Safeguard Measures in World Trade

Safeguard Measures in World Trade

The Legal Analysis, Third Edition

Yong-Shik Lee

Safeguard Measures in World Trade tackles the controversial issue of restrictions on imports. Professor Yong-Shik Lee skillfully argues that Safeguards interfere substantially with the normal stream of trade, and their improper application undermines the objectives of the World Trade Organization (WTO).

Chapter 9: Remaining issues

Yong-Shik Lee

Subjects: law - academic, international economic law, trade law


Article 11 clarifies one of the most important objectives of the Agreement on Safeguards: the prohibition of gray-area measures. The definition of gray-area measures, historical background, economic inefficiency, inconsistencies with the GATT provisions, and their inherent unfairness have already been discussed in Chapter 2.3 above. This chapter provides a discussion of the current status of the prohibition of gray-area measures and presents cases of suspect gray-area measures. Article 11.1 of the SA prohibits all forms of gray-area measures. Under this provision, Members may not "seek, take or maintain any voluntary export restraints, orderly marketing arrangements or any other similar measures on the export or the import side"(Article 11.1(b)). Article 11.3 goes beyond the prohibition of all gray-area measures agreed between governments and requires Members not to "encourage or support the adoption or maintenance by public and private enterprises of non-government measures equivalent to those referred to in paragraph 1." The economic effect of any private market arrangement among large industries worldwide could be tantamount to the inter-governmental arrangements prohibited in Article 11.2. The provisions of Article 11 cannot directly prohibit the conduct of private parties, since the GATT/WTO rules regulate the conduct of Members and not of private citizens. Nevertheless, Article 11 prohibits any government endorsement or support of private arrangements that would equally distort trade. After the implementation of the SA, the proliferation of gray-area measures seems finally to have been inhibited.

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