Safeguards and Asian WTO Members

1
Safeguards and Asian WTO Members

• Presented by
• Mr. Johann Human
• Prof. Chang-fa Lo
• Material prepared by
• ACWH, College of Law, NTU
• with the help of Mr. Yen-chang Lee, Yueh-ping Yang

2
Outline of Presentation

• Part 1 Import Relief
• Part 2 Introduction of Safeguards
• Part 3 Agreement On Safeguards
• Part 4 Safeguards Cases in Asia
• Members

3
Safeguards in Different Agreements

• GATT, Article XIX
• Agreement on Safeguards
• Agreement on Agriculture
• Agreement on Textiles and Clothing
• Protocol of Accession of China
• GATS

4
Import Relief

• Unfair Trade Practices
• Anti-Dumping Agreement (ADA)
• Agreement of Subsidy and Countervailing
• Measure (ASCM)
• Fair Trade Practices
• Safeguard Agreement (SA)

5
Introduction of Safeguards

• Safety valve
• Concession-inducing under GATT 1994,
• Article XIX
• History of Safeguard Practice
• Safeguard measures available under GATT
• 1974, Article XIX 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).

6
Agreement On Safeguards

• Objectives
• 1. Strengthen GATT 1994 and clarify Article XIX
• 2. Control over safeguards and eliminate measures
  outside control Article 11
• (Examples of similar measures to VERs 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. )
• 3. Enhance competition
• 4. Relations between GATT XIX and SA Apply
  together

7
Outline of the Agreement

• Preamble
• Article 1 -14
• Articles 2 and 4 substantive requirements
• Article 3 investigation period and documentation
  
• Articles 5-9 conditions on applicable measures
• Article 8 agreed compensation to affected
  parties
• Article 12 procedural requirements
• Article 13 surveillance of safeguard measures
• Annex

8
Conditions of Safeguards

• Article XIX1(a) of the GATT
• Article 2.1(a) of the SA
• as a result of unforeseen developments and of the
  effect of the obligations incurred by a
  contracting party under this Agreement
• in such increased quantities
• to cause or threaten serious injury to domestic
  producers in that territory of like or directly
  competitive products

9
Unforeseen Development

• GATT 1947, Article XIX1(a)
• Not defined in GATT 1994 or SA.
• In US Hatters Fur, Working Party
• development...which it would not be
  reasonable to expect that negotiators...could and
  should have foreseen
• In Korea Dairy, AB
• the development...must have been unexpected.

10
Unforeseen Development

• In Argentina Footwear, AB
• circumstances must be demonstrated as a matter
  of fact
• In US Steel, AB
• investigating authority must provide a
  reasoned conclusion that the "unforeseen
  developments" resulted in increased imports
  causing serious injury for each specific
  safeguard measure at issue.

11
Increased Import

• Article 2.1(a) of the SA
• increased quantities, absolute or relative to
  domestic production
• Absolute increase
• Relative increase
• - US Line pipe, Panel Report
• even no increase in absolute terms, however,
  imports had increased relative to domestic
  production
• Increase in value of imports?
• - Argentina Footwear, AB
• focus on quantity rather than value

12
Increased Import

• Characteristics of increase
• - Argentina Footwear, AB
• Recent enough, sharp enough, and significant
  enough
• Sharp important magnitude
• Sudden over short time span
• Must investigate the rate and the amount of
  increase as well as trends.
• Only recent and sudden increases can justify
  safeguards otherwise it cannot be an emergency
  measure.

13
Under Such Condition

• Article 2.1(a) of the SA
• and under such conditions
• In US Wheat Gluten Safeguards, Panel Report
• the phrase does not impose an additional
  analytical requirement, but rather refers to the
  substance of the causation analysis.
• Because price is not mentioned in Article 4.2(a),
  it is not a required consideration for all cases.
  
• In Korea Dairy, Panel Report
• refers to the obligation imposed on the importing
  country to perform an adequate assessment of the
  impact of the increased imports at issue and the
  specific market under investigation.

14
Under Such Condition

• In Argentina Footwear, Panel Report
• the phrase "under such conditions" does not
  constitute a separate legal requirement for a
  price analysis.
• the phrase indicates a need to analyze the
  conditions of competition between the imported
  product and the domestic like or directly
  competitive products in the importing country's
  market.

15
Domestic Industry

• Article 2.1(a) of the SA
• Producing like or directly competitive products
• In US- Lamb, AB
• - The input product (live lamb) can only be
  included in the definition of the domestic
  industry if it is like or directly competitive
  with the end-product (lamb meat)
• If an input and an end-product are not like or
  directly competitive, then it is irrelevant
  that there is a substantial coincidence of
  economic interests between the producers
• The focus must be on the identification of the
  product...and not on the processes by which those
  products are produced

16
Domestic Industry

• the producers as a whole (Art. 4.1(c) of the SA)
• In Argentina Footwear, AB
• address the number and the representative nature
  of producers making up the domestic industry.
• as no more than "a quantitative benchmark for
  the proportion of producers which a safeguards
  investigation has to cover.
• whose collective output constitutes a major
• proportion of the total domestic production of
• these products

17
Serious Injury or Threat of Serious Injury

• Serious Injury (Art. 4.1(a) of the SA)
• a significant overall impairment in the
• position of a domestic industry
• Threat of Serious Injury (Article 4.1(b) of the
  SA)
• clearly imminent
• based on facts and not merely on
• allegation, conjecture or remote possibility

18
Causal Link

• Article 4.2 (b) of the SA
• Establishes a two-fold causal requirement
  between increased imports and serious injury
• Demonstration that the increased imports caused
  serious injury
• Non-attribution Injury caused by factors other
  than increased imports must not be attributed to
  the increased imports.
• In US Lamb, AB
• Assessment of the injurious effect of other
  factors must be distinguished from increased
  imports, so that those effects can be
  disentangled from injurious effects of increased
  imports.

19
Remedies

• Types of measures
• Increased tariffs
• Surcharges
• Quantitative restrictions
• Import authorization

20
Measures

• Article 5.1 of the SA
• shall apply safeguard measures only to the
  extent necessary to prevent or remedy serious
  injury and to facilitate adjustment
• In US-Line pipe, AB
• A necessity requirement does not mean to
  remedy all serious injury
• Remedy in porportion to serious injury caused
  by increased imports

21
Measures

• Article 5.2(a) of the SA
• Quota allocation 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.
• If not reasonably practicable 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.

22
Duration of Measure

• Not to exceed 4 years (Art. 7.1, 7.4 of the SA)
• 1. Exceeding 1 year must be progressively
  liberalized
• 2. Eexceeding 3 years must provide for mid-term
  review
• 3. Existing at entry to force of WTO Agreement
  should terminate after 5 years. (Art. 10 of the
  SA)
• Extension of application (Art. 7.2, 7.3 of the
  SA)
• 1.Total duration shall not exceed 8 years,
  including provisional measures, period of initial
  application and extension.
• 2. If necessary to prevent or remedy serious
  injury
• 3. If domestic industry is adjusting.

23
Duration of Measure

• New measures for same product (Art. 7.5 of the
  SA)
• After cooling off period equivalent to the
  duration of the initial measure.
• Developing countries (Art. 9 of the SA)
• Right to extend application of measures with 2
  extra years 10 years total
• cooling off period is only half of initial
  duration

24
Provisional Measure

• Article 6 of the SA
• In critical circumstances where delay would
  cause damage which it would be difficult to
  repair, a Member may take a provisional safeguard
  measure pursuant to a preliminary determination
  that there is clear evidence that increased
  imports have caused or are threatening to cause
  serious injury
• Requirement critical circumstances
• Form tariff increases
• Duration Max. 200 days

25
Non-Discrimination

• Article 2.2 of the SA
• Must be applied irrespective of their source
• Based on MFN principle
• Must respect parallelism requirement must
  apply to same breadth of imports which were
  investigated.
• Article 5.2(b) of the SA
• Departure from Proportion
• 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.

26
Compensation

• Article 8.1 of the SA
• To maintain substantially equivalent level of
  concessions
• To negotiate trade compensation with affected
  members
• If no agreement within 30 days affacted member
  to suspend substantially equivalent concessions
  (retaliation)
• Article 8.3 of the SA
• No suspension allowed during first 3 years if
• Measure is based on absolute increase
• Measure conforms to the provision.

27
Latest Negotiation

• The latest negotiation aims at establishing
  safeguard rules under the trade in service.
  Pursuant to Art. 10 of the GATS, the Emergency
  Safeguard Measure (ESM) is needed to be
  negotiated on.
• On March 15, 2004, the Council for Trade in
  Service decided to extend the negotiation period
  of ESM.

28
Safeguards Initiations1995 - 2006
1995/01/01-2006/01/05
Total 148
29
Safeguard Measures1996-2006
1995/01/01-2006/01/05
Total 72
30
Safeguard Initiations --Asian Members
1995/01/01-2006/01/05
31
Safeguard Measures--Asian Members
1995/01/01-2006/01/05
32
Safeguard Initiations--Asian Members by Sector
33
Safeguard Initiations--Asian Members by Sector
34
Some Safeguards Cases in Asia

• Imports from Asian WTO Members
• Chinese Taipei
• China
• Exports to Asian WTO Members
• China
• Philippine
• Indonesia

35
Imports from Chinese Taipei

• In February, 2005, Canadian Bicycle Manufacturers
  Association (CBMA) submitted a complaint to the
  Canadian International Trade Tribunal (the
  Tribunal) requesting that the Tribunal initiate a
  global safeguard inquiry into the importation of
  bicycles.
• According to the statistics, the exportation of
  bicycles from Taiwan to Canada was 210 thousand
  in 2004. The value is about 1.3 billion, which is
  only less than China.
• The CITT announced its final report to implement
  the safeguard measure in September, 2005. The
  measure is not applicable to the developing
  countries except China, Vietnam, Mexico,
  Philippine and Thailand.

36
Imports from Chinese Taipei

• In October, 2002, Brazil noticed Chinese Taipei
  and South Korea that it planned to implement
  transitional safeguard measures on tatting
  products under the ATC.
• In January, 2003, Brazil decided to implement the
  transitional safeguard measures against Chinese
  Taipei.
• In February, 2003, Brazil and Chinese Taipei
  reached the agreement.

37
Imports from Chinese Taipei

• In 1998, Argentina launched the safeguard
  investigation aiming at toys, especially imported
  from Chinese Taipei, South Korea and Hong Kong.
• In 2001, it was decided that the importation of
  toys does not cause serious injury or threat to
  serious injury, therefore Argentina terminated
  the safeguard investigation.

38
Imports from China

• Specific Safeguard Mechanism
• Transitional Product-specific Safeguard
  Mechanism, Article 16 of the Draft Protocol on
  the Accession of the Peoples Republic of China
• Para. 241, 242 of the Report of the Working Party
  on the Accession of China

39
Imports from China

• Transitional Product-specific Safeguard
  Mechanism
• Aiming at specific Members China
• Market Disruption Requirement this standard is
  lower than the serious injury or threat to
  serious injury in SA.

40
Imports from China

• Para. 241, 242 of the Report of the Working
  Party
• Aiming at textile products.
• Market Disruption Requirement the same as
  transitional product-specific safeguard
  mechanism.
• The implementation period is not affected by the
  ATC and expires at the end of 2008.

41
Imports from China to U.S.

• In U.S., American Textile Manufacturers Institute
  (ATMI) submitted a complaint to the Committee for
  the Implementation of Textile Agreements (CITA)
  requesting that the CITA initiate safeguard
  measures to limit the importation of textiles
  from China in July, 2003.
• The CITA announced decision to set quota to seven
  specific categories of textiles in May, 2005.
• U.S. and China signed the agreement on the trade
  of textiles in November, 2005.

42
Imports from China to E.C.

• The European Commission announced the decision to
  launch the safeguard investigation with nine
  specific categories of textiles imported from
  China on April 29, 2005.
• China and E.C. signed the memo on June 11, 2005
  to settle the dispute on textiles.

43
Imports from China to Chinese Taipei

• In Chinese Taipei, Yunlin Towel Industry
  Technology and Development Association submitted
  the complaint to the International Trade
  Commission, Ministry of Economic Affairs
  (MOEAITC) requesting that the Commission to
  launch the investigation on Chinas towels in
  September, 2005.
• On April 14, 2006, the Commission announced its
  final decision to implement the special safeguard
  measures according to Art. 16 of the Protocol on
  the Accession of the Peoples Republic of China.

44
Imports from China to Turkey

• In February, 2005, Turkey decided that the
  importation of the textiles from China created
  the market disruption, therefore decided to
  implement the safeguard measures on 42 specific
  categories of textiles.
• In 2006, Turkey implement quantitative
  restrictions on 44 categories of textiles.

45
Exports to China

• China announced to implement the safeguard
  measure involving steel products in November,
  2002.
• The safeguard measures are China's first decision
  on such matters after its accession to the World
  Trade Organization (WTO) on December 11, 2001.
• The extended safeguard measures will involve
  three categories of steel products thin plate,
  non-grain-orientated silicon steel and
  cold-rolled thin stainless sheet. The products
  made up 40 per cent of China's total steel
  imports of 17 million tons in 2001.
• The Ministry of Commerce, China terminated the
  safeguard measure in December, 2003.

46
Exports to Philippine

• In 2002, the domestic ceramic industry of
  Philippine requested the Secretary to extend the
  safeguard measure for three year as it still need
  more time to complete the implementation of its
  adjustment plan and become import competitive.
• In April, 2002, Philippine decided to implement
  the safeguard measures to imported ceramic tiles
  products.

47
Exports to Indonesia

• In October, 2004, Indonesia launch the safeguard
  measures investigation with ceramic products
  exported to Indonesia.
• In February, 2006, Indonesia, KPPI decided to
  implement the safeguard measures.

48

• Thank You !