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Comparison of safeguard provisions

29 August 2009

The ICTSD has posted a review of safeguard measures in regional and bilateral agreements. The paper compares the provisions of 42 bilateral agreements to each other and to the WTO safeguard measures. It notes that generally ‘similar provisions to those found under WTO law’ are included in the bilateral and regional trade agreements and that under regional agreements such measures can be invoked ‘without demonstrating injury to the domestic industry’. The article notes that under WTO safeguard rules, scope also exists for special safeguards for agricultural products: although the initialled IEPAs ‘do not contain any special safeguard provisions’, the bilateral safeguard mechanism ‘has been extended to include certain agriculture products’.

The report further notes that under EPAs the dispute settlement provisions do not apply to safeguards. It points out, however, that under the COMESA regional agreement, ‘member countries have used the mechanism provided for in their regional agreements to protect their industries’.

The analysis notes that under the CARIFORUM-EU EPA, ‘imports originating in the developing economies of CARIFORUM are exempted from global safeguard measures taken by the EU for a period of five years after entry into force of the EPA’. According to the ICTSD analysis, under this provision ‘imports originating in the CARIFORUM economies will be excluded regardless [of] whether such imports are in actual fact the cause of serious injury to the EU economy’. This means that ‘the anomaly now exists that the country responsible for the surge in imports can in effect be excluded from the safeguard action’.

Overall the analysis notes that safeguard measures in EU agreements include ‘wider conditions for invocation’ than WTO provisions. This is achieved by referring to the threat of ‘serious disturbances’ as the basis for invocation. However the analysis notes that the term ‘serious disturbances’ is not defined and that the agreements are largely silent on the requirement of a ‘causal link’. The analysis also notes the ‘detailed provisions on the manner in which the measures are to be applied’, which can limit their application. It notes that ‘all of the seven EPA agreements contain almost identical safeguard provisions’. These agreements do not allow the EU to ‘impose bilateral safeguard measures on ACP countries’, except in the case of the EU’s outermost regions.

According to the ICTSD published analysis, in terms of remedies the EPAs provide for ‘the suspension of further reduction of the applicable rates or duties as well as an increase in the rate of duty for the concerned product’. The EPAs also allow for ‘tariff quotas to be imposed on the product concerned’, but with ‘no specific rules or guidelines … incorporated to regulate the allocation of quotas between suppliers’. The provisions allow safeguard measures to be taken for two years with a possible extension for a further two years. However, where safeguard measures exceed one year they must ‘progressively be liberalised’. The EPAs make provision for provisional application of safeguards, with these being more permissive than under other agreements.

The report recommends that developing countries should:

  • strike ‘a balance between applying the safeguard measures and striving for the objective of trade liberalisation’;
  • include consultation arrangements in the provisions;
  • pay particular attention to agriculture where markets are subject to considerable volatility;
  • include ‘clear and transparent provisions regarding the use and duration of any mechanism within the agreement in unambiguous language’;
  • set ‘clear developmental benchmarks and strategies prior to negotiations’;
  • ensure that ‘provision is made for safeguard measures to be invoked if a certain volume or price trigger for the concerned products are reached’;
  • ensure ‘asymmetry in the application of safeguards in favour of the developing party’ in north-south regional trade agreements, with LDCs being exempted from safeguard measures.

Editorial comment

The assertion that general safeguards do not apply to CARIFORUM exports would not appear to hold in the case of sugar. Under the provisions of the sugar arrangement established alongside the EPAs, CARIFORUM appears to be included in the dual-trigger safeguard threshold applied to ACP/LDC sugar exports during the transition period. If CARIFORUM countries are excluded, then clearly they would also need to be excluded from the calculation of the 3.5 million tonne ACP/LDC trigger threshold and the trigger threshold for non-LDC sugar exports established under this special safeguard arrangement.

None of the interim EPAs (IEPAs) include special agricultural safeguard provisions. In all the IEPAs, provisions dealing with agricultural safeguards are subsumed under the general safeguard provisions. Yet under a number of IEPA configurations a strong case can be made for dedicated agricultural safeguard provisions, given the structural nature of the trade distortions arising from the deployment of public assistance in support of the food and agricultural sector in the EU.

This is particularly the case in the SADC region. At the June 2007 symposium on EU agri-food export interests in free-trade area negotiations, EC officials acknowledged that while the EU had limited offensive interests in EPA negotiations in general, this was not the case for the SADC IEPA negotiations. Areas where particular offensive interests had been explicitly identified included ‘cheeses, some cereals and derivatives (malt, barley, cereal flours), some poultry products (poultry meat and eggs), processed pork meat (sausages/ham)’ and certain ‘highly processed fruit and vegetables, olive oil, wine’ (see table).

EU agriculture and food products: Growth in exports to the SACU

  • Beverages (+72.1% from 1996 to 2005)
  • Chocolate (+38.0% from 1996 to 2005)
  • Biscuits (+38.6% from 1996 to 2005)
  • Food preparations (+106.5% from 1995 to 2005)
  • Olive oil (+105.9% from 1995 to 2005)
  • Fruits and vegetables (+107.7% from 1995 to 2005)
  • Animal feed (+159.5% from 1995 to 2005)

This is reflected in the strong EU export growth in these and other sectors which has already taken place. With duty-free, quota-free access for substantially all EU food and agricultural exports to the SACU market largely being in place by 2012, the issue of the trade-distorting effects of new forms of EU subsidy would suggest a strong need for special agricultural safeguards, particularly given the schedule for further CAP reform already in place. It also suggests that there is a need for the smaller SACU countries to retain the right to use other trade policy tools (notably import licences and infant industry protection) in ways consistent with existing intra-regional arrangements.

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