Trade Remedy Provisions
dispute cases. In each case, the Appellate Body had ruled against the WTO member’s exclusion of PTA partners. Bilateral safeguards. There are two types of bilateral safeguards: transition safeguards and special safeguards. Transition safeguards are designed to mitigate the costs incurred as industries adjust to the preferential tariffs and often can only be imposed during the transition period. Special safeguards are provisions for products or sectors that are politically sensitive. PTAs often include extensive language defining when and for how long bilateral safeguards can be imposed (see box 9.4). Part of the reason for this detail might be the absence of analogous WTO provisions specifying the default behavior—unlike the case with the other trade remedies. The role of regional bodies in bilateral safeguard actions is noteworthy. Regional institutions might have a coordinating function, serving for example, as clearinghouses for information on emergency action. Alternatively, regional authorities could conduct safeguard investigations or review safeguard measures taken by national authorities.
Box 9.4. Bilateral Safeguards Template A. Safeguard measures disallowed B. Safeguard measures allowed, but with no specific provisions C. Safeguard measures allowed, with specific provisions 1. Conditions for application of safeguard a. Increasing imports cause serious injury to domestic industry b. During transition period, reductions in tariffs lead to increased imports and to serious injury c. Other 2. Mutually acceptable solution 3. Investigation 4. Application of safeguard measures a. Only to the extent necessary to remedy serious injury and facilitate adjustment b. Suspension of concessions, tariff reduction, or reversion to most favored nation rates c. Other 5. Provisional measures 6. Duration and review of safeguard measures a. Less than four years’ duration b. Not allowed beyond transition period 7. Maintenance of equivalent level of concessions (compensation) 8. Suspension of equivalent concessions (retaliation) 9. Regional body or committee a. Conducts investigations and decides on safeguard duties b. Reviews or remands final determinations c. Other 10. Notification and consultation 11. Special safeguards
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The special safeguard provisions in the PTAs are usually applied to agricultural products and textiles and clothing, which in many countries are the most difficult sectors to liberalize. Products or sectors that are hard to liberalize at the multilateral level are also hard to liberalize in PTAs and require special safeguard treatment. Hub-and-Spoke Pattern A review of the list of PTAs in table 9.2 shows that the proliferation of PTAs has not happened by chance; rather, a small set of countries recurs as members of most PTAs. Put differently, there is a pronounced hub-and-spoke and cross-regional pattern in the PTAs in the sample. The largest constellations are grouped around the EU, EFTA, and the United States (figure 9.1), but there are other active PTA players, including Mexico, with 9 PTAs, Singapore (6), Australia (5), Chile (5), and Canada (4). The prominent hub-and-spoke and cross-regional pattern of the PTAs in the sample raises the question of whether there are identifiable features in the trade remedy provisions negotiated by the hubs. The hypothesis is that each major hub negotiates according to certain key principles. The rules and philosophy may vary across hubs, but we expect consistency within a hub. Table 9.5 presents a summary of the provisions in each PTA. Looking first at the antidumping provisions, we see that EFTA and the EU have a different philosophy than the other major hubs, notably the United States. Among the EU’s PTAs, 90 percent either prohibit antidumping measures or limit their use. All of EFTA’s agreements either prohibit or limit the use of antidumping. By contrast, almost 90 percent of U.S. PTAs contain no language on antidumping, and, indeed, it is clear that the United States is the least open of all hubs to the inclusion of antidumping provisions in PTAs. This does not imply that any of the hubs consistently incorporates the same rules in each (or even most) agreements. Table 9.6 shows whether a rule is included in the majority of each hub’s agreements. When the hubs are inspected more closely, there is little evidence that any of them negotiate the same rules in all their PTAs. For instance, for only five hubs—the EC, EFTA, Mexico, Australia, and Canada—are there antidumping rules in most of the agreements, and only in the EC and EFTA do most agreements contain the same substantive provision. Moreover, this provision (regarding a mutually acceptable solution) involves rather weak language. The other three hubs often have antidumping rules, but for no hub is a particular rule included in most of the agreements. Thus, while it is fair to say that the Europeans are more