Safeguards
The Agreement on Safeguards took effect with establishment of the World Trade Organization on January 1, 1995. It builds on the 1947 General Agreement on Tariffs and Trade (GATT), which allows members to impose temporary border control measures called safeguards if a surge of imports causes or threatens to cause serious injury to a domestic industry. An import surge justifying safeguard action can be a real increase in imports (an absolute increase); or it can be an increase in the imports' share of a shrinking market, even if the import quantity has not increased (relative increase).
The Agreement on Safeguards sets out criteria for assessing whether "serious injury" is caused or threatened, as well as the factors to be considered in determining the impact of imports on the domestic industry. When imposed, a safeguard measure should be applied only to the extent necessary to prevent or remedy serious injury and to help the industry to adjust. Where quantitative restrictions (quotas) are imposed, they normally should not reduce the quantities of imports below the annual average for the last 3 representative years for which statistics are available, unless clear justification is given that a different level is necessary to prevent or remedy serious injury.
In principle, safeguards are meant to apply to all suppliers, although the special and differential treatment provisions of the Safeguards Agreement exempt actions against developing countries with market shares of less than 3 percent, unless the cumulative shares of developing countries is greater than 9 percent. In the case of quotas, the agreement describes how they can be allocated among supplying countries, including in the exceptional circumstance where imports from certain countries have increased disproportionately quickly.
A safeguard measure should not last more than 4 years, although this can be extended up to 8 years, subject to a determination by competent national authorities that the measure is needed and that there is evidence the industry is adjusting. Measures imposed for more than a year must be progressively liberalized.
When a country restricts imports in order to safeguard its domestic producers, in principle it must give something in return. The exporting country (or exporting countries) can seek compensation through consultations. If no agreement is reached, the exporting country can retaliate by taking equivalent action—for instance, it can raise tariffs on exports from the country enforcing the safeguard measure. In some circumstances, the exporting country has to wait for 3 years after the safeguard measure is introduced before it can retaliate in this way—i.e., if the measure conformed with the provisions of the agreement and if it was taken as a result of an absolute increase in the quantity of imports from the exporting country.
Other Relevant Multilateral Agreements:
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