November 2016 | Agriculture Comparing Safeguard Measures in Recent Regional and Bilateral Trade Agreements Willemien Viljoen Issue Paper November 2016 l Agriculture Comparing Safeguard Measures in Recent Regional and Bilateral Trade Agreements Willemien Viljoen Trade Law Centre (tralac) Issue Paper ii Published by International Centre for Trade and Sustainable Development (ICTSD) International Environment House 2 7 Chemin de Balexert, 1219 Geneva, Switzerland Tel: +41 22 917 8492 Fax: +41 22 917 8093 [email protected] www.ictsd.org Publisher and Chief Executive: Ricardo Meléndez-Ortiz Director, Climate, Energy and Natural Resources: Ingrid Jegou Senior Programme Manager, Agriculture: Jonathan Hepburn Acknowledgements This issue paper is produced by ICTSD’s Programme on Agricultural Trade and Sustainable Development. The author and ICTSD wish to thank Raul Montemayor and Biswajit Dhar for their helpful comments on previous drafts of this paper. ICTSD is also grateful for the support of its core and thematic donors, including the UK Department for International Development (DFID); the Swedish International Development Cooperation Agency (SIDA); the Netherlands Directorate General of International Cooperation (DGIS); the Ministry of Foreign Affairs of Denmark, Danida; the Ministry for Foreign Affairs of Finland; and the Ministry of Foreign Affairs of Norway. ICTSD welcomes feedback on this publication. This can be sent to Jonathan Hepburn ([email protected]) or Fabrice Lehmann, ICTSD Executive Editor ([email protected]). Citation: Viljoen, Willemien. 2016. Comparing Safeguard Measures in Recent Regional and Bilateral Trade Agreements. Geneva: International Centre for Trade and Sustainable Development (ICTSD). Copyright © ICTSD, 2016. Readers are encouraged to quote this material for educational and non-profit purposes, provided the source is acknowledged. This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License. To view a copy of this license, visit: https://creativecommons.org/licenses/by-nc/4.0/ or send a letter to: Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. The views expressed in this publication are those of the author and do not necessarily reflect the views of ICTSD or the funding institutions. ISSN 1817-356X iii Agriculture TABLE OF CONTENTS LIST OF TABLES iv LIST OF ABBREVIATIONS v FOREWORD vi EXECUTIVE SUMMARY vii 1. INTRODUCTION 1 2. GLOBAL SAFEGUARDS 3 2.1 GATT 1994 Article XIX 3 2.2 The WTO Agreement on Safeguards 4 2.3 Special and Differential Treatment 4 2.4 Special Safeguard in the Agreement on Agriculture 4 3. GLOBAL SAFEGUARDS IN REGIONAL TRADE AGREEMENTS 6 4. SAFEGUARDS IN REGIONAL AND BILATERAL TRADE AGREEMENTS 8 4.1 Methodology 8 4.2 Types of Bilateral or Regional Safeguards in RTAs 9 5. SPECIFIC BILATERAL OR REGIONAL SAFEGUARD MEASURES 13 5.1 Agricultural Safeguard Measures 13 5.2 Textile and Apparel Safeguard Measure 17 5.3 Specific Safeguard on Forestry Products 17 5.4 Specific Safeguard Applicable to Motor Vehicle Imports 18 5.5 Food Security Safeguards 18 5.6 Infant Industry Protection Safeguards 18 5.7 Country-Specific Safeguard Measure 19 6 MARKET INTEGRATION AND BILATERAL AND REGIONAL SAFEGUARD CLAUSES 20 7. IMPLICATIONS OF RECENT TRENDS IN BILATERAL AND REGIONAL SAFEGUARD MEASURES FOR A NEW MULTILATERAL GRICULTURAL SAFEGUARD MECHANISM 22 8. CONCLUSION 24 REFERENCES 26 ANNEX 28 iv LIST OF APPENDIXES Appendix A: Summary table of safeguard measures in recently concluded RTAs Appendix B: Divisions amongst the evaluated agreements—those with global safeguards, those with provisions regarding general regional or bilateral safeguards and those with provisions regarding specific bilateral or regional safeguards Appendix C: Agreements with specific bilateral or regional safeguards Appendix D: WTO safeguard agreement and general bilateral safeguard provisions Appendix E: WTO agreement on agriculture and agriculture specific bilateral safeguards LIST OF TABLES Table 1: Trigger levels beef Table 2: Trigger level milk powder Table 3: Trigger levels and safeguards applicable to apple imports v Agriculture LIST OF ABBREVIATIONS BLNS Botswana, Lesotho, Namibia and Swaziland c.i.f. cost, insurance, freight CEP Closer Economic Partnership COMESA Common Market for Eastern and Southern Africa ECA Economic Cooperation Agreement EFTA European Free Trade Association EPA Economic Partnership Agreement EU European Union FTA free trade agreement GATT General Agreement on Tariffs and Trade HS Harmonized System of Preferences IEPA Interim Economic Partnership Agreement MERCOSUR Common Market of the South MFN most favoured nation PTA preferential trade agreement RoO rules of origin RTA regional trade agreement SACU Southern African Customs Union SADC Southern African Development Community SPS sanitary and phytosanitary SSG special safeguard SSM special safeguard mechanism TBT technical barrier to trade TPP Trans-Pacific Partnership US United States WTO World Trade Organization vi FOREWORD Global market prices for a number of commodities have continued a steady decline from peaks in 2011, after a period of pronounced volatility and recurrent high prices that prevailed from 2006 onward. Slowing demand for commodities in major economies such as China, coupled with falling oil prices and a robust supply-side response to recent high price episodes, have contributed to the recent slide. The new market environment has also prompted concerns that “counter-cyclical” domestic support payments in some major producing countries may exacerbate the fall in prices by shielding producers from market signals and contributing to surplus farm production at the global level. At the same time, recurrent extreme weather events and changing patterns of temperature and precipitation are having increasingly significant consequences for agriculture in developing countries, especially in areas reliant on rain-fed production systems. Analysts anticipate that these challenges will become more acute as a result of climate change in the years ahead — posing new obstacles to the international community as it seeks to achieve the ambitious Agenda 2030 target of ending hunger and malnutrition. In particular, increased weather-related volatility on global markets is likely to affect the “stability” component of food security in developing countries. At the World Trade Organization (WTO), developing country negotiators from the G-33 coalition have highlighted their desire to be able to make use of a simple and effective safeguard mechanism to help protect domestic producers from sudden volume surges or price depressions. A decision at the WTO ministerial conference in Nairobi determined that the trade body’s members would pursue negotiations on this topic in dedicated sessions of the Committee on Agriculture. At the same time, farm exporting countries from both developed and developing countries have argued that this issue should be addressed as part of broader talks on market access at the WTO. Negotiating dynamics in this area have been affected by market integration efforts in bilateral and regional trade negotiations, including the twelve-member Trans-Pacific Partnership (TPP) that was concluded in 2015. As both importing and exporting country negotiators pursue talks on a workable safeguard mechanism that could be agreed upon at the WTO, it will be critical for them to have access to up-to-date and reliable information on the extent to which recent bilateral and regional trade deals include clauses on safeguards, as well as analysis on the potential significance of these provisions for ongoing efforts to craft an international instrument in this area. This paper, by Willemien Viljoen, provides policymakers, negotiators and other stakeholders with an impartial, evidence-based analysis of the implications of recent bilateral and regional trade negotiations for developing countries’ ability to use safeguard measures to protect domestic producers from sudden surges in the volume of imports or price depressions. As such, it builds on and updates previous ICTSD analysis on this same topic by addressing developments in preferential negotiations on trade. Ricardo Meléndez-Ortiz Chief Executive, ICTSD vii Agriculture EXECUTIVE SUMMARY The use of safeguard measures is regulated in multilateral trade agreements and regional and bilateral agreements. The applicable multilateral agreements are the General Agreement on Tariffs and Trade Article XIX, the World Trade Organization (WTO) Agreement on Safeguards and Article 5 of the WTO Agreement on Agriculture. The WTO Agreement on Safeguards provides clear guidelines and strict procedural obligations to which governments must adhere. Global safeguard measures are product specific and need to be applied on a most favoured nation basis, thus without discrimination against other WTO member countries. However, safeguard provisions provide for discriminatory treatment in two instances: 1) when excluding partner countries from global safeguard actions and 2) when excluding third countries and only imposing bilateral or regional safeguard actions on partner countries. These two exclusions were found in a number of the examined trade agreements (Kruger et al. 2009). Bilateral and regional safeguard mechanisms are an integral part of most regional trade agreements to address the effects of trade liberalisation initiatives under the applicable agreement. However, there are still recently concluded agreements which are silent on the issue of bilateral