Safeguard Measures at WTO

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Context

• Countries including India, Switzerland, Russia, and Japan criticized the safeguard measures imposed by the EU and the UK on imports of certain steel products.

Details

• The criticism of the EU and UK safeguard measures by WTO countries, including India, Switzerland, Russia, and Japan, highlights the complexities and challenges of international trade relations.
• These measures, intended to protect domestic industries from a surge in imports, have sparked disputes and disagreements among trading partners, leading to retaliatory actions and strained relations.

WTO SAFEGUARDS AGREEMENT What is this Agreement and what does it do? The Agreement on Safeguards of the World Trade Organization (WTO) establishes rules for the application of safeguard measures by WTO member countries. A safeguard is a temporary import restriction (for example a quota or a tariff increase) that a country is allowed to impose on a product if imports of that product are increasing so as to cause, or threaten to cause, serious injury to a domestic industry that produces a similar or directly competitive product. Under the WTO rules set forth in this Agreement, WTO member countries must conduct an investigation before they can apply a safeguard measure, and they must make a formal determination that imports of the product are significantly impairing or threatening to impair a domestic industry. Countries are also required to provide public notice to all interested parties of their intention to apply a safeguard measure and to give exporters ample opportunity to present their views. All members of the WTO are parties to this Agreement. The Agreement went into effect on January 1, 1995. It has no expiration date.

EU's Safeguard Measure Background:

• The EU imposed safeguard duties on certain steel products in response to additional duties imposed by the US during the Trump administration.
• This move was aimed at protecting its domestic steel industry from the impact of increased imports.

Criticism by WTO Countries:

• The WTO countries criticized the EU for maintaining its safeguard measure on steel imports and the UK for similar measures.
• They argued that these measures were not in compliance with WTO rules, specifically the requirement that such measures should be in response to "unforeseen circumstances."

India's Response and Retaliatory Measures:

• India proposed additional import duties on select EU products and the UK in retaliation against the safeguard measures.
• The proposed duties targeted products such as whiskey, cheese, and diesel engine parts, reflecting India's efforts to protect its interests in the face of perceived unfair trade practices.

WTO Safeguards Agreement and Compliance:

• The WTO's Safeguards Agreement allows members to restrict imports temporarily if their domestic industries are seriously injured or threatened by a surge in imports.
• Safeguard measures should be temporary and apply to all imports, not just those from specific countries, to ensure fair trade practices.

Implications and Trade Disputes:

• The criticism and retaliatory measures taken by WTO countries highlight the potential for trade disputes and tensions arising from differences in interpretation and application of trade rules.
• Many of the measures have been challenged in the WTO dispute resolution process, and in each case the process has found the challenged measure to be a violation of WTO law.
• Adherence to WTO rules and effective dispute resolution mechanisms are crucial for maintaining a rules-based trading system that promotes fair and equitable trade practices among nations.

Future Steps and WTO Meeting:

• The upcoming meeting of the WTO's Safeguards Committee in April 2024 will provide an opportunity for further discussions on these issues.
• It remains to be seen how these disputes will be resolved and how they will impact global trade relations in the future.

PRACTICE QUESTION Q. Discuss the role of the WTO's Safeguards Agreement in managing trade disputes. How do criticisms and retaliatory measures impact fair trade practices? Evaluate the effectiveness of the WTO's dispute resolution mechanisms in ensuring compliance with trade rules.