Safeguards under the World Trade Organization (WTO)

24.04.2024

Safeguards under the World Trade Organization (WTO)

Why in the news?                                                                                                                    

         Recently India and seven other members of the World Trade Organization (WTO), including China and Russia, have criticized the European Union (EU)'s decision to extend safeguard measures on specific steel products after June 30.

Important points:

• WTO members including India also condemned comparable duties imposed by the United Kingdom (UK).
• In 2021, India suggested imposing additional import duties totaling 292 million euros on specific EU products in response to the safeguard measures.
• Subsequently, it suggested imposing an additional 15 percent customs duty on imports of 22 products from the UK, including whiskey, cheese and diesel engine parts, as a response to the UK imposing a ban on steel products following its departure.

About security measures:

• Safeguard measures are measures initiated by a country that qualify as "emergency" action under the WTO Agreement on Safeguards.
• A WTO member may take "safeguard" action (i.e., temporarily restricting imports of a product) under the WTO Agreement on Safeguards to protect a specific domestic industry from increased imports of any product that would cause Is causing, or is threatening to cause, serious injury to the domestic industry.
• Such measures, which broadly take the form of concessions or suspension of obligations, may include quantitative import restrictions or duty increases above prescribed rates.
• They are one of three types of incidental trade protection measures, along with anti-dumping and countervailing measures, available to WTO members.
• Thus, unlike anti-dumping and countervailing measures, safeguard measures do not require a finding of "unfair" practice.
• The Agreement defines “serious injury” as a significant overall impairment of the position of the domestic industry.
• In determining whether serious injury exists, investigating authorities must evaluate all relevant factors bearing on the state of the industry.

Guiding Principles Regarding Security Measures:

• Must be temporary; that they can be imposed only if the imports are found to cause serious injury or threat to the competing domestic industry;
• that they be (generally) applied on a non-selective (i.e., most-favored-nation, or “MFN”) basis;
• They should be progressively liberalized while remaining effective; And the member imposing them must (usually) compensate members whose business is affected.

                               Source: The Hindu business line