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GATT2_14.TXT
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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 Member[1] may apply a safeguard measure to a product only 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 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.
(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) 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 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.
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 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 Member[5], 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 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.
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 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.
ANNEX
Exception Referred to in Paragraph 23
Members concerned Product Termination
EC/Japan Passenger cars, off road vehicles, light commercial
vehicles, light trucks (up to 5 tonnes), and the same
vehicles in wholly knocked-down form (CKD sets).31
December, 1999
1. A 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 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.
2. A Member shall immediately notify an action taken under paragraph 19 to
the Committee on Safeguards.
3. An 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.
4. Examples 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.
5. The only such exception to which the European Communities is entitled is
indicated in the Annex to this Agreement.