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“unforeseen developments.” Nevertheless, in an often cited portion of its report, the Appellate Body offered its opinion that the Agreement on Safeguards must be read together with GATT Article XIX, which contains the “unforeseen developments” requirement.Case Questions1.Why did the Appellate Body uphold the panel’s finding thatthe increased imports were not the cause of serious harm to European industry?2.Why could Argentina not apply the safeguards only to footwear from Europe?3.What is meant by “unforeseen developments”? Is it not foreseeable that any tariff concession will cause an increase in imports? Explain.4.What remedies are available to a country in a safeguards action? What is meant in Article XIX when it states, “The member shall be free…to suspend the obligation in whole or in part or to withdraw or modify the concession”?The WTO Agreement on SafeguardsThe WTO Agreement on Safeguards(1994) provides details lacking in the escape clause and sets out the procedural steps that countries have to follow to use it. In order to apply a safeguard, a country must first undertake an administrative investigation, which includes a public hearing at which importers, exporters, and other interested parties can present evidence and their views of whether the safeguard would be in the public interest. In the United States, investigations are conducted by the International Trade Commission, an independent agency of the federal government. The investigating body is required to evaluate all relevant economic factors bearing on the industry’s position, and it mustfind that the increased imports are the actual cause of the domestic industry’s decline. If other factors are shown to be causing injury simultaneously, then the increased imports are not considered to be the cause. Emergency action can be taken without the investigation if clear evidence justifies the safeguards, but any additional tariffs imposed must be lifted within 200 days.Global Safeguards.
Safeguards applicable to WTO member countries are often called global safeguards.As the term indicates, the safeguards are imposed on imports of specific products regardless of the country of origin. For example, if increased imports of nonrubber footwear are causing serious injury to a domestic industry, the safeguards must be applied “globally” to all imports of non-rubber footwear, regardless of where they are produced. Most countries also have special safeguards applicable to imports from China.Limits on the Use of Safeguards.The safeguards agreement places limits on safeguards because they are a temporary remedy to be used only until the problem is resolved. They may not exceed four years (with an extension to eight years). Thetariffs or restrictions on imports may not be greater than necessary to prevent injury, and must be gradually lifted when conditions warrant.