RESTRICTED
WORLD TRADE G/SG/W/162
23April 1996
ORGANIZATION(96-1489)
Original: English Committee onSafeguards
REPLIES TOQUESTIONS POSED BYTHE EUROPEAN COMMUNITIES1
CONCERNING THE NOTIFICATION PROVIDED BYTHE UNITED STATES2
OFLAWS AND REGULATIONS UNDER ARTICLE 12.6OFTHE AGREEMENT
Thefollowing communication, dated 18April 1996, hasbeenreceived from thePermanent
Mission oftheUnited States.
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1. Section 201(a)
Article 2oftheAgreement onSafeguards stipulates that"AMember mayapply asafeguard
measure toaproduct onlyifthatMember hasdetermined ...thatsuchproduct isbeing imported
intoitsterritoryinsuchincreasedquantities...andundersuchconditionsastocauseorthreaten
tocause serious injury tothedomestic industry ...".
Theprovision oftheUnited States legislation atissue differs from Article 2ofthe
above-mentionedAgreementinasmuchas,forthepurposeoftheadoptionofsafeguardmeasures,
itrequires adetermination astowhether aproduct isbeing imported insuchincreased quantities,
butdoesnotrequire adetermination astowhether theincreased imports areverified astaking
place under suchconditions astocause orthreaten tocause serious injury tothedomestic
industry.
CantheUnited States illustrate thereasons whySection 201(a) appears tobesodifferent from
Article 2oftheAgreement onSafeguards?
Response
Thenotion of"under suchconditions" isimplicit inanyconsideration ofwhether imports are
causing orthreatening injury. Inaddition, USlawrequires afullexamination oftheeconomic factors
relevant totheeffect ofimports onthedomestic industry. Many ofthese arelisted inSection 202(c)
oftheTrade Actof1974. Thus, USlawdoesrequire theUSITC toexamine whether themarket
conditions aresuchthatincreased imports canbesaidtobeasignificant cause ofserious injury.
2. Section 202(e)(4)(A) andSection 203(a)(3)(E)(G)(I)
Theprovisions atissueconcern, respectively, Commission recommendations tothePresident
andsafeguard action thatmaybetaken bythePresident afterhehasdetermined thatthedomestic
1G/SG/W/63.
2G/SG/N/1/USA/1.G/SG/W/162
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industry hasbeen caused, oristhreatened with, serious injury. More particularly, these
provisions refer totheinternational negotiations which thePresident mayinitiate andthe
voluntary export restraint agreements which hemayconclude withthird countries inorder
tolimitimports intotheUnited States oftheproducts concerned.
Having regard tothese provisions, cantheUnited States indicate precisely whatinternational
negotiations arereferred to?
Regarding theconclusion ofexport restraint agreements, cantheUnited States provide fuller
explanatory information?
Intheopinion oftheCommunity, theprovisions authorizing theconclusion ofrestraint
agreements arenotcompatible withArticle 11,paragraph 1(b)oftheAgreement onSafeguards,
which provides asfollows: "Furthermore, aMember shall notseek, takeormaintain any
voluntary export restraints, orderly marketing arrangements oranyother similar measures
ontheexport ortheimport side. These include actions taken byasingle Member aswellas
actions under agreements, arrangements andunderstandings entered intobytwoormore
Members".
Response
Section 203(a)(3)(E) isconsistent withArticle 11:1(b) oftheAgreement. Article 11:1(b) does
notprohibit agreements, butrather prohibits so-called greyareaandother measures nottaken in
conformity withtheprovisions ofArticle XIXandinaccordance withtheAgreement (e.g., notbased
onaserious injury determination). Indeed, Article 5:2specifically authorizes aMember applying
restrictions"toseekagreementwithrespecttotheallocationofsharesinthequotawithallothermembers
having asubstantial interest insupplying theproduct concerned." Moreover, Article 11:1(b) itself
specifically provides, inafootnote that:"Animport quota applied asasafeguard measure inconformity
withtherelevant provisions ofGATT 1994 andtheAgreement may, bymutual agreement, be
administered bytheexporting Member."
Thus, themerenegotiation oflimits isnotperseaviolation ofArticle 11.Under USsafeguard
law,thePresident maynegotiate agreements onlyafterreceiving areport from theITCcontaining
anaffirmative injury determination. Anyagreement negotiated would comply withallrequirements
andlimitations contained intheSafeguards Agreement.
Theprovisions ofSections 202and203concerning international negotiations toaddress the
underlying cause oftheinjury areseparate fromtheprovisions onnegotiating agreements withforeign
countries limiting export andimports. Thisisshown bythefactthattheyarelisted inSection 203(a)(3)
asseparate actions thePresident maytake. Thestatute doesnotfurther define thetypes ofinternational
negotiationsthatmightqualifyundertheseprovisions,and,tothebestofourknowledge,theseprovisions
havenever beenapplied.
3. Section 203(e)(7)(A)
Theprovision inquestion refers totheinterval which must elapse between twosafeguard
measures, inaccordance withArticle 7,paragraph 5,oftheAgreement onSafeguards.
Intheopinion oftheCommunity, thetwopossibilities referred toinpoints (i)and(ii)ofthe
provision atissue arenotalternative butcumulative. Thismeans thattheword orshould be
replaced byand. Two years isinfacttheminimum interval provided forbyArticle 7,
paragraph 5,oftheAgreement onSafeguards.G/SG/W/162
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Could theUnited States clarify thescope oftheprovision inquestion?
Response
Section 203(e)(7)(A) provides thattheinterval between actions withrespect tothesameproduct
shallbethelength oftheprevious action ortwoyears, "whichever isgreater."