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6. Import Surges and Safeguard Provisions With 6. IMPORT SURGES AND SAFEGUARD PROVISIONS WITH A PARTICULAR FOCUS ON ANTIDUMPING MEASURES Contents I. INTRODUCTION 207 1.1 Safeguard measures, anti-dumping and anti-subsidy measures 209 1.2 Anti-dumping in domestic legal systems 210 II. IMPORT SURGES – DEFINITION AND DETERMINATION 211 2.1 Is there a quantitative threshold to define a surge? 211 2.2 Benchmark for measuring a surge and its length 212 2.3 How recent should the data be? 212 2.4 Is there a need for a trend analysis? 213 2.5 Absolute surge or relative to production or both? 214 III. DUMPING – DEFINITION AND DETERMINATION 214 3.1 Definitions for calculation purposes 215 3.2 Determinations of dumping and injury 217 3.3 National legislation 218 3.3.1 Barbados, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines 218 3.3.2 EU 220 3.3.3 Trinidad and Tobago 221 IV. INJURY AND THREAT OF INJURY 222 4.1 Serious injury 223 4.2 Threat of serious injury 224 4.3 Material injury and threat of material injury 225 4.4 National legislation 227 4.4.1 Jamaica 227 206 Basic Legal Obligations V. LIKE AND COMPETITIVE PRODUCTS 229 5.1 Like products 229 5.2 Directly competitive products 231 5.3 Directly competitive or substitutable products in GATT, article III. 232 VI. DOMESTIC INDUSTRY 233 VII. THE CONCEPT OF CAUSATION 236 7.1 National Legislation 241 7.1.1 Trinidad and Tobago 241 VIII. ANTI-DUMPING DUTIES 242 8.1 National Legislation Procedural Rules 243 8.1.1 EU 243 8.1.2 Jamaica 246 8.1.3 Trinidad and Tobago 248 IX. CONCLUDING OBSERVATIONS 250 MAIN REFERENCES 253 Basic Legal Obligations 207 I. INTRODUCTION Import surges and their perceived negative effects on producers is a sensitive economic policy matter; depending on the vulnerability of the affected sector, it also tends to quickly become political – reports of import-surge episodes and their impact typically hit headlines. In the last decade or so, there has been an increase in the incidence of import surges and many observers relate this phenomenon to the opening up of domestic markets with the implementation of the AoA. The effect of these liberalisation reforms in developing countries combined with the export and domestic subsidies of developed countries has left the former vulnerable to the flooding of their domestic markets with products sold on the world market at less than their cost of production.1 This is also said to cause a loss in local trading capacity in developing countries, with production shortfalls in some of the same products where there were import surges. Anti-dumping mechanisms seek to avoid the negative effects of the importation of products at a price below their normal value, which has an injurious effect on the domestic industry. There have been many GATT- WTO dispute settlement cases concerning anti-dumping practices in both agricultural and non-agricultural sectors. This chapter offers a conceptual examination of import-surge related elements within the WTO legal framework, and juxtaposes that with an analysis of how anti-dumping measures have been used at the domestic level, particularly the US, EU and countries in the Caribbean. Import surges may result in safeguard measures being taken by the importing state, which are not always anti-dumping procedures – but can be if such imports spikes are the consequence of prices being lowered below the product's worth and result in injury to the local industry. Other measures to offset some negative consequences of spikes in imports are contained in article VI of GATT and fleshed out in the Agreements on Subsidies and Countervailing Measures (SCM Agreement), and the Agreement on Safeguards (SG Agreement); the Agreement on the Implementation of Article VI of GATT 1994 (the Antidumping Agreement (AD Agreement)) disciplines anti-dumping actions taken by WTO members. 1 Some Trade Policy Issues relating to Trends in Agricultural Imports in the Context of Food Security. FAO Committee on Commodity Problems, Sixty-fourth session March 2003. 208 Basic Legal Obligations The term "safeguards" is used in reference to government actions responding to imports that are considered "harmful" to the importing country's economy, or domestic industries that produce goods in competition with, or "similar" to, the imported products. Typically, government intervention takes the form of an import restraint or control through increased tariffs or quantitative restrictions. Sometimes, the exporting country may voluntarily restrict its own exports, usually in negotiation with the importing country, hence achieving some form of mutual solution. Article XIX of GATT and the SG Agreement prescribe the obligations of WTO members with regard to how they should apply safeguard measures in response to import surges. Hence, an economic analysis of the impact of import surges has to be conducted in order for the response to be consistent with the rules. Like all WTO Agreements, these instruments contain terms and phrases that are either open to various interpretations or ambiguous. Mostly, this is a result of the difficulties in striking a compromise during negotiations, or simply a desire to accommodate the various state practices on a particular issue. Often this is motivated by the need for countries to justify their use of safeguard protection in most circumstances. Making sense of these unclear or ambiguous provisions can be a daunting task – particularly when a sound economic analysis of a problem is predicated on a precise definition or identification of the elements of a provision. Measuring the impact of import surges on local economies is a difficult task which requires a sound and in-depth analysis of all facets to the problem. This chapter will render a legal analysis of the interpretive approaches to some of the key concepts in the WTO agreements complemented by illustrations of relevant anti-dumping provisions provided. It will identify and discuss some of the economically relevant terms and phrases in the Anti-Dumping, Safeguard and other Agreements relevant to import surges and anti-dumping, with examples of national legislation to illustrate the latter. Throughout, reference is made to panel and Appellate Body reports, showing interpretations on the various phrases and terminologies. It will also outline the economic implications of the interpretations that have been given as well as possible alternatives, including some recommendations on how these definitions impact the ability of developing country policy makers to properly implement their obligations under the SG Agreement. Finally, on a more practical level it gives an idea of the concepts and procedural rules included in national laws, facilitating a cursory analysis of compliance with WTO rules. Basic Legal Obligations 209 1.1 Safeguard measures, anti-dumping and anti-subsidy measures Exceptions to bound tariffs, or to the non-discrimination principle can be permitted as contingency measures designed to offset any potential circumvention or manipulation of the rules which result in injury to the domestic industry. These types of protection or safeguard mechanisms include: antidumping measures (actions taken against selling at an unfairly low price), countervailing duties (imposed to offset subsidies), and other safeguard actions (emergency measures that temporarily limit imports) – see box 1.2 This chapter is concerned with the first and third mechanisms. Box 1: Types of WTO safeguards3 There are many types of safeguard mechanisms. The main ones are: Anti-dumping measures; countervailing duties; and Emergency protection. In addition however, there is the Special Safeguard provisions in article 5 of the AoA which is designed to protect domestic industries from sudden import surges. It is limited to those agricultural products which underwent tariffication in the Uruguay Round. Others include: x Through the balance of payments safeguard provisions of GATT article XII and XVII:B and developed by the "Understanding of the Balance-of-Payments Provisions of the GATT 1994", members may apply import restrictions; they are encouraged to use the price-based option measures, such as import surcharges and import deposits, rather than quantitative restrictions; x Infant industries in developing countries are protected by GATT articles XVIII:a and XVIII:c through the use of safeguard measures to restrict imports, for temporary periods. This option is subject to WTO Approval; x General waivers can be granted by the WTO Council for permission not to be bound by an obligation; x General exceptions measures under GATT article XX can be taken for non- economic purposes to safeguard for example, public morals, health, laws and natural resources, subject to the requirement that such measures are non- discriminatory and are not a disguised restriction on trade; x Modification of Schedules and tariff renegotiations permit the withdrawal of certain concessions subject to compensation to affected members (GATT articles XXVIII and XXVIII bis). 2 The interplay between anti-dumping measures, countervailing duties and safeguard actions is visible in European Communities – Antidumping Measure on Farmed Salmon from Norway (2006) (WT/DS337). 3 Compiled by Hoekman, B and Kostecki, M. 1996. The Political Economy of the World Trading System: From GATT to WTO, chapter 7. Oxford University Press. 210 Basic Legal Obligations The two principal categories of safeguards are temporary increases in import barriers under predefined circumstances and permanent exceptions from general obligations. Most of those identified in the preceding list fall under the temporary suspension of obligations, with the exception of the modification of schedules and the general exception provisions. 1.2 Anti-dumping in domestic legal systems The US, EU, Australia, Canada and some East Asian countries have had anti-dumping legislation in place for much longer than most developing countries. Countries that previously did not feel the need for anti-dumping legislation due to high tariff and non-tariff protection have enacted laws as a result of increased trade liberalisation after the Uruguay Round.
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