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Safeguard measures restrict imports of a product temporarily if a domestic industry is seriously injured or threatened with serious injury caused by a surge in imports. The Agreement on Safeguards (the Safeguards Agreement) establishes rules for the application of safeguard measures by Member governments, as provided in Article XIX of GATT 1994. Effective safeguard rules are important to the viability and integrity of the multilateral trading system.
The availability of a safeguard mechanism gives WTO Members the assurance that they can act quickly to help industries adjust to import surges, providing them with flexibility they would not otherwise have to open their markets to international competition. At the same time, WTO safeguard rules ensure that such actions are of limited duration and are gradually less restrictive over time. Under certain circumstances, compensation is also authorized.
The Committee on Safeguards (the Safeguards Committee) was established to administer the Safeguards Agreement. It oversees the operation of the Agreement and is responsible for the surveillance of Members’ commitments. Governments have to notify and provide copies of their legislation authorizing the application of safeguard measures to the Committee, as well as report each phase of a safeguard investigation and related decision-making. The Committee reviews these reports and provides a forum for discussion of measures in place.
The Safeguards Agreement incorporates into WTO rules many of the concepts embodied in U.S. safeguards law (section 201 of the Trade Act of 1974, as amended).
Among its key provisions, the Safeguards Agreement:
Requires a transparent, public process for making serious injury determinations;
Sets out clearer definitions of the criteria for serious injury determinations;
Requires that safeguard measures be steadily liberalized over their duration;
Establishes maximum periods for safeguard actions;
Requires a review no later than the mid-term of any measure with a duration exceeding three years;
Allows safeguard actions to be taken for three years, without the requirement of compensation or the possibility of retaliation; and
Prohibits so-called “grey area” measures, such as voluntary restraint agreements and orderly marketing agreements.
In the United States, the U.S. International Trade Commission conducts safeguard investigations.