the GATT rules relating to contingency protection

The GATT rules permit countries to take contingency protection measures in two situations. Firstly, the rules recognise that certain industries accustomed to high levels of protection may find it difficult to withstand import competition when barriers are removed as a result of trade negotiations. In such situations, they permit countries to extend temporary protection to the affected industries to provide them breathing time in which to take steps to better their competitive position by improving their technology or rationalizing production. Such temporary protection measures taken by governments are called "safeguard actions".



Secondly, the rules permit governments to come to the rescue of the industries when foreign suppliers engage in unfair competition. Such unfair competition could result when foreign suppliers are able to charge lower prices because of the subsidies they are receiving from their government or because they are dumping goods.



Under the rules, however, the goods are treated as being dumped only if the price charged by foreign suppliers for the product in the export market is lower than the price they charge for sale in their domestic market. It is open to a country to levy anti-dumping duties on goods that are being so dumped to offset the element of dumping. Likewise, countervailing duties could be levied on goods that are receiving subsidies. Such duties should not, however, exceed the margin of dumping or the amount of subsidy by which the product has benefited.



The rules lay down two conditions which have to be satisfied before a country can take safeguard actions or levy anti-dumping or countervailing duties. Firstly, before taking such measures, it is essential for the importing country to establish, through investigations carried out at national level, that increased imports are causing injury to the domestic industry. Secondly, governments can ordinarily initiate such investigations, only if a petition is submitted by or on behalf of the domestic industry requesting such contingency protection measures.