RESTRICTED
WORLD TRADE G/SG/W/164
26April 1996
ORGANIZATION(96-1570)
Original: English Committee onSafeguards
REPLIES TOQUESTIONS POSED BYKOREA1
CONCERNING THE NOTIFICATION PROVIDED BYTHE UNITED STATES2
OFLAWS AND REGULATIONS UNDER ARTICLE 12.6OFTHE AGREEMENT
Thefollowing communication, dated 18April 1996, hasbeenreceived from thePermanent
Mission oftheUnited States.
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1. Provisional safeguards measures (Section 202(d)(2)(D))
Therelevant USlawstipulates that"such relief (i.e.provisional safeguards measures) shall
taketheformofanincrease in,ortheimposition of,adutyonimports, ifsuchformofrelief
isfeasible andwould prevent orremedy theserious injury."
However, Article 6oftheWTO Agreement onSafeguards states that"such measures should
taketheform oftariff increases."
Please clarify inthisregard whether theunderlined partoftheUSlawisintended torender
other forms ofrelief, suchasquantitative restrictions, permissible asaprovisional safeguard
measure. Ifso,please indicate howtheUSexplains thediscrepancy between itslawandthe
Agreement onSafeguards.
Response
Article 6oftheAgreement onSafeguards states thatprovisional measures inthecaseofcritical
circumstances "should" beintheformoftariffincreases. Were Article 6tohavelimited suchmeasures
totariff increases, theappropriate word would havebeen"shall." Theuseof"should" suggests only
apreference fortariff increases overother measures.
USlawprovides thattariffincreases aretobeapplied ifthatformofrelief isfeasible andwould
prevent orremedy serious injury. ThusUSlawappropriately reflects thepreference fortariffincreases
contained inArticle 6.
2 Thecondition ofre-application ofSGmeasures (Section 203(e)(7)(B))
Therelevant USlawstipulates that"iftheprevious action ...wasineffect foraperiod of
180daysorless,thePresident maytakeanewaction ...".
1G/SG/W/49+G/SG/W/49/Corr.1+G/SG/W/49/Rev.1.
2G/SG/N/1/USA/1.G/SG/W/164
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Ontheother hand, Article 7.6oftheWTO SGAgreement states that"asafeguard measure
withaduration of180daysorlessmaybeapplied again if...".
Thistimelimit of180dayswithin thecontext ofArticle 7oftheWTO SGAgreement is
understood tomean themaximum allowable period for"anewaction" butthe180dayperiod
under theUSlawseems toindicate theperiod of"aprevious action".
Isitcorrect tounderstand thattheUSlawalsorestricts themaximum allowable period of"a
newaction" to180days? Ifthatisnotthecase, whatistheexplanation oftheinconsistency
oftheUSlegislation withArticle 7.6oftheWTO SGAgreement?
Response
USlawdoesnotrestrict thenewaction to180days; nordoesitrequire thatthenewaction
belonger than180days. Totheextent Article 7:6oftheAgreement limits thenewaction to180days,
thePresident would limittheaction taken accordingly.
3. Orderly marketing agreement (Section 203(a)(3)(B), Section 303(f))
TheUSlawstipulates that"ThePresident maynegotiate, conclude, andcarry outagreements
withforeign countries limiting theexport from foreign countries andtheimport intotheUS
ofsucharticle".
Theformer lawcontained thephrase "orderly marketing" before theword "agreements".
"Orderly marketing" hasbeendeleted inthenewlaw,butthesubstantive content oftheentire
article seems toremain more orlessthesame asbefore.
These kinds ofagreements seemtoexemplify thegreyareameasures prohibited byArticle 11(b)
oftheWTO SGAgreement. Howcould thispossibly beexplained?
Response
Section 203(a)(3)(E) isconsistent withArticle 11:1(b) oftheAgreement. Article 11:1(b) does
notprohibit agreements, butrather prohibits so-called greyareaandother measures nottaken in
conformity withtheprovisions ofArticle XIXandinaccordance withtheAgreement (e.g., notbased
onaserious injury determination). Indeed, Article 5:2specifically authorizes aMember applying
restrictions"toseekagreementwithrespecttotheallocationofsharesinthequotawithallothermembers
having asubstantial interest insupplying theproduct concerned." Moreover, Article 11:1(b) itself
specifically provides, inafootnote that:"Animport quota applied asasafeguard measure inconformity
withtherelevant provisions ofGATT 1994 andtheAgreement may, bymutual agreement, be
administered bytheexporting Member."
Thus, themerenegotiation oflimits isnotperseaviolation ofArticle 11.Under USsafeguard
law,thePresident maynegotiate agreements onlyafterreceiving areport from theITCcontaining
anaffirmative injury determination. Anyagreement negotiated would comply withallrequirements
andlimitations contained intheSafeguards Agreement.
Theprovisions ofSections 202and203concerning international negotiations toaddress the
underlying cause oftheinjury areseparate fromtheprovisions onnegotiating agreements withforeign
countries limiting export andimports. Thisisshown bythefactthattheyarelisted inSection 203(a)(3)
asseparate actions thePresident maytake. Thestatute doesnotfurther define thetypes ofinternationalG/SG/W/164
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negotiationsthatmightqualifyundertheseprovisions,and,tothebestofourknowledge,theseprovisions
havenever beenapplied.
4. NAFTA Implementation Act
(a) Weunderstand thatNAFTA countries maybeexcluded fromgeneral safeguards actions.
Under whatspecific circumstances willthisbethecase?
ThePresident istoexclude NAFTA country imports from aUSsafeguard action unless he
finds thatimports from aNAFTA country, considered individually, account forasubstantial share
oftotalimports, andimports from aNAFTA country, considered individually or,inexceptional
circumstances, imports formNAFTA countries considered collectively, contribute importantly tothe
serious injury, orthreat thereof, caused byimports.
(b) When NAFTA countries aresubject toindividual import relief actions, aretheyexpected
tobesubjected toalesssevere restriction thanunder general actions?
Weassume thisquestion isreferring tothebilateral emergency action provision contained in
theNAFTA andimplemented inUSlaw. Therelevance ofthisprovision totheAgreement on
Safeguards isnotclear. Inanyevent, themaximum relief thatmaybeprovided under thisprovision
isatemporary increase intariffs totheMFN rateineffect atthetimeoftheaction, ortheMFN rate
ineffect atthetimeofentry intoforce oftheNAFTA, whichever islower.
(c) When NAFTA countries aretreated individually fromanaction, i.e.aquota allocation,
which isapplied tomember andnon-member countries, areNAFTA countries treated
more favourably thannon-NAFTA ones?
When aNAFTA country isnotexcluded from asafeguard action, itisnotexpected thatit
would betreated anydifferently from other WTO Members.