safeguard by xiagong0815

VIEWS: 38 PAGES: 110

  Seminar for the Department of Foreign Trade
               Bangkok, Thailand
                 September 22, 2011

Robert L. LaFrankie        Pornprom Karnchanachari
Trade Remedies & Customs   Legal Advisory Council Limited
Washington, DC             Bangkok, Thailand
      I. Introduction
      II. History/Status
     III. Trends/Use
     IV. Substantive Requirements
      V. Remedies
     VI. Other Issues (Concessions/Developing Countries/Parallelism)
    VII. Procedures
    VIII. Dispute Settlement
     IX. Thailand Safeguards
      X. Other Safeguards (China/Vietnam/Bilateral)


          Introduction:           What are safeguards?
    “Safeguards“: allow temporary protection to domestic
    industries facing increased import competition.
    Three types: Typically three types of safeguard
      1) Quantitative restrictions (i.e., import quotas);

      2) Tariff quotas (i.e., tariffs on excess over quota);

      3) Import duties (easiest to administer).

                   Introduction:              Purpose

    • Temporary Relief: Safeguards provide temporary relief
      from injury caused by sudden and unforeseen increase in
    • Safeguards provide “breathing room” for domestic industry
        Improve position relative to imports;
        Allow it to “adjust” – e.g., shift resources to other fields.
    • Key Point: Safeguards protect against fairly traded
      imports, unlike traditional trade remedies (i.e., AD/CVD)
      which protect against unfairly traded imports.

        Introduction:            “Emergency” Exception

    • Exception: As “fair trade” restraint, safeguards
      exception to:
        negotiated bound tariff rates (MFN principle) ;
        prohibition of quantitative restrictions.
    • Emergency Action: GATT Art. XIX allows such
      emergency action to restrict “fair trade“ under
      limited circumstances.
    • Rationale?: Idea is to provide a “safety valve” so as
      not to deter members from continued trade

            Introduction:         Rationale (why?)

    “If WTO law were not to offer a ‘safety valve’ for
    situations in which, following trade liberalization,
    imports increase so as to cause serious injury or threat
    thereof to a domestic industry, Members could be
    deterred from entering into additional tariff concessions
    and from engaging in further trade liberalization. It is
    for this reason that the safeguard mechanism in Article
    XIX has always been an integral part of the GATT.”
    (U.S. Lamb)


     History/Status:           Infrequent/Grey Measures

    • Infrequent: As restraint on “fair trade”, Article XIX
      escape clause was infrequently used.
    • Grey Measures: Resulted in many “grey” measures
      instead (i.e., “voluntary” restraints, “orderly”
      marketing agreements – autos, steel,
    • Reform: This created need for reform to regularize
      procedures for these types of fair trade restraints –
      resulting in WTO Safeguards Agreement (“SGA”).

           History/Status:             SGA and GATT

     • Now Two Sources: SG measures now governed by two
       different sources:
        1) WTO Safeguards Agreement (SGA); and
        2) GATT Article XIX.
     • SGA: imposes standards that must be followed for
       safeguards imposition – both what must be determined
       and what restraints can be imposed and for how long.
     • GATT Art. XIX requirements still apply. SGA Preamble
       “to clarify and reinforce the disciplines of GATT 1994, and
       specifically those of its Article XIX.” (Korea Dairy)

              History/Status:           SGA/GATT

     • SGA Art. 10 Phase Out: All previous GATT
       safeguards eliminated in maximum of 8 years from
       WTO SGA - so all now gone.

     • SGA Art. 11 Prohibitions: GATT safeguards must
       now conform to WTO SGA – so any VRM, OMA, or
       similar type of “grey” restraint (i.e., price monitoring,
       surveillance, cartels, licensing, etc.) must be phased


             Trends and Use:               Introduction

     • As noted above, Safeguards are seldom used.
     • Worldwide: Since 1995 (SGA adopted), 216 safeguards
       cases filed (through 2010), resulting in 101 measures
     • AD/CVD: This compares to 4,002 AD and CVD cases
       filed worldwide (through 2010), resulting in 2,576
       measures (65%).
     • Main Users: To date, the predominant users of SG are:
       India (26); Turkey (15); Jordan (15); Indonesia (12); Chile
       (12); the U.S. (10) and the Philippines (9).
     • Thailand has had only one SG case filed (see below).

                               Worldwide Investigations
                                    1995 - 2010


     Source: World Trade Organization

                   Worldwide SG Initiations Over Time
                              1995 - 2010



     Source: World Trade Organization

                 Worldwide SG Actions for Top Sectors
                            1995 - 2010






     Source: World Trade Organization

                 Worldwide SG Actions for Top Countries
                             1995 - 2010


                      (15)         (15)

                                          (12)   (12)

     Source: World Trade Organization

             Trends and Use:          Conclusions

     • Overall, far fewer SG cases than either AD or CVD.

     • SG success rate is also generally lower than AD and
       CVD success rate.


              Substantive Requirements
                         Art. 2 and 4 Findings

     • Art. 2: Sets forth four basic substantive requirements.
     • A Member may apply safeguards only if a product is
       imported in such increased quantities so as to cause or
       threaten to cause serious injury to the domestic industry.
     • Thus, basically four substantive requirements:
            1) domestic industry;
            2) increased quantities;
            3) injury; and
            4) causation.

     • Art. 4: Further defines each of these terms/requirements.

             Substantive Requirements
              (1) Domestic Industry/Like Product

     Domestic Industry: Means--
     • Domestic producers as a whole of the like or directly
       competitive products operating within the territory; or
     • Domestic producers of like or directly competitive
       products, of which combined output constitutes a
       major proportion of the total production of the
       domestic industry.

              Substantive Requirements
              (1) Domestic Industry/Like Product

     The determination of the “domestic industry” is based
     on the ‘producers … of the like or directly competitive
     products’. The focus must, therefore, be on the
     identification of the products, and their ‘like or directly
     competitive’ relationship, and not on the processes by
     which those products are produced. (U.S. Lamb).

             Substantive Requirements
              (1) Domestic Industry/Like Product

     Like Product: Means—

     • Products which are identical in all respects; or

     • Products whose physical characteristics significantly
       resemble those of imported products.

             Substantive Requirements
                      (2) Increased Imports

     • Quantities: Focus of increase is clearly quantities,
       and not values.
     • Absolute/Relative: The increased quantities may be
       either an absolute increase or an increase relative to
       domestic production. (Art. 2.1)
     • Unforeseen Developments: Increase must be due to
       “unforeseen developments,” as required by GATT
       Art. XIX. (Argentina Preserved Peaches).

             Substantive Requirements
                      (2) Increased Imports

     • Defined: No set period or amount of increase.
     • Sudden & Recent: The phrase ‘is being imported’
       implies that the increase in imports must have been
       “sudden and recent.” (Argentine Footwear)
     • “The increase in imports must have been recent
       enough, sudden enough, sharp enough, and
       significant enough, both quantitatively and
       qualitatively, to cause or threaten to cause ‘serious

             Substantive Requirements
                      (2) Increased Imports

     • Recent: Does not mean increase must continue up to
       the period immediately preceding the determination,
       nor up to the very end of the period of investigation.“
       (U.S. Steel Safeguards)
     • Trends/Explanation Are Key: Rather, it is important
       to explain the overall trend in imports, including any
       “recent decrease” in absolute imports during
       investigation period. (U.S. Steel Safeguards)
     • Some Limits: Can’t be just “end-point to end-point”
       comparison. Must look at trends.

             Substantive Requirements
                       (3) Injury/Threat

     • Serious Injury Defined: Significant overall
       impairment of the position of a domestic industry.
     • “Very high standard of injury”. (U.S. Lamb)
     • “Serious”: The word “serious” requires a much
       higher injury standard than the work “material.”
       (U.S. Lamb)
     • Why?: Injury standard should be higher than
       AD/CVD because SG affect “fair trade”.

              Substantive Requirements
                          (3) Injury/Threat
     • Threat Defined: Threat of serious injury means a serious
       injury that is clearly imminent.
         Threat decision must be based on facts and not on conjecture
          or remote possibility.
     • Clearly Imminent: Means “ready to take place.” (U.S.
     • Recent Data: Focus on recent data at end of
       investigation period is logical due to “future-oriented”
       nature of a “threat” analysis.
     • Mere threat of increased imports not enough. (Argentine

              Substantive Requirements
                           (3) Injury/Threat

     Art. 4.2(a) criteria for assessing injury/threat.
     • Very Broad: Must consider “all relevant factors” of
       “objective and quantifiable” nature “having a bearing” on
       the industry, including:
         Increase in imports: the rate and amount of the increase
           in imports of product in absolute or relative terms.
         Market share: the share of the domestic market taken by
           the increased imports.
         Changes: check changes in the level of sales, production,
           productivity, capacity utilization, profits, losses,

             Substantive Requirements
                        (3) Injury/Threat

     • Trends: Do not need negative trend in every factor to
       have overall impairment. (U.S. Wheat Gluten)

     • Check All: Must check all relevant factors, not just
       those raised by parties.

     • Disjunctive: Do not need both (threat and actual)
       “or” is disjunctive, only need one or the other. (U.S.
       Line Pipe)

             Substantive Requirements
                         (4) Causality

     • Causal Link: Must be a causal link between increased
       imports and the serious injury (or threat) to the
       domestic industry.
     • Other Factors?: If factors other than the increased
       imports are causing injury at the same time, the
       injury from such other factors may not be attributed
       to the increased imports.
     • Key Point: Analysis is often overturned on this
       point. So need careful analysis here.

                Substantive Requirements
                                (4) Causality

     • Multiple Causes Ok: Need not show increased imports
        alone capable of causing serious injury. (U.S. Steel Safeguards)

     • Art. 4.2(b): “Suggests that ‘the causal link’ between increased
       imports and serious injury may exist, even though other factors are
       also contributing, ‘at the same time’, to the situation of the domestic
       industry.” (U.S. Wheat Gluten)

     • Non-Attribution: Must identify injurious effects of other
       factors (other than imports) and satisfactorily explain them.


                    Remedies:             Introduction

     • Types: Three primary types of safeguard remedies:
         Quantitative restrictions (i.e., import quotas);
         Tariff quotas (i.e., tariff on excess over quotas);
         Import duties (typically used).

     • Extent: Art. 5.1, “only to the extent necessary to prevent
       or remedy serious injury and facilitate adjustment.”
     • Irrespective of Source: Safeguard measures shall be
       applied to imported product “irrespective of its source”
       (Art. 2.2) (i.e., its a “worldwide” remedy, with exceptions).

               Remedies:          Quotas - Generally

     • Limited Remedy: If use quota, it cannot reduce
       imports below the most “recent period” (i.e., avg. of
       last three representative years, if statistics available).
     • Exception: May disregard this rule if “clear
       justification” exists that a different level is needed to
       prevent or remedy injury (e.g., lower than pre-import
       surge level).

               Remedies:          Quota Allocations

     • Allocations: Must allocate any quota used among
       “supplying countries.”
     • Agreement: Should first seek agreement among ”all
       supplying countries having a substantial interest.”
     • No Agreement: If agreement not practicable, then
       allocate based on previous representative period
       (e.g., avg. of last 3 years, value or volume), with due
       account of special factors.

             Remedies: Quotas – Exceptions/Limits

     • 5.2.b – Exception: If some imports have increased at
       disproportionate rate (i.e., “spiked”) relative to total increase in
       imports, then may depart from typical allocation methodology.
     • Requirements: To do so, must: (1) have mandatory
       consultations; (2) find that imports from some increased
       disproportionately; (3) state reasons.
     • Practical Result: May then apply lower quota to those for
       whom imports have spiked.
     • Limitation: Can only do this for injury not threat cases, and
       may only apply this for four years (not more).

         Remedies:            Provisional Measures (Art. 6)

     • Provisional Measures: Special temporary remedy in
        “critical circumstances” where delay causes damage difficult to
     • Form: Should be in the form of “tariff increases” (refund if
        negative in final).
     • Duration: 200 days, during which time applicable
        requirements of Articles 2-7 and 12 must be met.
     • Evidence: Must be preliminary determination of “clear
        evidence of serious injury or threat” from increased imports.
     • Time counts against total duration.

                Remedies:            Duration (Art. 7)

     • General: SG imposed only for such time as necessary to
       prevent/remedy injury, and to facilitate adjustment.
     • Time Period: Generally 4 year limit (can be less).
     • Extension: Can extend for total of 8 years (developing
       countries = 10 years) if comply with Arts. 2, 3, 4 and 5
       (procedures) and Arts. 8 and 12 (concessions and notice), and
         Necessary to continue to prevent or remedy serious injury;
         Adjustment: Should show the industry is adjusting.

     Remedies:          Progressive liberalization (Art. 7.4)

     General Rules:
     • One Year: If expected duration of SG measure is over
       one year, must progressively liberalize at regular
     • Three Years: If exceeds 3 years, must review (at
       midterm), and either withdraw or increase liberalization.
     • Four Years: If SG measure extends past 4 years, no more
       restrictive than at end and should be liberalized.
     So, if appropriate, member should withdraw measure or
     increase liberalization over time.

           Remedies:         Reapplication (Art. 7.5)

     • Limits: Once SG terminated, cannot impose a new
       SG measure on same product immediately, but must
     • 2 year Rule: General rule is if SG previously applied
       (since WTO), must wait at least 2 years to reapply (or
       duration of original measure if exceeded 2 years).
     • 180 Day Exception: If SG previously applied 180
       days (or less), can reapply after waiting one year, but
       only if SG not imposed more than 2 times in 5 years.


             Other Issues:             Concessions (Art. 8)

     • General Rule of Compensation: Unlike AD or CVD
        duties, WTO Members imposing (or extending) SG measures
        may need to compensate affected countries.
     • Types?: May agree on any type of trade compensation for the
        adverse affects of the SG measure (e.g., decrease other duties).
     • If can’t agree in 30 days, may unilaterally suspend equivalent
       concessions (i.e., increase other duties) within 90 days (if WTO
       not disapprove).
     • 3 Year Exception: No retaliation for 3 years if SG based on
        “absolute increase” (as opposed to “relative increase” per Art. 2)
        and conforms to agreement.

           Other Issues:         Developing countries

     Developing Country Exception: SGA has special rights
     for “developing countries”.
     • Art. 9.1: Shall not apply against DC member if:
         3% rule: Imports from individual DC member under
          3%; and
         9% rule: Imports from all DC members below 3% are
          under 9%.
     • Must take “all reasonable steps” to exclude such de
       minimis DC from SG measures. (U.S. Line Pipe)

            Other Issues:             Developing Countries

     Issues: DC exceptions not well defined; raise many issues:
     • SGA does not define DC’s (no specific list) (U.S. uses GSP list).
     • Period and how to measure de minimis levels (3% and 9%) not
     • Product groupings not defined.
     Strategies: Lack of guidance provides maximum flexibility to
     determine if country is DC and in/out.
     • Reconsider?: Flexibility to monitor DC imports and apply SG
        if imports surge above 3% (e.g., monitoring, etc.).

                 Other Issues:            Parallelism

     • Non-Discrimination: Art. 2.2 says SG measures shall be
       applied to all products irrespective of source. (MFN)
     • Issue: Can exclude imports from counties with FTAs?
     • U.S. Tried This: U.S. has excluded NAFTA imports (e.g.,
       Canada) from some SG measures .
     • WTO Disagreed: “Parallelism” requires that imports
       included in injury analysis must correspond with imports
       subjected to the SG remedies (including FTA members). (U.S.
       Wheat Gluten)

                  Other Issues:             Parallelism

     • Extent unclear: WTO says its ok to exclude some imports
       from remedy as long as Member explicitly establishes that imports
       from covered sources alone satisfy all SG requirements (i.e.,
       cause injury). (U.S. Line Pipe) (Even if FTA imports small)
     • Explicitly establishes: Meaning unclear, requires
       “reasoned and adequate explanation” demonstrating this. (U.S.
       had only said Canada’s imports not important.)
     • Developing Country Exception: Must still comply with
       developing country exception, as it is explicit exception.

                 Other Issues:          Adjustment

     • Art. 5.1: Purpose of SG measure is to “facilitate
     • Why?: SG are temporary restraint to provide “breathing
       room” – so need to do something in return.
     • Required?: Not specifically required to be considered
       before SG measure can be imposed. (Korea Dairy)
     • Important: But, critical to examine adjustment plan as
       part of “reasoned explanation” of need for SG measure
       and injury.

          – SGA ARTICLES 3 AND 12

              Procedures:        Generally (Art. 3)

     • Generally Open Ended: SGA not specify exactly how
       investigation to be conducted.
     • U.S. – Steel Safeguards: “the [SGA] is concerned
       with the ultimate determination made and reflected
       in the Member’s report . . . There is no provision on
       how or when the investigation is to be initiated or
       whether . . . the initiation . . . should be undertaken
       by the King, the President, or the industry. Nor does
       the [SGA] dictate the manner in which
       determinations are to be arrived at. “

          Procedures:             Notice/Comment (Art. 3)

     Procedural Rules: But, several required procedures:
     • Public procedures: Investigation by procedures previously
       established and made public. (Art. 3.1)
     • Notice: Must provide public notice to interested parties
       (including notice to SG committee). (Art. 3.1)
     • Participation: Provide for participation by interested parties,
       including hearings, present views, etc. (Art. 3.1)
     • Report: Published report providing “reasoned conclusions” on
       all pertinent facts and law. (Art. 3.1)
     • Confidentiality: Must protect; can disregard if unwarranted.

            Procedures:            Consultation (Art. 12)

     Consultation rules: Art. 12 imposes separate notice and
     consultation requirements.
     • Notice: Notify SG committee when initiate, make findings,
       apply/extend SG.
     • Information: Must provide “all pertinent information” and
       evidence of injury, and description of the product.
     • Consultations: Must consult with members having
       “substantial interest” in exports of product concerned (both
       prior to and after imposition to allow views and concessions).
     • Meaningful: Must be meaningful exchange of information
       (and done in good faith).


       Dispute Settlement:                  Generally (Art 14)

     WTO DSU Applies: Art. 14 subjects SG actions to WTO
     dispute settlement provisions and panel review (DSU).
     • Standard of Review: Panel makes “objective assessment of
       the facts.”
     • Key Criteria: Panels often review:
         Whether authorities considered all relevant facts.
         Whether authorities provided reasoned and adequate
          explanation of how facts support conclusions.
     • New Arguments: Importantly, WTO challenges can raise
       new arguments not submitted previously to authorities.

      Dispute Settlement:             Procedures (Art. 14)

     • Process: Appeal first to panel, decision of which is
       reviewable by appellate body. (Briefing/argument)
     • Takes Time: Appeal process typically lasts 15-18
       months, including appeals. Must implement within
       “reasonable time.”
     • Results: WTO consistently overturns SG measures.
     • Strategy: Given time frame, can leave SG measures
       in place pending review (e.g., U.S. Steel safeguards in
       place about 18 months).

                    Dispute Resolution: Timeframe
                    Timeline of Section 201 Steel Case

                                              March-May 2002:
              June 22, 2001:                  WTO Requests for
              ITC Institution                 Consultations

              October 22, 2001:               July 11, 2003:
              ITC Determination               WTO Panel Report

              December 19, 2001:              November 10, 2003:
              ITC Report to President         WTO Appellate Body Report

              March 5, 2002:                  December 4, 2003:
              President announces safeguard   President announces safeguard
              measures                        measures terminated

     Source: Congressional Research Service


              Thailand:         Laws & Regulations

     • Laws/Regulations: Safeguard Measures on
       Increased Import Act, B.E. 2550 (2007), effective 6
       April 2008, plus Ministerial and Department
       Regulations and Announcements.
     • Same principles as SGA Measures under WTO and
       safeguard laws of other countries.
         "Emergency" actions apply against (1) absolute or
          relative increase in import quantities of products with
          (2) causal link of (i) injury or (ii) threaten serious
          injury to Thai domestic industry.

              Thailand:        Laws & Regulations

     • Measures: Apply as necessary to prevent or remedy
       injury to allow producers of the like products or the
       domestic industry the adjustment period.
     • Three Types:
         Tariffs on imported products;
         Quantitative restrictions on imported products;
         Other measures, e.g., tariffs + quotas on imported

              Thailand:        Application Process

     • Applicants:
         Domestic Industry;
         Department of Foreign Trade.
     • Application Process:
         Apply to Department of Foreign Trade, Ministry of
          Commerce, Thailand;
         Specific Application Form and Supporting Evidence
          showing increase of imports causing injury or threaten
          serious injury to Thai domestic industry.

               Thailand:         Pre-Investigation

     • Pre-Investigation Procedure
         Safeguard Sub-Committee considers application and
          render opinion:
            No grounds        Notify applicant;
            Grounds     Application accepted by Safeguard
             Committee      Initiate formal investigation by
             announcement of Department of Foreign Trade
             Notify WTO.

                  Thailand:        Investigation

     • Investigation Procedure
         Questionnaire issued to interested parties, e.g.,
          overseas producers and exporters, local producers,
          government of exporting countries, other parties
          deemed relevant.

         Submission of questionnaire responses by interested

               Thailand:         Investigation

      Analysis of questionnaire responses of interested
       parties based on factors, including, not limited to the
         Rate and amount of the increased imports;
         Share of domestic market taken by the increased
         Changes in the level of sales;
         Changes in the level of production;
         Changes in the level of productivity;
         Changes in the level of capacity utilization;
         Changes in the level of profits and losses;
         Changes in employment levels.

                    Thailand:        Evidence

     • Evidence
        Must clearly demonstrate that serious injury or threat
         of serious injury is caused by increased imports.
        When factors other than increased imports are causing
         injury to the domestic industry at the same time, such
         injury shall not be attributed to the increased imports.

                  Thailand:          Formal Process

     • Formal Process
         Verification;
         Hearing;
         Safeguard Sub-Committee considers responses from
          interested parties, then submits for consideration of
          Safeguard Committee;
         Safeguard Committee considers responses from interested
          parties as well as report of Safeguard Sub-Committee;
         Safeguard Committee renders and announces
         Notify WTO.

             Thailand:         Provisional Measures

     • Provisional Safeguard Measures
         When preliminary information found that the
          increased import has caused injury or that the injury is
          imminent to such an extent that any delay would
          cause damage which would be difficult to repair.
         Not more than 200 days.

                 Thailand:           Final Measures

     • Definitive Safeguard Measures
         Apply as necessary only to prevent or remedy injury
          to allow producers of the like product or the domestic
          industry the adjustment period.
            Tariffs on imported products – Additional to normal
            Quotas on imported products – Must not reduce the
             quantity of the imports below the level of a recent
             period, except with clear justification that such level is
             necessary to prevent or remedy the injury.
            Other measures, e.g., tariffs + quotas on imported

           Thailand:        Definitive Measures

      Apply for not more than 4 years.
      If safeguard measure is longer than 1 year, measure
       will be liberalized.
      If safeguard measure is longer than 3 years, mid-term
       review is required.
      Safeguard measures may be extended, but must not be
       longer than 10 years, including the period of
       provisional measures, initial imposition, and any

                   Thailand:         Exemptions

     • Exemption from Safeguard Measures
         Safeguard measures shall not be applied against a
          product originating in a developing country if its share
          of imports does not exceed three percent (3%) of total
          imports of the product concerned.
         Provided, that developing countries with less than
          three per cent (3%) import share collectively account
          for not more than nine per cent (9%) of total imports of
          the product concerned.

                 Thailand:         Timing/Appeals

     • Investigation Time Frame
         270 days from the date of the initiation, extendable not
          more than additional 90 days.
     • Appeal
         No appeal provision in The Safeguard Measures on
          Increased Import Act, B.E. 2550 (2007).
            International Trade and Intellectual Property Court?
            Administrative Court?

               Thailand:          Glass Blocks Case

     • Thai Safeguard Measure
         Product: Glass Block.
         Thai Customs Tariff Code 7016.9000.
         Period of Investigation: January 1, 2007 to September
          30, 2010.

               Thailand:         Glass Blocks Case

     • Serious Injury Found
         Injury to Thai domestic industry attributed to
          increased and low-priced imports of glass block.
         Thai domestic industry unable to carry out its set plan
          successfully, resulting in the decline in sales volume,
          capacity utilization and domestic market share.
         Thai domestic industry unable to cover operating
          expenses due to decreased per-unit profits compared
          with the production cost, resulting in losses in its
          overall performance.

                  Thailand:                Glass Blocks Case

     • Type of Measure: Tariffs
       Duration                                Tariffs
       18 August 2011 – 14 January 2012        35% of CIF price or Baht 11.23 per piece,
                                               whichever is higher
       15 January 2012 – 14 January 2013       32% of CIF price of Baht 10.23 per piece,
                                               whichever is higher
       15 January 2013 – 14 January 2014       29% of CIF price of Baht 9.23 per piece,
                                               whichever is higher

                Thailand:      Glass Blocks Case

     • Exemptions
        Yes.
        165 Developing Countries in East & Southern Africa,
         West Africa, North Africa, South Asia, Europe, Central
         Asia, Middle East, Americas and East Asia and Pacific.


              Other Safeguards:              Bilateral

     • Nearly 400 regional agreements since 1995
         90% FTAs.
         10% customs unions.
     • Two main issues:
         Impose special safeguards only against bilateral
         Exclude bilateral partner from member’s global

               Other Safeguards:                  Bilateral

     • Customs Union: Single customs territory formed – duties
       eliminated between partners, same duties applied to imports
       into the customs union.
     • FTA: Two or more customs territories, with favorable duties
       between them but different duties applied to non-FTA imports
       into each member.
     • MFN Principle: FTAs and Customs Unions go against MFN
       principles – special favorable treatment allowed for partner
       countries – but allowed by GATT Article XXIX.

              Other Safeguards:           Bilateral

     • Why?: Same rationale as SGA: reduction in duties
       between countries could lead to sudden increase in
       imports that injure a member’s domestic industry.
     • So: Special bilateral safeguard provisions negotiated.
         Normally only duties (not quotas or TRQ’s).
         Often only for transition period following FTA

              Other Safeguards:            Bilateral

     • Most have FTA-specific dispute resolution
     • But no detailed specific requirements for bilateral
       safeguards in the WTO agreements.
     • Range from highly legalistic (NAFTA) to vague

                Other Safeguards:                   Bilateral

     • Terminology varies: “serious injury” concept called “market
       disruption” or “serious disturbance” – can mean an entire
       region must be effected (not just domestic industry in region).
     • Few procedures specified, other than consultations.
     Key Issue – Exclusions:
     • Often exclude FTA partner from member’s global safeguards.
     • Exclusions often require that partner not be substantial cause of
       serious injury otherwise found. (WTO issue/parallelism)

         Other Safeguards:                   Special Safeguards

     • Few: Invoked in special situations (i.e., specific product,
        country, etc.) and with special requirements (e.g., no injury).
          Textiles: Special textiles safeguards had been allowed
            under Article 6 of the WTO Agreement on Textiles and
            Clothing with no injury test, but this expired January 1,
          Agriculture: Special safeguards are allowed under certain
            specific conditions on agricultural products under Article 5
            of the WTO Agreement on Agriculture; triggered by
            defined import levels and prices (no injury test).
          China: China’s WTO Accession Protocol Safeguard.


             China Safeguards:                Accession

     • Accession: China Joins WTO in 2001.
     • Concessions: Negotiated concessions to join in the
       “Protocol on the Accession of the People’s Republic
       of China”.
         For example, in antidumping, non-market economy
          treatment of China allowed for 15 years (i.e., to 2016).
     • Article 16: “Transitional Product-Specific Safeguard

              China Safeguards:                 Actions

     • Case and remedy applies only to China.
     • Substantive standards (slightly different):
         “increased quantities or under such conditions”;
         “as to cause or threaten to cause”;
         “market disruption to domestic producers of like or
          directly competitive products.”

        China Safeguards:                 Market Disruption

     • “Market disruption” means:
         Chinese imports are:
            “increasing rapidly, either absolutely or relatively”;
            So “as to be a significant cause of material injury or
             threat of material injury”.
     • Must consider “volume of imports,” their “effect on
       prices,” and the “effect of such imports on the
       domestic industry.”

              China Safeguards:                Remedies

     Basically The Same: Though some exceptions:
     • Withdraw concessions or limit imports to prevent or
       remedy “market disruption.” (Tariffs, quotas, TRQ’s).
     • 2 yrs.: If based on relative increase, no more than two years
       without China’s retaliation.
     • 3 yrs.: If based on absolute increase, no more than three
       years without China’s retaliation.
     • Provisional measures can be immediate, and up to 200
     Key Limit: Remedies cannot extend past November 2013.

         China Safeguards:               Diversion Action

     • If a China safeguard action by Country A, “causes or
       threatens to cause significant diversions of trade”
       into its market:
         Consultations by Country B within 30 days with China
          and/or Country A.
         Consultations to last up to 60 days.
         Then, Country B “in respect of such product” can
          “withdraw concessions or otherwise limit imports”
          from China to the “extent necessary” to prevent or
          remedy such diversions.

            Vietnam Safeguard Action?

     • Accession agreement with U.S. is applicable to
       textiles and apparel, triggered by Vietnam reinstating
       any of listed and eliminated subsidies.



             Outcome of Section 201 Cases
                                      1975 - Present



     Source: Congressional Research Service (citing
     International Trade Commission)
               Section 201 Cases by Product
                                         1975 - Present











     Source: Congressional Research Service (citing
     International Trade Commission)
             Outcome of Section 421 Cases
                                      2002 - 2010




     Source: International Trade Commission

      U.S. Investigations, ITC Affirmative
                                      1980 - 2008

     Source: International Trade Commission

      U.S. Investigations, ITC Affirmative
                                      1998 - 2008

     Source: International Trade Commission

                 Worldwide Investigations
                                        1995 - 2010

     Source: World Trade Organization


     Section 201 Cases – Lamb Meat
     INITIATION               October 23, 1998

     PERIOD DATA              1993 - 1997
     COLLECTED                JAN - SEPT 1997, 1998
     PRODUCT                  fresh, chilled, or frozen lamb meat

     REMEDY                   July 22, 1999 - July 21, 2000
                              Australia: 17,139,582 kg        New Zealand: 14,481,603 kg
     •tariff-rate quota       Other countries: 229,966 kg     Year 1 = 40%
                              July 22, 2000 - July 21, 2001
     •adjustment assistance   Australia: 17,139,931 kg        New Zealand: 14,871,407 kg
     program                  Other countries: 236,155 kg     Year 2 = 32%

                              July 22, 2001 - July 22, 2002
                              Australia: 18,062,279 kg        New Zealand: 15,261,210 kg
                              Other countries: 242,346 kg     Year 3 = 24%

     SG PERIOD                imposed on July 7, 1999
                              3 years plus 1 day
                              terminated on November 15, 2001
     EXCLUDED                 Canada and Mexico (NAFTA)
                              Israel, CBERA, ATPA, and developing countries

      Section 201 Cases – Wire Rod
     INITIATION           January 27, 1999

     PERIOD DATA          1994 - 1998
     PRODUCT              hot-rolled bars and rods, in coils, of non-alloy or alloy steel, except such bars
                          and rods of alloy steel containing 24 percent or more of nickel
     REMEDY               March 1, 2000 - February 28, 2001
                          1,433,351,886 kg
     •tariff-rate quota   Year 1 = 10%
                          March 1, 2001 - February 28, 2002
                          1,462,018,923 kg
                          Year 2 = 7.5%

                          March 1, 2002 - March 1, 2003
                          1,491,259,302 kg
                          Year 3 = 5%

                          (and quarterly quotas)

     SG PERIOD            imposed on March 1, 2000
                          3 years plus 1 day
                          terminated on March 1, 2003
     EXCLUDED             Canada and Mexico (NAFTA)

       Section 201 Cases – Line Pipe
      INITIATION            August 4, 1999

      PERIOD DATA           1994 - 1998
      COLLECTED             JAN - JUNE 1998, 1999
      PRODUCT               welded carbon quality line pipe of circular cross section, of a kind used for oil
                            and gas pipelines
                            Year 1 = 19%
      •increase in duties
                            Year 2 = 15%

                            Year 3 = 11%

                            (exemption of first 9,000 short tons from each supplying country each year)

      SG PERIOD             imposed on March 1, 2000
                            3 years plus 1 day
                            terminated on March 1, 2003
      EXCLUDED              Canada and Mexico (NAFTA)

            Section 201 Cases – Steel
      INITIATION    July 3, 2001

                    (USTR Request; consolidated with Senate Finance Committee Request on
                    August 22, 2001)
      PERIOD DATA   1996 - 2000
      COLLECTED     JAN - JUNE 2000, 2001
      PRODUCT       1. certain carbon and alloy flat-rolled steel
                    2. tin mill products
                    3. hot-rolled bar and light shapes
                    4. cold-finished bar
                    5. rebar
                    6. certain welded pipe and tube
                    7. fittings and flanges
                    8. stainless steel bar
                    9. stainless steel rod
                    10. stainless steel wire

                    (initial proclamation excluded numerous specific products; USTR
                    subsequently announced additional exclusions)
      SG PERIOD     imposed on March 20, 2002
                    3 years plus 1 day
                    terminated on December 4, 2003
                    (import licensing system terminated on March 21, 2005)
      EXCLUDED      Canada, Israel, Jordan and Mexico (FTAs) and most developing countries that
                    are members of the WTO

      Section 201 Cases – Steel (cont)
      REMEDY                1. certain carbon and alloy flat-rolled steel

      •increase in duties   Slab
                            4.90 mmt        Year 1 = 30%
      •tariff-rate quotas   5.35 mmt        Year 2 = 24%
      (TRQs)                5.81 mmt        Year 3 = 18%

      •import licensing     Plate / Hot-rolled / Cold-rolled / Coated
      system                Year 1 = 30%        Year 2 = 24%      Year 3 = 18%

                            2. tin mill products
                            3. hot-rolled bar and light shapes
                            4. cold-finished bar
                            Year 1 = 30%       Year 2 = 24%        Year 3 = 18%

                            5. rebar
                            6. certain welded pipe and tube
                            8. stainless steel bar
                            9. stainless steel rod
                            Year 1 = 15%        Year 2 = 12%       Year 3 = 9%

                            7. fittings and flanges
                            Year 1 = 13%       Year 2 = 10%        Year 3 = 7%

                            10. stainless steel wire
                            Year 1 = 8%       Year 2 = 7%        Year 3 = 6%


      Summary of U.S. Trade Remedy Laws
          Type                  Purpose               Agencies                                Remedy

      Countervailing   To offset unfair and          DOC, ITC     CVD duties are imposed when (a) DOC determines that a
      Duty (CVD)       injurious subsidies.                       government is providing a countervailable subsidy, and (b) the
                                                                  ITC determines that a U.S. industry is injured.

      Antidumping      To offset unfair and          DOC, ITC     AD duties are imposed when (a) DOC determines that foreign
      (AD)             injurious dumping.                         producers are dumping, and (b) the ITC determines that a U.S.
                                                                  industry is materially injured.

      Safeguards       Provides for import relief    ITC,         Action may be taken in the form of an increase in or imposition of
                       from injurious surges of      President    a duty, a tariff-rate quota, a modification or imposition of a
                       imports resulting from                     quantitative restriction, one or more appropriate measures of trade
                       fairly competitive trade                   administration assistance, or a combination of these actions.
                       from all countries.
      Safeguards       Provides for remedy against   ITC,         Action may be taken in the form of increased rates of duty or
      (NME)            market disruption caused      President    quantitative restrictions that will prevent or remedy the market
                       by imports from communist                  disruption. Temporary emergency action may also be taken.
      Safeguards       Provides for remedy against   ITC, USTR,   Action may be taken in the form of increased rates of duty or
      (China)          market disruption caused      President    quantitative restrictions that will prevent or remedy the market
                       by imports from the                        disruption. Temporary emergency action may also be taken.
                       Peoples’ Republic of China.                Consultations with China are also required to attempt to resolve
                                                                  the market disruption.

       Source: Congressional Research Service


      China–Specific Safeguard Investigations
                                        2002 - 2010

       Source: Global Safeguards Database

                      China:      Tires Case

      • First (and only) China Safeguards imposed by U.S.
      • Petitioners: steel and other unions.
      • Imposed by President Obama soon after his election.
      • Year 1 – 35%, Year 2 – 30%, and Year 3 – 25%,
        through September 2012.
      • All previous attempts either negative injury finding
        or safeguard measures denied by President Bush.

                       China:       Tires Case

      • China argued – fair trade (as with SGA) and MFN
        derogation (very high standards), and lost.
      • AB agreed China SG involves “a distinct standard”
          “are increasing rapidly”: present tense is upward
           trend with significant increases over a short and recent
           period of time.
          “in such increased quantities”: significantly higher
           levels than before.
      • But does not require focus on the most recent past,
        recognizing practical data limitations.

                      China:      Tires Case

      • “Significant cause”: important factor bringing about
        material injury.
      • Chinese imports can be one of several causes, but
        alone must be an important cause.
      • Not really different from WTO’s use of “a” cause
        standard in other context.
      • Actually, China’s “disruption” as “material injury”
        lower than SGA’s “serious injury”

                          Thank You
           Robert L. LaFrankie       Pornprom Karnchanachari
             Kenneth J. Pierce           Bangkok, Thailand
      Hughes Hubbard & Reed LLP    Legal Advisory Council Limited
            Washington, D.C.             Bangkok, Thailand
           (202) 721-4691/4690      Phone (66-2) 512-6090 Ext. 102


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