RESTRICTED
WORLD TRADE G/SG/W/136
1May1996
ORGANIZATION(96-1674)
Original: English Committee onSafeguards
REPLIES TOQUESTIONS POSED BYTHE UNITED STATES1
CONCERNING THE NOTIFICATION PROVIDED BYHUNGARY2
OFLAWS AND REGULATIONS UNDER ARTICLE 12.6OFAGREEMENT
Thefollowing communication, dated 29February 1996, hasbeenreceived fromthePermanent
Mission ofHungary.
_______________
Questions -General
Hungary ’snotification ofGovernment Decree No.113/1990 (XII.23.) Korm implies thatnew
safeguards legislation isunder development.
- Ifthisisthecase, whatisthestatus ofthenewlegislation? Willthenewlegislation replace
thedecree which Hungary notified totheWTO? What aspects ofthelegislation arebeing
modified? Willthenewlegislation beconsistent withtheprovisions oftheWTO Agreement
onSafeguards?
Answers -General
Itisenvisaged toenact theAgreement onSafeguards intotheHungarian legislation byalaw
tobeadopted bytheParliament. ThetextoftheAgreement willbepublished word byword. Itis
alsoenvisaged toissue anewGovernment Decree ontheimplementation.
Thisnewdecree willreplace thedecree notified asfarastheAgreement onSafeguards is
concerned. Thecurrent decree isenvisaged toremain inforceforthecasesdealtwithunder paragraph 5
oftheHungarian Protocol ofAccession totheGATT andforthecases against imports fromcountries
notMembers oftheWTO.
Questions Section 1
Hungary cites“increased quantities ”asonecondition forapplying asafeguard measure.
- What constitutes “increased quantities ”forthese purposes, andhowisthiscondition tiedto
domestic production, ifatall?
1G/SG/W/106-G/SG/W/108.
2G/SG/N/1/HUN/2G/SG/W/136
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Answers Section 1
"Increased quantities" means quantities increased inthelasttwoorthree years inabsolute
volumes andinrelation tothedomestic production.
Questions Section 2
Thedecree doesnotoutline theadministrative process governing theapplication ofsafeguard
measures, including theinvestigation anddetermination asrequired bytheWTO.
- What aretheadministrative procedures thattheMinistry forInternational Economic Relations
mustfollow when making adecision regarding theapplication ofsafeguard measures?
- Whatspecificproceduresdictatethemannerinwhichgovernment,producerandforeigninterests
aresolicited andconsidered inthisprocess?
- Howdoesthegovernment determine thatimports cause orthreaten tocause serious injury?
- What factors aretaken intoaccount when conducting suchaninvestigation? Howisthelevel
ofimport restriction determined?
- Aretheregulations andprocedures ofsuchinvestigations published pursuant toHungary ’s
obligations under Article 3oftheWTO Safeguards Agreement andArticle XofGATT 1994?
Answer Section 2(chapeau)
Inconnection withthechapeau tothedetailed questions onSection 2,thedecree notified of
course doesnotoutline theadministrative process asrequired bytheWTO. Atthetimeofthepublication
oftheDecree, fiveyears ago,itwasconsidered tobeenough torefertotheActNo.IVof1957 on
theGeneral Rules ofStateAdministrative Procedures (seetheanswers under Section 5).Nevertheless
therearesome specific procedural requirements included inSection 3ofthenotified decree uponwhich
some practice isbuiltup.
During thelifetime ofthisdecree, itwasonlyonceutilized foranergaomnes Article XIX
measure, alltheother applications were selective, outside thescope oftheWTO Agreement.
Answer tothedetailed questions onSection 2
Proceedings maybeinitiated inwriting bythedomestic producer whose output constitutes
amajor proportion ofthedomestic production orexofficio .Inpractice wehavehadnoexofficio
cases.
Ifthecomplaint isnotdetailed enough, theMinistry would send aquestionnaire tothe
complainant.
Having hadadetailed complaint, itiscirculated among thevarious departments oftheMinistry
andtheother interested Ministries andBodies. (They generally are:theFinance, Labour, possibly
Agriculture, theCustoms Office, theEconomic Competition Office, theChamber ofIndustry and
Commerce.) They aregiven 8or15daystoreply.G/SG/W/136
Page3
Having hadtheiropinion anadhoccommittee ofthemisassembled todecide whether toinitiate
theproceedings ornot.Ifitisdecided toinitiate theproceedings, itispublished intheOfficial Journal
oftheMinistry anditisreleased forthepress.
Thepublication givesinformation about theidentity ofthecomplainant, thefactoftheinitiation,
theproduct inquestion bytariff number, thesupplying country andgives adeadline fortheinterested
producers, importers, foreign partners toindicate theirinterest. Thedeadline is8or15days. Normally
nobody isindicating interest atthisstage. Thecomplainant andthetrade representative oftheknown
producer isalsoadvised inwriting.
Ifitisdecided nottoinitiate aprocedure, thedecision iscommunicated inwriting tothe
complainant butnothing ispublished. Thecomplainant hasarighttoappeal.
After thedeadline haspassed, anewmeeting oftheadhoccommittee isassembled todecide
onthesubstance ofthecase, thedecision andthereasons thereof.
Thedecision isissued bytheGeneral Director oftheLegal Department oftheMinistry. If
itispositive, itispublished including thereasons thesame wayastheannouncement oftheinitiation
waspublished. Thecomplainant andtheknown exporter, theimporter andother interested parties
areadvised alsoinwriting. Itmaybedecided toexecute thedecision immediately. Ifthedecision
isnegative, there isnopublic announcement, onlytheinterested parties areadvised.
Theparties interested maylodge anappeal in15daystotheMinister. Theappeal istreated
bythesame adhoccommittee andthedecision oftheMinister ispublished thesame wayasthefirst
instance decision waspublished.
Under theActontheGeneral Rules ofStateAdministration Procedures thereisnopossibility
toturntotheCourts against theimposition ofsafeguard quotas, because decisions taken inthefield
offoreign trade turnover licensing constitute anexception (paragraph 72(4)d).
There arenoother specific procedures forsoliciting andconsidering government producer
andforeign interests.
When determining whether imports cause orthreaten tocause serious injury wewould ask
thecomplainant togiveadescription oftheserious injury caused orthreatening tobecaused -inhis
opinion -bytheincrease ofimports ortheirconditions. Weaskfordataonthesubstantial general
deterioration intheposition ofthedomestic producers, factors substantiating thisdeterioration, causal
linkbetween increase ofimports andserious injury.
Asfarasthreat ofinjury isconcerned, theapproach isverycautious. Thecomplainant isasked
whether thethreat ofinjury isclearly foreseen andimminent, what factors areproving thisthreat.
Itisalsoasked whether there isanyother factor causing injury andifthereisany,towhatextent does
itcause injury.
Theanswers areanalyzed considering theirconsistency andcomparing themwithother data,
especially imports statistics. Thedetermination isdebated intheframework oftheadhoccommittee
mentioned earlier.
When preparing thesecond instance decision alltheseelements areverified again andinaddition
theelements mentioned intheappeal arealsoconsidered.G/SG/W/136
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When conducting aninvestigation, account istaken ofelements suchastherateofimports
increase inabsolute andrelative terms, theshare ofimports inthedomestic market, tendency ofsales,
conditions ofimports, production, productivity, utilization ofcapacity, profits, losses, employment.
Thelevelofimport restriction isgenerally established onthebasis oftheaverage ofimports inthe
lastthree representative years, totheextent necessary toremedy orprevent serious injury.
Existing regulations andprocedures ofinvestigations arepublished pursuant toArticle X.1
ofGATT 1994. Clearly nothing ispublished forthetime being relating specifically tothe
WTO Safeguards Agreement.
Question -Duration ofSafeguard Measures
Noreference ismade tohowsafeguard measures would bereviewed orphased out. There
isalsonoreference totheapplication ofprovisional measures incritical circumstances. Inaddition,
there arenoprovisions describing thetimeinterval required before there-application ofasafeguard
measure.
- Would Hungary elaborate onthese points?
Answer -Duration ofSafeguard Measures
There isnoreference made tohowsafeguard measures would bereviewed orphased outbecause
thenotified decree envisages ameasure foraperiod notexceeding oneyear. Asfarasprovisional
measures incritical circumstances areconcerned, theymaybebased onparagraph 5oftheHungarian
Protocol ofAccession totheGATT. TheProtocol isalsopartoftheHungarian legal regulations,
itwaspublished byaGovernment Decree in1973. Under thenotified decree itispossible tore-apply
asafeguard measure onthebasis ofanewinvestigation.
Questions -Section 2(c)
- Please elaborate whatactions constitute an“undertaking fromtheexporter onthepriceand/or
thevolume oftheproduct imported. ”
- Howissuchameasure consistent withtheprovisions ofWTO Agreement onSafeguards which
prohibit voluntary export restraints andorderly marketing agreements outside theframework
oftheAgreement?
Answer -Section 2(c)
An"undertaking from theexporter ontheprice and/or thevolume oftheproduct imported"
maymean avoluntary export restraint oranorderly marketing agreement. Itfallsunder paragraph 5
oftheProtocol ofAccession .
Question -Section 3.6
Hungary notes thatbefore asafeguard measure isadopted, theopinions of“consumers ’
organizations ”aresought.
- Aretheviews ofallinterested parties, including foreign firms, alsoconsidered priortoapplying
anysafeguard measure? Ifso,howaresuchviews solicited andconsidered?G/SG/W/136
Page5
Answer -Section 3.6
Alltheinterested parties: theinterested producers, importers, foreign partners mayinterfere
withtheprocedures before andafterthedecision ofthefirstinstance. Wemayadvise inwriting only
theknown ones. However, inourrather limited practice, untilnownobody hadshown anyinterest
intheperiod before thedecision ofthefirstinstance. During theprocess before thedecision ofthe
second instance usually theimporters, sometimes inalargenumber, show interest andinterfere. Their
caseisexamined thesamewayintheadhoccommittee asanyother element ofthesituation. Personal
consultations withsuchparties havebeenheldonlyinoneortwocases.
Question -Section 5
Thelegislation notes thattheproceedings concerning safeguard measures shallbegoverned
bytheprovisions ofActNo.IVof1957 ontheGeneral Rules ofState Administration Procedures.
- What types ofproceedings arecovered bytheAdministrative Procedures? What dothese
Procedures provide, particularly inlightofrequirements oftheWTOAgreement onSafeguards?
HasHungary submitted copies oftheProcedures totheWTO?
Answer -Section 5
TheActNo.IVof1957 isadetailed piece oflegislation dealing withtheGeneral Rules of
State Administrative Procedures.
TheActconsists of9chapters and98Sections. Thisacthasbeennotified totheCommittee
onSafeguards.3
Themain features oftheActarethefollowing:
Astateadministrative caseisacasewhere astateorgan establishes arightoranobligation
concerning aparty, ortheadministrative organ isverifying data, making registration orexecuting
administrative control (Section 3(3)).
Incaseofaforeign party, theActwillprevail ifinternational agreement orlegalregulation
doesnotprovide otherwise (Section 3(5)). Hungarian andforeign parties enjoy complete equality and
their cases must bedealt without anydifferentiation. Everybody isfreeinastateadministrative
procedure tousehismother language andnobody maybehandicapped because ofthelackofknowledge
oftheHungarian language (Section 2(5)). Iftheperson incharge doesnotspeak theforeign language,
interpretation must beadhered to(Section 34(1)).
There aredetailed rules, what stateorgan willbecompetent andwhich oneofthem hasto
dealwithagiven case(Chapter II).
Theprocedure willbelaunched ontheinitiation oftheparty orexofficio .Theparties have
tobeadvised ontheinitiation incases determined bylegal regulations. Ifthere isagreat number
ofparties inacase, theinitiation must bepublished (Section 13(1-2)).
3G/SG/N/1/HUN/2/Suppl.1.G/SG/W/136
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Astateadministrative casemustbedecided in30daysunless aGovernment Decree establishes
alonger period oftime. Itmayoncebeprolonged by30daysbythedecisions oftheHead ofthe
stateadministrative organ (Section 15(1) and(3)).
Thecaseinitiated byaparty mustbedecided taking intoaccount itscontent (Section 16(3)).
Proof must beweighted piece bypiece andinitstotality (Section 26(4)).
Hearings oftheparties, experts, meetings mustberecorded bymaking protocols ortaperecords
orpromemoria (Section 17(1)).
Parties asarulemayberepresented bytheirdesignated representatives (Section 18(1)).
Members ofthestateadministrative staffareexcluded fromdealing withcases inwhich they
themselves areparties. They maynotparticipate inasecond instance caseiftheyparticipated inits
firstinstance processing. They arealsoexcluded iftheycannot beobjective forwhatever reason
(Section 19(1-3)).
Theparty hastheright tomake ortorefuse tomake oralorwritten statements during the
procedure. Ifhedoes notmake declarations orrefuses tofurnish thedatarequested, thestate
administrative organ maydecide onthebasisofthefactsavailable. Theparty mustbewarned ofthis
(Section 27(1)).
Thestateadministrative organ willholdajointmeeting ifitisprescribed byalegalruleor
itisnecessary fortheestablishment ofthefacts toheartheparties jointly. Parties andtheir
representatives mayoffercomments tothestatements heard, theymayaskquestions andpropose to
hearother persons andcollect other pieces ofproof (Section 36(1-3)).
Ifitisobligatory under alegalregulation orifitispermitted bythenature ofthecase, the
stateadministrative organ must trytogettheparties toreach acompromise. Ifthecompromise is
inaccordance withthelawanditdoesnotharmthelawful interest oftheparties orothers, itwillendorse
thecompromise (Section 38).
Deadline mustbetaken ashaving beenfulfilled incaseofdoubt. Ifthelastdayofthedeadline
isaholiday, thedeadline willexpire onthenextworking day(Section 39(4) and(2)).
Thepartyandhisrepresentative maystudy thedocuments during theprocedure andmake copies
thereof. Other interested persons alsomaybegiven suchpossibilities. There arecertain limitations
concerning confidentiality (Section 41).
Firstinstance decisions maybeappealed in15daysaftertheircommunication (Section 62(1-2 )).
Firstinstance decisions areenforceable onlyifitisspecifically decided soifitismade possible by
anActoraGovernment Decree (Section 63(2)c).
Generally asecond instance decisions maybebrought totheCourt. Incaseofdecisions in
thefieldoflicensing foreign trade turnover there isnosuchpossibility therefore safeguard second
instance decisions arefinal(Section 72(4)d). Inother cases (forinstance, incaseofasurcharge), there
isapossibility toturntotheCourt ofthefirstinstance in30daysandtotheCourt ofthesecond instance
in15days.G/SG/W/136
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ADDITIONAL ORAL QUESTIONS POSED BYTHE UNITED STATES
1. TheHungariandelegationstatedduringthe11December1995SpecialMeetingoftheCommittee
onSafeguardsthatsafeguardmeasuressubjecttoparagraph5ofHungary'sprotocolofaccession
totheGeneral Agreement onTariffs andTrade 1947 would continue tobegoverned by
Hungary 'sActIVof1957, rather thantheimplementing lawthattheGovernment ofHungary
anticipates willpartially supersede Decree No.113/1990, which hasbeen notified tothe
Committee. What safeguard measures doestheGovernment ofHungary believe aresubject
toparagraph 5ofHungary 'sprotocol ofaccession totheGATT 1947, andonwhatbasis?
Hungary considers thatunder paragraph 5ofHungary 'sProtocol ofAccession totheGATT
safeguard actions maybetaken ifaproduct isbeing imported insuchincreased quantities orunder
suchconditions astocause orthreaten tocause serious injury. Such safeguard actions areselective
onthebasis ofparagraph 5(d)oftheProtocol oftheAccession.
They maytaketheformofexport limitation orother action, including action withrespect to
export price under paragraph 5(b)oftheProtocol ofAccession. Under paragraph 5(d)oftheprotocol
theymayhavetheform ofanimport restriction.
2. HasActIVof1957 everbeennotified totheCONTRACTING PARTIES totheGATT 1947?
Ifnot,isActIVof1957 otherwise available inaWTO working language?
Asindicated above, ActIVof1957 hasbeennotified totheCommittee onSafeguards.
3. What aretheprocedures forsafeguard actions conducted under ActIVof1957? Arethese
procedures published orotherwise available inwriting?
Theprocedures onsafeguard actions areprovided forunder Government Decree 113/1990
(XII.23.) Korm. Theprovisions ofActIVof1957areadditional administrative procedures thatapply
tosafeguard actions unless otherwise provided byGovernment Decree 113/1990 (XII.23.) Korm.
Asnoted, thefulltextofActIVof1957 hasbeennotified totheCommittee.