased out in accordance with
paragraph 23 below.
(c) This Agreement does not apply to measures sought, taken
or maintained by a Member pursuant to provisions of the
GATT 1994 other than Article XIX, and Multilateral
Trade Agreements in Annex 1A other than this Agreement,
or pursuant to protocols and agreements or arrangements
concluded within the framework of the GATT 1994.
23. The phasing out of measures referred to in paragraph 22(b)
above shall be carried out according to timetables to be
presented to the Committee on Safeguards by the Members concerned
not later than 180 days after the date of entry into force of the
Agreement Establishing the MTO. These timetables shall provide
for all measures referred to in paragraph 22 above to be phased
out or brought into conformity with this Agreement within a
period not exceeding four years after the date of entry into
force of the Agreement Establishing the MTO, subject to not more
than one specific measure per importing Member5, the duration of
which shall not extend beyond December 31, 1999. Any such
exception must be mutually agreed between the Members directly
concerned and notified to the Committee on Safeguards for its
review and acceptance within 90 days of the coming into force of
the Agreement Establishing the MTO. The Annex to this Agreement
3An import quota applied as a safeguard measure in
conformity with the relevant provisions of the GATT 1994 and this
Agreement may, by mutual agreement, be administered by the
exporting Member.
4Examples of similar measures include export moderation,
export-price or import-price monitoring systems, export or import
surveillance, compulsory import cartels and discretionary export
or import licensing schemes, any of which afford protection.
5The only such exception to which the European Communities
is entitled is indicated in the Annex to this Agreement.
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indicates a measure which has been agreed as falling under this
exception.
24. Members shall not encourage or support the adoption or
maintenance by public and private enterprises of non-governmental
measures equivalent to those referred to in paragraph 22 above.
SECTION VII
Notification and consultation
25. A Member shall immediately notify the Committee on
Safeguards upon:
(a) initiating an investigatory process relating to serious
injury or threat thereof and the reasons for it;
(b) making a finding of serious injury or threat thereof
caused by increased imports; and
(c) taking a decision to apply or extend a safeguard
measure.
26. In making the notifications referred to in sub-
paragraphs 25(b) and (c) above, the Member proposing to apply or
extend a safeguard measure shall provide the Committee on
Safeguards with all pertinent information, which shall include
evidence of serious injury or threat thereof caused by increased
imports, precise description of the product involved and the
proposed measure, proposed date of introduction, expected
duration and timetable for progressive liberalization. In the
case of an extension of a measure, evidence that the industry
concerned is adjusting shall also be provided. The Council for
Trade in Goods or the Committee on Safeguards may request such
additional information as they may consider necessary from the
Member proposing to apply or extend the measure.
27. A Member proposing to apply or extend a safeguard measure
shall provide adequate opportunity for prior consultations with
those Members having a substantial interest as exporters of the
product concerned, with a view to, inter alia, reviewing the
information provided under paragraph 26 above, exchanging views
on the measure and reaching an understanding on ways to achieve
the objective set out in Paragraph 16 above.
28. A Member shall make a notification before taking a
provisional safeguard measure referred to in paragraph 4 above.
Consultations shall be initiated immediately after the measure is
taken.
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29. The results of the consultations referred to in this
Section, as well as the results of mid-term reviews referred to
in paragraph 13, any form of compensation referred to in
paragraph 16, and proposed suspensions of concessions and other
obligations referred to in paragraph 17, shall be notified
immediately to the Council for Trade in Goods by the Members
concerned.
30. Members shall notify promptly the Committee on Safeguards of
their laws, regulations and administrative procedures relating to
safeguard measures as well as any modifications made to them.
31. Members maintaining measures described in paragraphs 21
and 22 above which exist at the date on which the Agreement
Establishing the MTO enters into force shall notify such measures
to the Committee on Safeguards, not later than 60 days after the
entry into force of the Agreement Establishing the MTO.
32. Any Member may notify the Committee on Safeguards of all
laws, regulations, administrative procedures and any measures or
actions dealt with in this Agreement that have not been notified
by other Members that are required by this Agreement to make such
notifications.
33. Any Member may notify the Committee on Safeguards of any
non-governmental measures referred to in paragraph 24 above.
34. All notifications to the Council for Trade in Goods referred
to in this Agreement shall normally be made through the Committee
on Safeguards.
35. The provisions on notification in this Agreement shall not
require any Member to disclose confidential information the
disclosure of which would impede law enforcement or otherwise be
contrary to the public interest or would prejudice the legitimate
commercial interests of particular enterprises, public or
private.
SECTION VIII
Surveillance
36. There shall be a Committee on Safeguards under the authority
of the Council for Trade in Goods, which shall be open to the
participation of any Member indicating its wish to serve on it.
The Committee will have the following functions:
(a) to monitor, and report annually to the Council for
Trade in Goods on, the general implementation of this
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Agreement and make recommendations towards its
improvement;
(b) to find, upon request of an affected Member, whether or
not the procedural requirements of this Agreement have
been complied with in connection with a safeguard
measure, and report its findings to the Council for
Trade in Goods;
(c) to assist Members, if they so request, in their
consultations under the provisions of this Agreement;
(d) to examine measures covered by paragraphs 21 and 22,
monitor the phase-out of such measures and report as
appropriate to the Council for Trade in Goods;
(e) to review, at the request of the Member taking a
safeguard measure, whether proposals to suspend
concessions or other obligations are "substantially
equivalent", and report as appropriate to the Council
for Trade in Goods;
(f) to receive and review all notifications provided for in
this Agreement and report as appropriate to the Council
for Trade in Goods; and
(g) to perform any other function connected with this
Agreement that the Council for Trade in Goods may
determine.
37. To assist the Committee in carrying out its surveillance
function, the MTO Secretariat shall prepare annually a factual
report on the operation of the Agreement based on notifications
and other reliable information available to it.
SECTION IX
Dispute settlement
38. The provisions of Articles XXII and XXIII of the GATT 1994
as elaborated and applied by the Understanding on Rules and
Procedures Governing the Settlement of Disputes shall apply to
consultations and the settlement of disputes arising under this
Agreement.
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ANNEX
Exception Referred to in Paragraph 23
Members concerned Product Termination
EC/Japan Passenger cars, off 31 December, 1999
road vehicles,
light commercial
vehicles, light
trucks (up
to 5 tonnes), and
the same vehicles
in wholly knocked-
down form (CKD
sets).