RESTRICTED
WORLD TRADE S/WPGR/W/4
24November 1995
ORGANIZATION(95-3741)
Working Party onGATS Rules
SAFEGUARDS PROCEDURES INREGIONAL TRADE AGREEMENTS
Note bytheSecretariat
1. Atitssecondmeetingon18October1995,theWorkingPartyrequestedtheSecretariattoprovide
information available onanyinstances where services safeguards hadbeen invoked, andalsoon
procedures andcriteria established under various regional tradeagreements fortheinvocation ofservices
safeguards. TheSecretariat wasunable toidentify anycases where service-related safeguards hadbeen
invoked.Informationonproceduresandcriteriaforinvocationofsuchmeasuresunderdifferentregional
agreements ispresented below.
2. Theinformation provided inthisnotefocuses onsector-specific orindustry-specific emergency
safeguards inthesense ofGATT Article XIX, asdistinct from general safeguard provisions suchas
those relating tobalance-of-payments measures under GATS Article XII,orsafeguards ofacontinuing
nature which constitute exceptions togeneral obligations intheGATS Article XIVsense. Itshould
beemphasized, however, thatthese different criteria forinvoking safeguards arenotalways treated
separately, andneither aretheassociated procedures. Thenotedistinguishes between thejustification
formeasures, therequired procedures forinvocation, andthenature ofpermissible measures .
Procedures andCriteria Established under Regional Trade Agreements forInvoking Services Safeguards
TheConvention establishing theEurope Agreement (with Poland)1
Article 51envisages thatduring thetransitional periods, specified therein, thesignatory
concerned2mayintroduce derogating measures -including emergency safeguard measures.
Justification
Anational industry mayhavetherightofrecourse toemergency safeguards ifitis:
(i) Undergoing restructuring;
(ii) Facing serious difficulties, particularly where these entail serious social problems;
(iii) Facing theelimination ordrastic reduction intotalmarket share heldbynational
companies ornationals inagiven sector orindustry intheimporting country;
(iv) Newly emerging.
1Theagreement between theEUandPoland isusedasanexample ofthegenre. Very similar agreements
have been signed between theEUandanumber ofother EastEuropean countries.
2There isanasymmetry intheEurope Agreements, inthesense thatthissafeguard mechanism isnotavailable
totheEuropean Community.S/WPGR/W/4
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Procedures
(i) Priornotification totheAssociation Council oftheconcrete measures tobeintroduced;
(ii) Thecountry taking thesafeguard measure must consult theAssociation Council;
(iii) Measures cannot beimposed during atleast30daysfollowing notification tothe
Council;
(iv) Inthecaseofurgency inthefaceofathreat ofirreparable damage, measures may
beimposed without priorconsultations butthecountry taking themeasure mustconsult
theAssociation Council immediately aftertheintroduction ofthemeasure.
N.B. After thetransitional periods referred toabove, these measures canonlybeintroduced bythe
authorization oftheAssociation Council andunder conditions determined bythelatter.
Measures
Themeasures shall:
(i) Bereasonable andnecessary inorder toremedy thesituation;
(ii) Notapply toCommunity companies andnationals already established intheterritory
oftheimporting signatory;
(iii) Wheneverpossible,grantpreferentialtreatmenttoCommunitycompaniesandnationals;
(iv) Beremoved inaccordance withtheestablished transition arrangements.
TheNorth American FreeTrade Area (NAFTA)
TheNAFTA contains anemergency safeguard provision relating tofinancial services.
Justification
(i) Ifthesumoftheauthorised capital offoreign commercial bankaffiliates (asdefined
intheSchedule ofMexico toAnnex VII), measured asapercentage oftheaggregate
capital ofallcommercial banks inMexico, reaches 25%, Mexico mayrequest
consultations withtheother parties onthepotential adverse effects arising from the
presence ofcommercial banks oftheother Parties intheMexican market.
(ii) Inconsidering thepotential adverse effects, theParties shalltakeintoaccount:
a) theriskofundue control oftheMexican payments system bynon-Mexican
persons;
b) theeffect foreign commercial banks established inMexico mayhave on
Mexico 'sability toconduct monetary andexchange-rate policy;
c) theadequacy oftheagreement inprotecting theMexican payments system.S/WPGR/W/4
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Procedures
(i) Arequest forconsultations tobecompleted expeditiously totheparties concerned;
(ii) Iftheconsultations failtoachieve aconsensus, anyparty mayrequest theestablishment
ofanarbitral panel which would present itsdetermination within 60days.
Measures
Noindication isprovided ofthenature ofso-called "remedial action."
Agreement ontheEuropean Economic Area (EEA)
Emergency safeguard measures arepermitted under theEEA.
Justification
Thecriteria fortriggering safeguard measures arethefollowing:
(i) Serious economic, societal orenvironmental difficulties ofasectoral orregional nature
thatareliable topersist.
Procedures
Theinvoking party shall:
(i) Notify without delay theother party through theEEA JointCommittee andprovide
allrelevant information;
(ii) Immediately enter intoconsultations intheEEA Joint Committee;
(iii) Nottakeanymeasure untilonemonth haselapsed afterthedateofnotification unless
consultations havebeenconcluded earlier;
(iv) Incaseofexceptional circumstances requiring immediate action excluding prior
examination, protective measures strictly necessary toremedy thesituation maybe
imposed forthwith;
(v) Notify themeasure immediately afteritsimposition;
(vi) Consult onthemeasures every threemonths fromthedateofitsadoption, withaview
toitsearly abolition ortothelimitation ofitsscope ofapplication;
(vii) TheEEA Joint Committee maybeasked toreview suchmeasures atanytime.
Measures
(i) Such measures shallberestricted withregard totheirscope andduration towhatis
strictly necessary inorder toremedy thesituation;
(ii) Priority shallbegiven tosuchmeasures aswillleastdisturb thefunctioning ofthe
agreement.S/WPGR/W/4
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TheAndean Common Market
Emergency safeguard provisions arecontemplated under theCartagena Agreement.
Justification
Asafeguard action maybetaken if,asaresult ofcompliance withLiberalization Program
oftheAgreement, amember suffers difficulties related tofiscal income.
Procedures
Themember mayrequest theBoard topropose totheCommission measures toresolve the
problem.
Measures
Themeasures arenotspecified, buttherelative degree ofeconomic development ofthecountry
concerned istobetaken intoaccount.
European Community (EC)
TheEEC safeguard provision under thegeneral lawoftheEEC treaty encompasses awide
range ofsituations thatmight trigger safeguard action, including emergencies.
Justification
Thegrounds forsafeguard measures arethefollowing:
(i) Economic difficulties resulting fromcommercial policy measures taken inaccordance
withthetreaty obligations ofanyMember state.
Procedures
(i) Arequest mustbeaddressed totheCommission, which thendecides whether ornot
toauthorise themeasure;
(ii) Incaseofanemergency, during thetransition period, aMember statemaytakethe
necessary measure andthennotify ittoaffected member states andtheCommission;
(iii) TheCommission isempowered torequire abolition oramendment ofthemeasure.
Measures
Thetypes ofprotective measures permitted arenotspecified, butmeasures must:
(i) Create theleastpossible disturbance tothefunctioning ofthecommon market;
(ii) Take intoaccount theneed toexpedite, asfaraspossible, theintroduction ofthe
common customs tariff.