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WORLD TRADE G/SG/Q1/CRI/5 17 June 2008 ORGANIZATION (08-2824) Committee on Safeguards Original: Spanish

NOTIFICATION OF LAWS AND REGULATIONS UNDER ARTICLE 12.6 OF THE AGREEMENT

Replies to Questions Posed by the UNITED STATES1 Regarding the Notification of COSTA RICA2

The following communication, dated 6 June 2008, is being circulated at the request of the delegation of Costa Rica.

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Question 1

Is the WTO Agreement on Safeguards self-implementing under Costa Rican law? Also, in potential cases of conflict between the WTO Agreement on Safeguards and the Regulations which legislation would have precedent?

Yes, the WTO Agreement on Safeguards is self-implementing under Costa Rican law and would take precedence over the Central American Regulations on Safeguard Measures (hereinafter "the Regulations") in all substantive and procedural aspects not covered by the Regulations, as provided for in Article 4 of the Regulations. Both legal instruments are implemented simultaneously and complement each other.

Question 2

After reviewing the Regulations, we would ask that Costa Rica please elaborate on the organizational relationship and process of trade remedy proceedings between the investigating authority, Directorate-General of Integrating of the Ministry or Secretariat of the Economy and the Council for Economic Integration.

Each Member State of the Central American Economic Integration System has its own investigating authority in cases relating to safeguard measures. Under Article 35 of the Regulations, the Council of Ministers for Central American Economic Integration shall be apprised of and approve any resolutions issued by an investigating authority which are to result in the application of provisional or definitive measures involving increased duties. To this effect, the investigating authority must transmit to the Secretariat for Central American Economic Integration (SIECA) a copy

1 G/SG/Q1/CRI/3. 2 G/SG/N/1/CRI/4.

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of resolutions for the application of measures, in order that SIECA may convene the Council of Ministers for Central American Economic Integration so that it may be apprised of the case.

Question 3

Article 1 (Definitions) of the Regulations define the investigating authority as "The Directorate or Directorate-General of Integration of the Ministry or Secretariat of the Economy or, as the case may be, the Directorate competent for matters pertaining to Central American economic integration in each State Party, or the technical unit with responsibility for investigating situations that may warrant the application of the safeguard measures provided for in these Regulations". However, it is not entirely clear who the investigating authority will be for a safeguard action, nor how the Secretariat for Central American Economic Integration (SIECA) will function with regards to a safeguard investigation. Please clarify whether there is one investigating authority across the Central American Tariff and Customs Region or whether each country will have its own investigating authority. In addition, please clarify how SIECA will function in the safeguards process. What role will SIECA play with regards to initiation of safeguards investigations and determining injury and the causal link between imports and injury?

For the time being there is no regional authority in charge of safeguard investigations in Central America. Each country has its own investigating authority responsible for conducting such investigations. Article 35 of the Regulations stipulates that SIECA's only role is to convene the Council of Ministers for Central American Economic Integration so that the latter may be apprised of and approve the resolutions of each country's investigating authority regarding the application of provisional or definitive safeguard measures.

Question 4

Article 2 (Object of the Regulations) and Article 4 (Substantive and procedural rules) explain that the Regulations "set out the provisions for the [Safeguards Agreement]", but that substantive aspects "not covered by [the Regulations] shall be determined by the provisions of the [Safeguards Agreement]". Are these provisions to be interpreted as creating a hierarchy such that in any conflict between the Regulations and the WTO Agreement on Safeguards, the Regulations prevail?

Both legal instruments are self-implementing under Costa Rican law; they are applied jointly and on a complementary basis.

Question 5

Please explain how Article 20 of the Regulations is consistent with Article 6 of the WTO Safeguards Agreement, including with respect to the requirement in Article 6 that there be "clear evidence" that increased imports have caused or are threatening to cause serious injury.

Article 6 of the Agreement on Safeguards is applied, on a complementary and supplementary basis, in addition to the provisions of the Regulations, so that in order for provisional safeguard

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measures to be imposed, there must be a positive preliminary determination of clear evidence that increased imports have caused or are threatening to cause serious injury to a domestic industry.

Question 6

Article 23 (Verification of information) of the Regulations notes that the investigating authority may conduct verification visits as it deems necessary. Given the WTO Agreement on Safeguards is silent on the issue of verification visits, can Costa Rica please explain the circumstances that would result in a verification being conducted?

As explained in Article 23 of the Regulations, the purpose of such visits would be to verify the information submitted by interested parties during the investigation. However, in order to ensure that such visits are effective, express agreement shall first be obtained from the firms to be visited, which shall be duly advised of the general nature of the information to be verified.

Question 7

Article 32 (Duration of safeguard measures) of the Regulations states that a safeguard may be in place for a period not to exceed four years. However, there is no provision of the Regulations that states that a safeguard measure must be progressively liberalized throughout its duration as per Article 7, paragraph 4 of the WTO Agreement on Safeguards. Can Costa Rica please clarify that it will progressively liberalize safeguard measures through their respective durations?

As explained above, the WTO Agreement on Safeguards is self-implementing under Costa Rican law. The application of Article 7.4 of the Agreement would therefore be complementary and supplementary to that of Article 32 of the Regulations, which means that any safeguard measure imposed will be subject to the progressive liberalization requirement during its application.

Question 8

Article 32 (Duration of safeguard measures) of the Regulations does not appear to address the application of a safeguard measure to an import which has previously been subject to a safeguard measure in accordance with Article 7, paragraphs 5 and 6 of the WTO Agreement on Safeguards. Please clarify how Costa Rica will apply safeguards in situations in which a product was previously subject to a safeguard measure.

As explained above, the WTO Agreement on Safeguards is self-implementing under Costa Rican law. The application of Article 7.5 of the Agreement would therefore be complementary and supplementary to that of Article 32 of the Regulations, which means that any safeguard measure applied to a product which has previously been subject to such a measure will be subject to the provisions set forth in Article 7.5 of the WTO Agreement on Safeguards.

Question 9

Article 37 (Review of the measure) of the Regulations states: "A safeguard measure that has been adopted may be reviewed, at the request of a party or ex officio, at any time during its

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application, in accordance with the provisions of the Agreement". However, there is no discussion about a mandatory review for a safeguard measure the duration of which exceeds three years as per Article 7, paragraph 4 of the WTO Agreement on Safeguards. Please clarify that reviews will be mandatory if they exceed a three year period as per Article 7, paragraph 4 of the WTO Agreement on Safeguards. Please confirm that Costa Rica will only withdraw a safeguard measure or increase the pace of liberalization through these reviews, and will not use reviews to decrease the pace of liberalization.

As explained above, the WTO Agreement on Safeguards is self-implementing under Costa Rican law. The application of Article 7.4 of the Agreement would therefore be complementary and supplementary to that of the provisions of the Regulations, which means that any safeguard measure subject to review will be dealt with in accordance with that Article.

Question 10

Article 38 (Publication) of the Regulations notes that resolutions regarding the initiation of a safeguard investigation and the imposition of preliminary and/or final measures shall be published only once and at the cost of the interested party. What would happen if an interested party refuses to pay? Please identify which national newspapers would publish these notifications, as well as where the Official Journal of the Central American Integration System can be located online.

It is important to note that the commitment assumed by the Central American countries under this provision is not to submit a semi-annual report, but to inform the Executive Committee for Economic Integration about the application of the Regulations. In practice, this commitment is followed through orally at the regular meetings held by the Committee. Nevertheless, one must bear in mind that safeguard measures are not instruments frequently used by the Central American countries, so it is not usual for such reports to be given.

In any case, the minutes of the meetings of the Executive Committee for Economic Integration are not made public and are therefore not accessible to interested parties. One should bear in mind that Article 41 of the Regulations refers to transparency commitments between the States Parties, not the investigating authority's transparency commitments towards interested parties. Article 43 of the regulations sets out to develop this aspect further and provides that investigating authorities shall notify procedural actions to interested parties, in accordance with Article 12 of the Agreement on Safeguards.

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