This document summarizes different types of trade restrictions and exceptions under the global trading system, including re-negotiation of tariff concessions, waivers, emergency safeguards, antidumping actions, countervailing duties, restrictions for balance of payments purposes, and general exceptions. It provides details on the rules and processes around each type of restriction. It also discusses debates around certain policies like antidumping, noting criticisms that they can be used protectionistically and impose costs on other countries and consumers.

1. S
Safeguards and
Exceptions
Chapter 9
The Political Economy of The World Trading System
Presented by Hang Nguyen

2. Agenda
S Re-negotiation of Concessions
S Waivers
S Emergency Protection (Safeguards)
S Antidumping Actions
S Measures to Countervail Subsidized Imports
S Trade Restrictions for BOP Purposes
S Infant Industry Protection
S General Exceptions
S Conclusion

4. Source: WTO, Global Antidumping Database

5. 9.1 Re-negotiation of
Concessions
Article XXVIII:1
S Re-negotiation: centres on the compensation
S ‘open season’: conducted every 3 years following a binding
S ‘special circumstances re-negotiations’: approved by GATT
contracting parties
S ‘reserved right re-negotiations’: occur anytime during 3
years
S The contracting party:
S The country – initial negotiating rights – INRs
S The country – ‘principal supplying interest’ (negotiation
rights)/‘substantial interest’ (consultation rights)

6. 9.1 Re-negotiation of
Concessions
The Uruguay Round Understanding on the Interpretation of
Article XXVIII
S Enhanced the opportunities of affected exporters to
participate in tariff re-negotiations.
S Before UR: over 30 GATT contracting parties utilized the
re-negotiation option more than 200 times (1955-95
period)
S After UR: implemented Harmonized System  24 re-
negotiations (1995-2008)

7. 9.2 Waivers
S Tariff re-negotiations are limited: they only pertain to
instances in which a country wants to raise tariffs above
previously bound levels.
S Article XXV:5 GATT allows a member to request a waiver
from one or more other obligations
S The most famous waiver: US in 1955 (inconsistent with
Section 22 of the Agricultural Adjustment Act).
S Waivers under WTO are time bound: are reviewed
annually to determine if the exceptional circumstances
requiring the waiver continue to exist.

8. 9.3 Emergency Protection
(Safeguards)
Article XIX: permits governments to impose measures to
protect domestic producers seriously injured by imports.
Necessary conditions:
S Unforeseen developments
S Resulting from the effects of obligations incurred by a
contracting party (e.g. tariff concessions made in a MTN)
S Leading to increased imports
S That cause or threaten serious injury to domestic
producers

9. 9.3 Emergency Protection
(Safeguards)
S Affected exporting countries were protected by a
requirement of compensation  made Article XIX a
substitute for Article XXVIII re-negotiation
S By the time of UR: to constrain the use of AD and VERs
and to reassert the dominance of Article XIX
S  Tighten the disciplines on the use of VERs and AD
S  Reduce the disincentives to use Articles XIX

10. 9.3.1 The Uruguay Round
Agreement on Safeguards
S Major achievement: prohibition of VERs and similar
measures on the export or the import side
S SG measures: investigation demonstrates “serious
injury” considering factors
S Protection is limited to what is necessary to prevent or
remedy serious injury caused by imports  causal link
S Article XIX – ‘Emergency Action’: in ‘critical
circumstances the Agreement on SG allows Members to
put in place SG immediately on a provisional basis.

11. 9.3.2 The WTO experience
with safeguards
S SG measures: infrequently compared to other
instruments i.e. antidumping
S Key terms are not defined in the agreement.
S ‘Unforeseen developments’ test to safeguard actions by
Appellate Body (AB)
S However, if SG conform to WTO rules, will be
nondiscriminatory and thus affect all imports.

12. 9.3.3 Special Safeguards Cases
S The 2001-2 US Steel Safeguards
S QRs: starting in 1970s, AD and CVD actions in 80s-90s
S 2001: imposing SG actions  fail to show a ‘causal link’
 termination of SG actions in Dec, 2013
S Special Safeguards (SSG)
S WTO Agreements on Textiles and Clothing (ATC)
S Agreement on Agriculture
S China’s Protocol of Accession

13. 9.4 Antidumping Actions
S AD mechanism in US: replace a system in which specific
industries lobbied the US Congress for specific tariffs with one
where industries seeking protection had to go through an
administrative system.
S Increasing controversial during 1980s
S 1950: 37 cases
S Since 1970s: over 4000 AD investigations initiated by WTO
members
S 1995-2007: 3200 investigations  2049 led to AD measures.
S Main users: Australia, Canada, EU and US

15. 9.4.1 A brief summary of
GATT disciplines
S Dumping (GATT): offering a product for sale in export markets
at a price below normal value.
S Article VI: not prohibit dumping, but actions to offset dumping
S Actions against dumping: only if material injury is shown
S Injury determinations:
S Positive evidence
S An objective examination of the volume of the dumped imports
S Their effect on prices in the domestic market
S Impact on domestic producers of like products

16. 9.4.2 What’s wrong with dumping

17. 9.4.2 What’s wrong with dumping
S Discourage domestic firms from engaging in the development
of a competing product by establishing a large market share
S Predation: a foreign firm could deliberately price products low
enough to drive the existing domestic firms out of business and
establish a monopoly.
S  AD is unlikely to encourage.
S The predation has very little to do with AD: US cases
S Antidumping Act of 1916: very rarely invoked.
S The Tariff Act of 1930: usually invoked by import-competing
industries

18. 9.4.3 What’s wrong with antidumping
S AD is not about fair play. Its goal is to tilt the rules of the game
in favour of import-competing industries.
S AD is a useful safety valve that allows countries to implement
and sustain more general trade liberalization  positive
relationship between deterioration in macroeconomic
conditions and the use of AD.
S AD constitute an obstacle to free trade in developing countries:
‘retaliation’ – tit-for-tat responses by targeted countries 
effect in restraining the use of AD by importing countries.

19. 9.4.3 What’s wrong with antidumping
S AD is costly for affected firms, consumers and third countries
S Impact on affected exporters is significant
S Discretion of investigating authorities: dumping margins can be
inflated
S Injury criteria may be manipulated by firms
S By initiating and winning an AD action, upstream suppliers may
be able to manipulate the health of downstream firms to the
advantage of both  cascade along the chain of production.

20. 9.4.3 What’s wrong with antidumping
S Negotiating price undertakings with exporters that are subject
to AD investigations
S Exporters prefer undertakings to the alternative of paying AD
duties
S Undertaking are more detrimental to the national welfare of
countries using them than duties are: due to transaction costs.

21. Thank you for your attention!