Agreement on Safeguard Measures: Understanding the Basics
When it comes to international trade, safeguard measures are implemented by countries to protect domestic industries from sudden surges in imports that can cause serious damage. Such measures are designed to provide a temporary relief to help domestic industries cope with increased competition, should the need arise.
The Agreement on Safeguard Measures, which is part of the World Trade Organization (WTO) framework, is the main set of rules that members must follow when imposing safeguard measures. The agreement was put in place to ensure that trade is conducted fairly and transparently, without posing any undue barriers to trade.
Understanding the Purpose of Safeguard Measures
Safeguard measures are designed to provide temporary protection to domestic industries that are struggling due to increased imports, either in the form of a sudden surge in quantity or decrease in prices. It provides a window of time for the domestic industry to adjust, restructure, and become more competitive in the global market.
However, safeguard measures must be applied in a manner that does not disrupt normal trade patterns or cause harm to other countries. They should not discriminate between exporting countries, and they must be based on objective criteria.
What are the Key Elements of the Agreement on Safeguard Measures?
The Agreement on Safeguard Measures sets out the rules and requirements for the application of safeguard measures. The key elements of the agreement include:
1. Justification: The agreement requires that before a safeguard measure is implemented, the member must provide evidence that there has been a surge in imports that is causing or threatening serious injury to its domestic industry.
2. Non-discriminatory: The agreement requires that the application of safeguard measures must be non-discriminatory, meaning that they should not discriminate between exporting countries.
3. Transparency: The agreement requires that all members must provide information about their safeguard measures to the WTO and other member countries.
4. Limitations: The agreement imposes limitations on the duration and level of safeguard measures to ensure that they are not used as a protectionist measure.
5. Compensation: The agreement requires that the member imposing safeguard measures must provide compensation to affected exporting countries.
The Agreement on Safeguard Measures is an essential part of the WTO framework, providing a guide on how members should apply safeguard measures to protect their domestic industries. The rules of the agreement ensure that safeguard measures are applied in a non-discriminatory and transparent way that does not disrupt normal trade patterns or cause harm to other countries. With the application of safeguard measures, countries can help their domestic industries to adjust, restructure and become more competitive in the global market.