The Law and Economics of Contingent Protection in the WTO

The Law and Economics of Contingent Protection in the WTO

Elgar International Economic Law series

Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters

In this important book, three of the leading authors in the field of international economic law discuss the law and economics of the three most frequently used contingent protection instruments: anti-dumping, countervailing measures, and safeguards. When discussing countervailing measures, the authors also discuss legal challenges against prohibited and/or actionable subsidies. The authors’ choice is mandated by the fact that the effects of a subsidy cannot always be confined to the market of the WTO Member wishing to react against it. Assuming there are effects outside its market, an injured WTO Member can challenge the scheme as such before a WTO Panel. Taking the three agreements for granted as a starting point, the book provides comprehensive discussion of both the original contracts, and the case law that has substantially contributed to the understanding of these agreements.

Chapter 15: The regulation of safeguards in the WTO

Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters

Subjects: economics and finance, international economics, law - academic, international economic law, trade law

Extract

14. The rationale for safeguards The GATT Article XIX safeguard provision was only invoked in 150 instances between 1947 and 1994. Many of these cases were lodged between 1975 and 1978, that is, just before the GATT Members fully realized the potential of the anti-dumping instrument, triggering the ‘anti-dumping boom’ of the 1980s and 1990s. This initial ‘unpopularity’ of the safeguard was mostly due to two features imposed by GATT Article XIX: a safeguard measure should be nondiscriminatory among trading partners, and it could be subjected to compensation to be granted to trading partners (and retaliation by them if there was a disagreement on the level of compensation between the country imposing a safeguard and its trading partners). The first condition was clearly putting any country initiating a safeguard at odds with the coalition of all the existing and potential exporters of the product concerned. The second condition was imposing an ex ante unknown price on the measure envisaged. None of these conditions were relevant in the case of ‘voluntary export restraints’ (VERs) and other ‘grey measures’ – the most used, though GATT-inconsistent, instruments of protection of the 1960s and 1970s. And, none of these conditions were required by anti-dumping procedures, the preferred instrument since the early 1980s. The Uruguay negotiators were very conscious of the substitutability between the various instruments of contingent protection. As a result, they tried to make more attractive the use of safeguard measures, in the hope of reducing the use of anti-dumping measures and ensuring the...

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