Chapter Eight

Emergency Action

Article 801: Bilateral Actions

1. Subject to paragraphs 2, 3 and 4 and Annex 801, and during

the transition period only, if a good originating in the

territory of a Party, as a result of the reduction or elimination

of a duty provided for in this Agreement, is being imported into

the territory of another Party in such increased quantities, in

absolute terms, and under such conditions so that the imports of

such good from that Party alone constitute a substantial cause of

serious injury, or threat thereof, to a domestic industry

producing a like or directly competitive good, the Party into

whose territory the good is being imported may, to the minimum

extent necessary to remedy or prevent the injury:

(a) suspend the further reduction of any rate of duty

provided for under this Agreement on such good;

(b) increase the rate of duty on such good to a level not

to exceed the lesser of

(i) the most-favored-nation (MFN) applied rate of duty

in effect at the time the action is taken, or

(ii) the MFN applied rate of duty in effect on the day

immediately preceding the date of entry into force

of this Agreement; or

(c) in the case of a duty applied to a good on a seasonal

basis, increase the rate of duty to a level not to

exceed the MFN applied rate of duty that was in effect

on such good for the corresponding season immediately

preceding the date of entry into force of this

Agreement.

2. The following conditions and limitations shall apply to a

proceeding that may result in emergency action under paragraph 1:

(a) a Party shall, without delay, deliver to any Party that

may be affected written notice of, and a request for

consultations regarding, the institution of a

proceeding that could result in emergency action

against a good originating in the territory of a Party;

(b) any such action shall commence not later than one year

from the date of institution of the proceeding;

(c) no action shall be maintained

(i) for a period exceeding three years, except where

the good against which the action is taken is

provided for in the items in staging category C+

of the Tariff Schedule of the Party taking the

action, and that Party determines that the

affected industry has undertaken adjustment and

requires an extension of the period of relief, in

which case the period of relief may be extended

for one year provided that the duty applied during

the initial period of relief is substantially

reduced at the commencement of the extension

period, or

(ii) beyond the expiration of the transition period,

except with the consent of the Party against whose

good the action is taken;

(d) no action shall be taken by a Party against any

particular good originating in the territory of another

Party more than once during the transition period; and

(e) upon the termination of the action, the rate of duty

shall be the rate that, according to the original

Schedule for the staged elimination of the tariff,

would have been in effect a year after the commencement

of the action, and commencing January 1 of the year

following the termination of the action, at the option

of the Party that has taken the action

(i) the rate of duty shall conform to the schedule in

the Tariff Schedule of the Party, or

(ii) the tariff shall be eliminated in equal annual

stages ending on the date set forth in the Tariff

Schedule of the Party for the elimination of the

tariff.

3. A Party may take a bilateral emergency action after the

expiration of the transition period to deal with cases of

serious injury, or threat thereof, to a domestic industry arising

from the operation of this Agreement only with the consent of the

Party against whose good the action would be taken.

4. The Party taking an action pursuant to this Article shall

provide to the Party against whose good the action is taken

mutually agreed trade liberalizing compensation in the form of

concessions having substantially equivalent trade effects to the

other Party, or equivalent to the value of the additional duties

expected to result from the action. If the Parties are unable to

agree upon compensation, the Party against whose good the action

is taken may take tariff action having trade effects

substantially equivalent to the action taken under paragraph 1.

The Party taking such tariff action shall apply the action only

for the minimum period necessary to achieve such substantially

equivalent effects.

5. This Article does not apply to emergency actions respecting

goods covered by Annex 300-B (Textile and Apparel Goods).

Article 802: Global Actions

1. Each Party shall retain its rights and obligations under

Article XIX of the GATT or any safeguard agreement pursuant

thereto except those regarding compensation or retaliation and

exclusion from an action to the extent that such rights or

obligations are inconsistent with this Article. Any Party taking

an emergency action under Article XIX or any such agreement shall

exclude imports of a good from each other Party from such action

unless:

(a) imports from a Party, considered individually, account

for a substantial share of total imports; and

(b) imports from a Party, considered individually, or in

exceptional circumstances imports from Parties

considered collectively, contribute importantly to the

serious injury, or threat thereof, caused by imports.

2. In determining whether:

(a) imports from a Party, considered individually, account

for a substantial share of total imports, such imports

normally shall not be considered to account for a

substantial share of total imports if such Party is not

among the top five suppliers of the good subject to the

proceeding, measured in terms of import share during

the most recent three-year period; and

(b) imports from a Party or Parties contribute importantly

to the serious injury, or threat thereof, the competent

investigating authority shall consider such factors as

the change in the import share of each Party, and the

level and change in the level of imports of each Party.

In this regard, imports from a Party normally shall not

be deemed to contribute importantly to serious injury,

or the threat thereof, if the growth rate of imports

from a Party during the period in which the injurious

surge in imports occurred is appreciably lower than the

growth rate of total imports from all sources over the

same period.

3. A Party taking such action, from which a good from another

Party or Parties is initially excluded pursuant to paragraph 1,

shall have the right subsequently to include that good of the

other Party or Parties in the action in the event that the

competent investigating authority determines that a surge in

imports of such good of the other Party or Parties undermines the

effectiveness of such action.

4. A Party shall, without delay, deliver written notice to the

other Parties of the institution of a proceeding that may result

in emergency action under paragraph 1 or 3.

5. In no case shall a Party impose restrictions on a good in an

action under paragraph 1 or 3:

(a) without delivery of prior written notice to the

Commission, and without adequate opportunity for

consultation with the Party or Parties against whose

good the action is proposed to be taken, as far in

advance of taking the action as practicable; and

(b) that would have the effect of reducing imports of such

good from a Party below the trend of imports of such

good from that Party over a recent representative base

period with allowance for reasonable growth.

6. The Party taking an action pursuant to this Article shall

provide to the Party or Parties against whose good the action is

taken mutually agreed trade liberalizing compensation in the form

of concessions having substantially equivalent trade effects to

that Party or Parties or equivalent to the value of the

additional duties expected to result from the action. If such

Parties are unable to agree upon compensation, the Party against

whose good the action is taken may take action having trade

effects substantially equivalent to the action taken under

paragraph 1 or 3.

Article 803: Administration of Emergency Action Proceedings

1. Each Party shall ensure the consistent, impartial and

reasonable administration of its respective laws, regulations,

decisions and rulings governing all emergency action proceedings.

2. Each Party shall entrust determinations of serious injury,

or threat thereof, in emergency action proceedings to a competent

investigating authority, subject to review by judicial or

administrative tribunals, to the extent provided by domestic law.

Negative injury determinations shall not be subject to

modification, except by such review. The competent investigating

authority empowered under domestic law to conduct such

proceedings should be provided with the necessary resources to

enable it to fulfill its duties.

3. Each Party shall adopt or maintain equitable, timely,

transparent and effective procedures for emergency action

proceedings, in accordance with the requirements set out in Annex

803.

4. This Article does not apply to emergency actions respecting

goods covered by Annex 300-B (Textile and Apparel Goods).

Article 804: Dispute Settlement in Emergency Action Matters

No party may request the establishment of an arbitral panel

under Article 2008 regarding any proposed emergency action.

Article 805: Definitions

For purposes of this Chapter:

competent investigating authority means the "competent

investigating authority" of a Party as defined in Annex 804;

contribute importantly means an important cause, but not

necessarily the most important cause;

critical circumstances means circumstances where delay would

cause damage that would be difficult to repair;

domestic industry means the producers as a whole of the like or

directly competitive good operating within the territory of a

Party;

emergency action means any emergency action proceeding instituted

after the date of entry into force of this Agreement;

serious injury means a significant overall impairment of a

domestic industry;

surge means a significant increase in imports over the trend for

a recent representative base period;

threat of serious injury means serious injury that, on the basis

of facts and not merely on allegation, conjecture or remote

possibility, is clearly imminent; and

transition period means the 10-year period commencing on the date

of the entry into force of this Agreement, except where the good

against which the action is taken is provided for in the items in

staging category C+ of the Tariff Schedule of the Party taking

the action, in which case the transition period shall be the

period of staged tariff elimination for that good.

=============================================================================

ANNEX 801

Bilateral Actions

Notwithstanding Article 801, bilateral emergency actions

between Canada and the United States on goods originating in the

territory of either Party shall be governed in accordance with

the terms of Article 1101 of the Canada-U.S. Free Trade

Agreement, which is hereby incorporated into and made a part of

this Agreement for such purpose.

=============================================================================

ANNEX 803

Administration of Emergency Action Proceedings

1. Institution of a Proceeding:

(a) An emergency action proceeding may be instituted by a

petition or complaint by entities specified in domestic

law. The entity filing the petition or complaint shall

demonstrate that it is representative of the domestic

industry producing a good like or directly competitive

with the imported good.

(b) A Party may institute a proceeding on its own motion or

request the competent investigating authority to

conduct a proceeding.

2. Contents of a petition or complaint. When the basis for an

investigation is a petition or complaint filed by an entity

representative of a domestic industry, the petitioning

entity shall, in its petition or complaint, provide the

following information to the extent that such information is

publicly available from governmental and other sources, and

best estimates and the basis therefore if such information

is not available:

(a) Product description. The name and description of the

imported good concerned, the tariff subheading under

which such good is classified, its current tariff

treatment, and the name and description of the like or

directly competitive domestic good concerned,

(b) Representativeness:

(i) The names and addresses of the entities filing the

petition or complaint, and the locations of the

establishments in which they produce the domestic

good,

(ii) the percentage of domestic production of the like

or directly competitive good that such entities

account for and the basis for claiming that they

are representative of an industry, and

(iii) the names and locations of all other domestic

establishments in which the like or directly

competitive good is produced;

(c) Import data. Import data for each of the five most

recent full years that form the basis of the claim that

the good concerned is being imported in increased

quantities, either in absolute terms or relative to

domestic production;

(d) Domestic production data. Data on total domestic

production of the like or directly competitive good for

each of the five most recent full years;

(e) Data showing injury. Quantitative and objective data

indicating the nature and extent of injury to the

concerned industry, such as data showing changes in the

level of sales, prices, production, productivity,

capacity utilization, market share, profits and losses,

and employment;

(f) Cause of injury. An enumeration and description of the

alleged causes of the injury, or threat thereof, and a

summary of the basis for the assertion that increased

imports, either actual or relative to domestic

production, of the imported good are causing or

threatening to cause serious injury, supported by

pertinent data; and

(g) Criteria for inclusion. Quantitative and objective

data indicating the share of imports accounted for by

imports from the territory of each other Party and the

petitioner's views on the extent to which such imports

are contributing importantly to the serious injury, or

threat thereof, caused by imports of that good.

3. Petitions or complaints, except to the extent they contain

confidential business information, shall promptly be made

available for public inspection upon being filed.

4. With respect to an emergency action proceeding instituted on

the basis of a petition or complaint filed by an entity asserting

that it is representative of the domestic industry, the competent

investigating authority shall not publish the notice required by

paragraph 6 without first assessing carefully that the petition

or complaint meets the requirements of paragraph 4, including

representativeness.

5. Notice requirement. Upon instituting an emergency action

proceeding, the competent investigating authority shall publish

notice of the institution of the proceeding in the official

journal of the Party. The notice shall identify: the petitioner

or other requester; the imported good that is the subject of the

proceeding and its tariff subheading; the nature and timing of

the determination to be made; the time and place of the public

hearing; dates of deadlines for filing briefs, statements, and

other documents; the place at which the petition and any other

documents filed in the course of the proceeding may be inspected;

and the name, address and telephone number of the office to be

contacted for more information.

6. Public hearing. In the course of each such proceeding,

the competent investigating authority shall:

(a) hold a public hearing, after providing reasonable

notice, to allow all interested parties, and any

association whose purpose is to represent the interests

of consumers in the territory of the Party instituting

the proceeding, to appear in person or by counsel, to

present evidence, and to be heard on the questions of

serious injury, or threat thereof, and the appropriate

remedy; and

(b) provide an opportunity to all interested parties and

any such association appearing at the hearing to

cross-question interested parties making presentations

at that hearing.

7. Confidential information. The competent investigating

authority shall adopt or maintain procedures for the treatment of

confidential information, protected under domestic law, that is

provided in the course of a proceeding, including a requirement

that interested parties and consumer associations providing such

information furnish non-confidential written summaries thereof,

or if they indicate that such information cannot be summarized,

the reasons why a summary cannot be provided.

8. Evidence of injury and causation:

(a) In conducting its proceeding the competent

investigating authority shall gather, to the best of

its ability, all relevant information appropriate to

the determination it must make. It 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 good concerned, in absolute

and relative terms, the share of the domestic market

taken by increased imports, and changes in the level of

sales, production, productivity, capacity utilization,

profits and losses, and employment. In making its

determination, the competent investigating authority

may also consider other economic factors, such as

changes in prices and inventories, and the ability of

firms in the industry to generate capital;

(b) The competent investigating authority shall not make an

affirmative injury determination unless its

investigation demonstrates, on the basis of objective

evidence, the existence of a clear causal link between

increased imports of the good 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;

9. Time period for deliberation. Except in critical

circumstances and in global actions involving perishable

agricultural products, the competent investigating authority,

before making an affirmative determination in an emergency action

proceeding, shall allow sufficient time to gather and consider

the relevant information, hold a public hearing, and provide an

opportunity for all interested parties and consumer associations

to prepare and submit their views.

10. The competent investigating authority shall publish promptly

a report, including a summary thereof, in the official journal of

the Party setting forth its findings and reasoned conclusions on

all pertinent issues of law and fact. The report shall describe

the imported good and its tariff item number, the standard

applied and the finding made. The statement of reasons shall set

forth the basis for the determination, including a description

of: the domestic industry seriously injured or threatened with

serious injury; information supporting a finding that imports are

increasing, the domestic industry is seriously injured or

threatened with serious injury, and increasing imports are

causing or threatening serious injury; and, if provided for by

domestic law, any finding or recommendation regarding the

appropriate remedy and the basis therefor. In its report, the

competent investigating authority shall not disclose any

confidential information provided pursuant to any undertakings

concerning confidential information that may have been made in

the course of the proceedings.

=============================================================================

ANNEX 804

Country-Specific Definitions

For purposes of this Chapter:

competent investigating authority means:

(a) in the case of Canada, the Canadian International Trade

Tribunal, or its successor;

(b) in the case of the Mexico, the designated authority

within the Ministry of Trade and Industrial Development

("Secretaría de Comercio y Fomento Industrial"), or its

successor; and

(c) in the case of the United States, the U.S.

International Trade Commission, or its successor.