RESTRICTED
WORLD TRADE S/WPGR/W/15
12December 1996
ORGANIZATION(96-5319)
Working Party onGATS Rules
QUESTIONS RELATING TOANEMERGENCY
SAFEGUARD MECHANISM INGATS
Note bytheSecretariat
TheWorking Party onGATS Rules agreed atitseighth meeting on8October 1996 thatthe
following questions relating totheestablishment ofanemergency safeguard mechanism under GATS
would becirculated asaworking document oftheWorking Party. TheWorking Party agreed that
those Members wishing todosowould provide written replies tothese questions.
What isthejustification andpurpose ofanemergency mechanism under GATS?
1. Thequestionofwhatasafeguardmechanismwouldbeforinvolvesthefollowingconsiderations:
a. Would anemergency safeguard forservices beintended todealwiththekindofsituation
foreseen inArticle XIXofGATT --thatis,atemporary threat toadomestic “industry ”
arising from increased imports? Would ithaveanyother objective?
b. Areexisting “safeguard ”mechanisms inGATS, notably those contained inArticle XII
andArticle XIV, sufficient toaddress anydifficulties governments might encounter
asaconsequence oftheirGATS commitments? Similarly, doesArticle XXIprovide
anadequate vehicle forreversing ormodifying scheduled commitments intheevent
ofunanticipated difficulties?
c. Doesthenature ofcommitments undertaken inGATS --whereby Members maychoose
whether toschedule asector, andmayalsocondition market access andnational
treatment withrespect tocommitments thataremade --obviate theneedforsafeguards?
Orwould itbemore appropriate tothink interms oftheideathattheexistence ofa
safeguard would allow governments tobemore forthcoming withrespect totheir
scheduled commitments?
d. What would betheeconomic objective ofasafeguard --toprotect production, investors,
oremployment? Would itprotect alldomestic production, oronlythatpartof
production attributable tonational suppliers? Would itaimtoprotect investment by
nationals, oralldomestically based investments? What would betheobjective of
allowing departures fromnational treatment under modes 3and4?Isthedistinction
betweenestablishmentrightsperseandpost-establishmentoperationsrelevantinrelation
topossible safeguard measures under modes 3and4?
e. Would asafeguard mechanism needtocontemplate special provisions fordeveloping
countries ordoestheconcept ofprogressive liberalization offer adequate leeway in
thisrespect?S/WPGR/W/15
Page2
f. Isthere anything intrinsic toservice transactions, suchasintangibility, simultaneity
ofproductionandconsumption,ortheneedforphysicalproximitybetweentheproducer
andtheconsumer, which makes (some) services transactions different from goods
transaction inways thatmight influence arguments astothenecessity orutility of
safeguard measures inservices?
g. Isanything intrinsic toservices markets, suchastheroleandimportance ofregulatory
regimes, standards andcertification requirements, which makes services markets
different fromgoods markets inwaysthatmight influence arguments astothenecessity
orutility ofsafeguards measures inservices?
h. Isanything intrinsic totheroleofservices intheeconomy, suchastheirimportant
support andinfrastructure role,which makes services markets different from goods
markets inways thatmight influence arguments astothedesirability ofsafeguards
measures inservices?
i. DoMembers maintain anyemergency safeguard measures innational legislation? If
so,whatarethese measures andhowaretheyimplemented?
What criteria might bebrought tobearindetermining when anemergency safeguard measure
maybejustified?
2. Anumber ofquestions canbeidentified inrelation tothecriteria thatmight apply indetermining
thecircumstances inwhich emergency safeguard measures aretobeused. Thequestions included
below assume thatessentially thesameGATT concepts ofincreased imports, injury andcausality would
apply under anemergency safeguards mechanism inGATS.
a. What, interms ofGATS, istheequivalent ofincreased imports under Article XIX
ofGATT? Inmode 1,thecross-border flowofservices maybesimilar totheimport
ofgoods, butthesituation isquite different under other modes. How should the
possibility ofasafeguard betriggered inthese circumstances?
b. How should serious injury bedetermined? Injury towhom orwhat?
c. What standards would berequired todetermine thatincreased competition fromforeign
sources caused injury tothenational industry?
d. How would thenational industry bedefined forthepurpose ofdetermining injury?
e. Should alinkbeestablished between thenature ofaspecific commitment inaparticular
sector, including inrelation tolimitations onmarket access andnational treatment,
andtheavailability ofasafeguard measure? Inother words, should theavailability
ornature ofasafeguard berestricted where limitations havebeeninscribed?
f. What measurement andidentification problems ariseinservices thatmight complicate
thedevelopment ofasafeguard instrument, andhowshould theybedealtwith?S/WPGR/W/15
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What form might asafeguard mechanism forservices take?
3. Ifincreased foreign competition andserious injury todomestic services orservice suppliers
have occurred, andcausality between thetwohasbeen established, aquestion arises astothe
characteristics ofasafeguard measure thatmight beapplied.
a. What typeofmeasure should beapplied? Would taxes, foreign exchange restrictions,
otherquantitative limitations, orregulatory restraints besuitable assafeguard measures?
b. What would betheimplications ofdifferent modes ofsupply forthekindofmeasures
employed?
c. Would therebecircumstances inwhich theapplication ofasafeguard measure inrespect
ofonemode ofsupply would provoke ademand forcomparable measures inrelation
toother modes atthesame time?
d. Should safeguards beapplied onanon-discriminatory basis inallcircumstances?
e. Howquickly would itbepossible foraMember totakeasafeguard measure? Would
thenotion of"critical circumstances," asdeveloped intheAgreement onSafeguards,
apply intheservices area?
f. What should betheduration ofanysafeguard measures adopted?
g. Would safeguard measures bemade degressive during theperiod oftheirapplication?
h. Would aMember taking asafeguard action berequired alsotoadopt adjustment
measures?
i. Would theapplication ofsafeguard measures beaccompanied bycompensatory
adjustments intheschedule oftheMember taking themeasure?