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TWN Info Service on WTO and Trade Issues (Oct16/24)
31 October 2016
Third World Network


Concerns voiced over rising use of safeguard measures
Published in SUNS #8341 dated 26 October 2016


Geneva, 25 Oct (Kanaga Raja) -- A meeting of the Committee on Safeguards at the World Trade Organisation (WTO) on Monday (24 October) heard a number of members reiterating their concerns over the growing use of safeguard measures.

According to trade officials, these members argued that such measures should only be used in exceptional circumstances, as they generally affect all exporters of the product that has been targeted by the measure.

At the formal meeting of the Committee on Monday, Japan, Brazil, Canada, Australia, the United States, Korea, Chinese Taipei, the European Union, Hong Kong-China and China voiced concerns over the increasing number of safeguard actions that are being notified to the Safeguards Committee.

According to the US, the present meeting of the Committee is reviewing some 26 safeguard measures.

This is the eighth meeting in a row where 20 or more safeguard measures were under review, the US maintained.

Japan expressed serious concern over the recent sharp increase in the use of safeguard measures, in particular in the steel sector.

Japan maintained that oversupply in the steel sector was due to the expansion of capacity by some members.

It claimed that this was undertaken without any consideration of economic rationality, and that this imbalance has triggered a rise in trade remedy measures globally.

Korea stressed the need for great caution in the use of safeguard measures, given their chilling effects on international trade.

According to trade officials, the European Union highlighted the "skyrocketing" number of safeguards that are targeting imports of steel.

It called on members to consider more targeted measures, such as anti-dumping duties, to address the specific producers that are causing problems.

Several of the members that spoke also acknowledged the right of members to use safeguard measures.

However, they noted that this trade remedy is unique in being the only one to target "fairly" traded imports (as opposed to anti-dumping and countervailing measures that target "unfairly" traded imports).

They therefore said that caution was needed, and governments should ensure that any actions were taken in strict accordance with WTO rules.

[Article 2 of the WTO Agreement on Safeguards states: "1. A Member 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."

["2. Safeguard measures shall be applied to a product being imported irrespective of its source."]

MEMBERS' NOTIFICATIONS REVIEWED

According to trade officials, Australia, Korea and Brazil raised questions about a notification by China on 22 September (G/SG/N/6/CHN/2) which announced the initiation of a new safeguard investigation on sugar imports.

Brazil expressed particular concern as it was one of the most affected countries. It pointed out that safeguards should be considered as exceptional instruments.

Korea expressed concern over the potential impact of the safeguard investigation on its exporters. It called on China to carry out the investigation in full compliance with WTO rules.

China assured members that the safeguard investigation on sugar will be carried out in an open and transparent manner.

According to trade officials, Ukraine, Korea and Japan voiced concerns over a proposed safeguard measure by India on imports of hot-rolled flat sheets and plates (G/SG/N/11/IND/16).

Ukraine reiterated that it has serious concerns over what it claimed was India's practice of imposing safeguard measures based on the use of forecasted market trends rather than on an actual increase in imports.

It called on India to adhere to the WTO rules.

Japan maintained that India's determination used as the basis for the safeguard measure did not meet WTO requirements, in particular Article XIX. 1(a) of the General Agreement on Tariffs and Trade (GATT) which requires a connection between increased imports and injury to the affected domestic producer, as well as the need to offer tariff concessions to compensate affected members for the safeguard measure.

On the proposed safeguard measure on unwrought aluminium (G/SG/N/6/IND/43), the EU argued that India's injury determination was not conclusive.

It also maintained that the increase in imports was not "sudden and sharp" as required under the Safeguards Agreement, and that both domestic capacity and production were increasing.

The US informed the Committee that it had just received a response to its written question on India's proposed safeguard measure on flat sheets and plates.

It said that it will come back to India if it had any questions.

The US also said that it looked forward to receiving India's reply to its questions on the safeguard measure on aluminium.

According to trade officials, India responded that with regards to both safeguard measures, the details of its findings were available on a government website. It urged members to carefully examine these findings.

India further defended its imposition of minimum import prices (MIPs) on more than 170 iron and steel imports.

It said that these were imposed in line with WTO requirements.

Japan, the EU, Brazil and Korea raised questions over the decision by Malaysia to initiate a safeguard investigation on imports of steel wire rod and deformed bar-in-coil (G/SG/N/6/MYS/5).

Japan also voiced concerns over Malaysia's safeguard investigation on steel concrete reinforcing bars (G/SG/N/6/MYS/4).

Japan said that it highly regretted the subsequent decision by Malaysia on 27 September to impose a provisional safeguard on steel wire rod and deformed bar-in-coil.

It maintained that Malaysia's actions did not meet the requirements under Article XIX. 1(a) of GATT for both investigations.

The EU said the increase in the targeted imports primarily came from two countries and that Malaysia should have therefore initiated an anti-dumping investigation.

Brazil also raised questions about Malaysia's compliance with Article XIX. 1(a) of GATT.

Korea claimed that there was insufficient evidence to impose a safeguard on its exporters.

According to trade officials, Malaysia invited those members expressing concerns to engage with it bilaterally.

OTHER MATTERS

Chile informed the Committee that it has terminated safeguard investigations on imports of steel wire, wire rods, nails, and mesh without imposing any final measures.

Brazil welcomed the transparency in Chile's investigations, saying that Chile could serve as an example for other members.

However, the US said that it continued to have concerns over Chile's practice of initiating investigations and then immediately imposing provisional measures.

Egypt also informed the Committee that it had terminated safeguard investigations on imports of polyethylene terephthalate (PET) and white sugar.

The EU maintained that the investigations have disturbed trade and should have never been initiated in the first place.

While welcoming the decision by Egypt, Korea said that exporters may have already suffered significant drops in shipments to Egypt due to the initiation of investigations.

The Kyrgyz Republic announced that it had allowed a safeguard on imported harvesters to expire in August.

The safeguard was no longer being applied among members of the Eurasian Economic Union (EEU), it said.

According to trade officials, the US, Chinese Taipei, and Japan questioned the decision by South Africa to initiate safeguard investigations on two types of flat-rolled products of iron or steel.

Japan maintained that the investigations were not carried out in accordance with WTO rules.

Chinese Taipei said that it should have been exempted from the safeguard since it exported a minimal amount (de minimis) of the targeted products to South Africa.

The EU asked Turkey whether it had implemented an agreement on compensation for a safeguard measure imposed by Turkey on imported wallpaper.

Ukraine said that it should have been exempted from the safeguard as a de minimis exporter.

Responding to the EU, Turkey said that it would announce the results of its internal procedures to adjust its tariff quotas as soon as the procedure is completed.

The next meeting of the Safeguards Committee is scheduled to take place during the week of 24 April 2017. +

 


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