Bridges Weekly Trade News Digest • Volume 12 • Number 39 • 19th November 2008
WTO Registers Drop in Use of Safeguards
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WTO Members are not invoking special import restrictions to protect domestic producers as frequently as they did in the past, according to a WTO report released on Monday.
The safeguard mechanism is intended to shield producers from sudden surges in imports or drastic drops in the price of the goods they produce. If a specific volume or price threshold is crossed, then a compensatory tariff can be imposed on imports of the good in question.
Only five such ‘safeguards’ have been initiated thus far this year, the report said, down from a high of 34 for all of 2002. Since 1995, a total of 89 such measures have been implemented.
India has initiated 15 of the trade restrictions over the past 14 years, the most of any country. Turkey is next with 14, followed by Jordan, which has implemented 12.
Chemical products have been the most frequent targets of the measures, followed by foodstuffs, and base metals. Roughly 25 measures have been imposed on agricultural products since 1995.
Some warn that such mechanisms might become more popular as national governments look for ways to protect domestic producers from the full brunt of the global economic turmoil. A future report will no doubt show whether such a scenario actually plays out.
Controversy over when a new safeguard mechanism could be used has been blamed for triggering the collapse of a high-level July meeting of the WTO’s Doha Round of trade talks. Disagreement largely centred on whether, and by how much, developing countries would be allowed to raise tariffs beyond current caps in order to protect subsistent farmers from import surges.
Delegations also disagreed over how long the safeguard should last, and how many months countries would have to wait before imposing a new measure on a product that has received the protection in the past.
India and many other developing countries fought for flexibility in invoking safeguards to protect domestic producers, while the US, joined by several major South American exporters, demanded market predictability for their producers.
ICTSD reporting.
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