Safeguards on trade

Date: 28/05/03

WORLD Trade Organization members are responsible for an "explosion" in use of the toughest form of trade protection weapon - with the EU leading the onslaught, according to a top economist.

A report by Cliff Stevenson, chief economist for US law firm Mayer, Brown, Rowe and Maw, found that 132 'safeguard actions' were logged during 2002 - up from just 53 in 2001 and only 26 in 2000.

The EU - with 21 cases targeting steel products - was the most voracious trade bloc, followed by Chile and Hungary, accounting for 19 each.

The US, which angered the world's trade community with its controversial decision in 2001 to launch duties against swathes of steel imports, did not launch a single safeguard measure last year.

Stevenson said the shift to safeguard measures - and their increased popularity among developing countries - is "a disturbing trend for the future".

However, on a "more optimistic note", he points out that the WTO's appellate panel has overruled every safeguard measure it has assessed.

Safeguard measures are far tougher - and more controversial - than traditional 'anti-dumping' duties.

Under WTO rules, safeguard measures, such as punitive duties, target all sources of imports of a product at the stroke of a pen, not just those from a particular supplier in one country.

They can be used only in cases where an industry faces "serious injury" from unfairly priced imports of a good, rather than just "material injury".