                         AGREEMENT ON SAFEGUARDS


Members,

      Having in mind the overall objective of the Members to improve and 
strengthen the international trading system based on the GATT 1994;

      Recognizing the need to clarify and reinforce the disciplines of the 
GATT 1994, and specifically those of its Article XIX (Emergency Action on 
Imports of Particular Products), to re-establish multilateral control over 
safeguards and eliminate measures that escape such control;

      Recognizing the importance of structural adjustment and the need to 
enhance rather than limit competition in international markets;  and

      Recognizing further that, for these purposes, a comprehensive 
agreement, applicable to all Members and based on the basic principles of 
the GATT 1994, is called for;                     

      Hereby agree as follows:


                                SECTION I

                                 General


1.    This Agreement establishes rules for the application of safeguard 
measures which shall be understood to mean those measures provided for in 
Article XIX of the GATT 1994.


                               SECTION II

                               Conditions


2.    A Member[1] may apply a safeguard measure to a product only if that 
Member has determined, pursuant to the provisions set out below, that such 
product is being imported into its territory in such increased quantities, 
absolute or relative to domestic production, and under such conditions as to 
cause or threaten to cause serious injury to the domestic industry that 
produces like or directly competitive products.

3.    (a)  A Member may apply a safeguard measure only following an 
           investigation by the competent authorities of that Member 
           pursuant to procedures previously established and made public in 
           consonance with Article X of the GATT 1994.  This investigation 
           shall include reasonable public notice to all interested parties 
           and public hearings or other appropriate means in which 
           importers, exporters and other interested parties could present 
           evidence and their views, including the opportunity to respond to 
           the presentations of other parties and to submit their views, 
           inter alia, as to whether or not the application of a safeguard 
           measure would be in the public interest.  The competent 
           authorities shall publish a report setting forth their findings 
           and reasoned conclusions reached on all pertinent issues of fact 
           and law.

      (b)  Any information which is by nature confidential or which is 
           provided on a confidential basis shall, upon cause being shown, 
           be treated as such by the competent authorities.  Such 
           information shall not be disclosed without permission of the 
           party submitting it.  Parties providing confidential information 
           may be requested to furnish non-confidential summaries thereof 
           or, if such parties indicate that such information cannot be 
           summarized, the reasons why a summary cannot be provided.  
           However, if the competent authorities find that a request for 
           confidentiality is not warranted and if the party concerned is 
           either unwilling to make the information public or to authorize 
           its disclosure in generalized or summary form, the authorities 
           would be free to disregard such information unless it can be 
           demonstrated to their satisfaction from appropriate sources that 
           the information is correct.

4.    In critical circumstances where delay would cause damage which it 
would be difficult to repair, a provisional safeguard measure may be taken 
pursuant to a preliminary determination that there is clear evidence that 
increased imports have caused or are threatening to cause serious injury.  
The duration of the provisional measure shall not exceed 200 days, during 
which period the pertinent requirements of this Section and Section VII 
shall be met.  Such measures should take the form of tariff increases to be 
promptly refunded if the subsequent investigation referred to in paragraph 7 
below does not determine that increased imports have caused or threatened to 
cause serious injury to a domestic industry.  The duration of any such 
provisional measure shall be counted as a part of the initial period and any 
extension referred to in paragraphs 10, 11 and 12 below.

5.    Safeguard measures shall be applied to a product being imported 
irrespective of its source.

6.    For the purposes of this Agreement:

      (a)  serious injury shall be understood to mean a significant overall 
           impairment in the position of a domestic industry;

      (b)  threat of serious injury shall be understood to mean serious 
           injury that is clearly imminent, in accordance with the 
           provisions of paragraph 7 below.  A determination of the 
           existence of a threat of serious injury shall be based on facts 
           and not merely on allegation, conjecture or remote possibility;  
           and

      (c)  in determining injury or threat thereof, a domestic industry 
           shall be understood to mean the producers as a whole of the like 
           or directly competitive products operating within the territory 
           of a Member, or those whose collective output of the like or 
           directly competitive products constitutes a major proportion of 
           the total domestic production of those products.

7.    (a)  In the investigation to determine whether increased imports have 
           caused or are threatening to cause serious injury to a domestic 
           industry under the terms of this Agreement, the competent 
           authorities shall evaluate all relevant factors of an objective 
           and quantifiable nature having a bearing on the situation of that 
           industry, in particular, the rate and amount of the increase in 
           imports of the product concerned in absolute and relative terms, 
           the share of the domestic market taken by increased imports, 
           changes in the level of sales, production, productivity, capacity 
           utilization, profits  and losses, and employment.

      (b)  The determination referred to in sub-paragraph 7(a) shall not be 
           made unless this investigation demonstrates, on the basis of 
           objective evidence, the existence of the causal link between 
           increased imports of the product concerned and serious injury or 
           threat thereof.  When factors other than increased imports are 
           causing injury to the domestic industry at the same time, such 
           injury shall not be attributed to increased imports.

      (c)  The competent authorities shall publish promptly, in accordance 
           with the provisions of paragraph 3 above, a detailed analysis of 
           the case under investigation as well as a demonstration of the 
           relevance of the factors examined.

8.    Safeguard measures shall be applied only to the extent as may be 
necessary to prevent or remedy serious injury and to facilitate adjustment.  
If a quantitative restriction is used, such a measure shall not reduce the 
quantity of imports below the level of a recent period which shall be the 
average of imports in the last three representative years for which 
statistics are available, unless clear justification is given that a 
different level is necessary to prevent or remedy serious injury.  Members 
should choose measures most suitable for the achievement of these 
objectives.

9.    (a)  In cases in which a quota is allocated among supplying countries, 
           the Member applying the restrictions may seek agreement with 
           respect to the allocation of shares in the quota with all other 
           Members having a substantial interest in supplying the product 
           concerned.  In cases in which this method is not reasonably 
           practicable, the Member concerned shall allot to Members having a 
           substantial interest in supplying the product shares based upon 
           the proportions, supplied by such Members during a previous 
           representative period, of the total quantity or value of imports 
           of the product, due account being taken of any special factors 
           which may have affected or may be affecting the trade in the 
           product.

      (b)  A Member may depart from the provisions in (a) above provided 
           that consultations under paragraph 27 are conducted under the 
           auspices of the Committee on Safeguards established in paragraph 
           36 of this Agreement and that clear demonstration is provided to 
           the Committee that (i) imports from certain Members have 
           increased in disproportionate percentage in relation to the total 
           increase of imports of the product concerned in the 
           representative period, (ii) the reasons for the departure from 
           the provisions in (a) above are justified, and (iii) the 
           conditions of such departure are equitable to all suppliers of 
           the product concerned.  The duration of any such measure shall 
           not be extended beyond the initial period under paragraph 10 
           below.  The departure referred to above shall not be permitted in 
           the case of threat of serious injury.

10.   Safeguard measures shall be applied only for a period of time as may 
be necessary to prevent or remedy serious injury and to facilitate 
adjustment.  The period shall not exceed four years, unless it is extended 
under paragraph 11 below.

11.   The period mentioned in paragraph 10 above may be extended provided 
that the competent authorities of the importing Member have determined, in 
conformity with the procedures set out in this Section, that  the safeguard 
measure continues to be necessary to prevent or remedy serious injury;  that 
there is evidence that the industry is adjusting;  and provided that the 
pertinent provisions of Sections III and VII below are observed.

12.   The total period of application of a safeguard measure including the 
period of application of any provisional measure, the period of initial 
application and any extension thereof, shall not exceed eight years.

13.   In order to facilitate adjustment, if the expected duration of a 
safeguard measure as notified under the provisions of paragraph 25 is over 
one year, it shall be progressively liberalized at regular intervals during 
the period of application.  If the duration of the measure exceeds three 
years, the Member applying such a measure shall review the situation not 
later than the mid-term of the measure and, if appropriate, withdraw it or 
increase the pace of liberalization.  A measure extended under paragraph 11 
above shall not be more restrictive than it was at the end of the initial 
period, and should continue to be liberalized.

14.   No safeguard measure shall be applied again to the import of a product 
which has been subject to such a measure, taken after the date of entry into 
force of the Agreement Establishing the MTO, for a period of time equal to 
that during which such measure had been previously applied, provided that 
the period of non-application is at least two years.

15.   Notwithstanding the provisions of paragraph 14 above, a safeguard 
measure with a duration of 180 days or less may be applied again to the 
import of a product if:

      (a)  at least one year has elapsed since the date of introduction of a 
           safeguard measure on the import of that product;  and

      (b)  such a safeguard measure has not been applied on the same product 
           more than twice in the five-year period immediately preceding the 
           date of introduction of the measure.


                               SECTION III

               Level of concessions and other obligations


16.   A Member proposing to apply a safeguard measure or seeking an 
extension of a safeguard measure shall endeavour to maintain a substantially 
equivalent level of concessions and other obligations to that existing 
between it and the exporting Members which would be affected by such a 
measure under the GATT 1994, in accordance with the provisions of paragraph 
27 below.  To achieve this objective, the Members concerned may agree on any 
adequate means of trade compensation for the adverse effects of the measure 
on their trade.

17.   If no agreement is reached within 30 days in the consultations under 
paragraph 27 below, then the affected exporting Members are free, not later 
than 90 days after the measure is applied, to suspend, upon the expiration 
of 30 days from the day on which written notice of such suspension is 
received by the Council for Trade in Goods, the application of substantially 
equivalent concessions or other obligations under the GATT 1994, to the 
trade of the Member applying the safeguard measure, the suspension of which 
the Council for Trade in Goods does not disapprove.

18.   The right of suspension referred to in paragraph 17 above shall not be 
exercised for the first three years that a safeguard measure is in effect, 
provided that the safeguard measure has been taken as a result of an 
absolute increase in imports and that such a measure conforms to the 
provisions of this Agreement.


                               SECTION IV

                       Developing country members


19.   Safeguard measures shall not be applied against a product originating 
in a developing country Member as long as its share of imports of the 
product concerned in the importing Member does not exceed 3 per cent, 
provided that, developing country Members with less than 3 per cent import 
share collectively account for not more than 9 per cent of total imports of 
the product concerned.[2]

20.    A developing country Member shall have the right to extend the period 
of application of a safeguard measure for a period of up to two years beyond 
the maximum period provided for in paragraph 12 above.  Notwithstanding the 
provisions of paragraph 14 above, a developing country Member shall have the 
right to apply a safeguard measure again to the import of a product which 
has been subject to such a measure, taken after the date of entry into force 
of the Agreement Establishing the MTO, after a period of time equal to half 
that during which such a measure has been previously applied, provided that 
the period of non-application is at least two years.


                                SECTION V

                    Pre-existing Article XIX measures


21.   Members shall terminate all safeguard measures taken pursuant to 
Article XIX of the GATT 1947 that were in existence at the date of entry 
into force of the Agreement Establishing the MTO not later than eight years 
after the date on which they were first applied or five years after the date 
of  entry into force of the Agreement Establishing the MTO, whichever comes 
later.


                               SECTION VI

             Prohibition and elimination of certain measures


22.   (a)  A Member shall not take or seek any emergency action on imports 
           of particular products as set forth in Article XIX of the GATT 
           1994 unless such action conforms with the provisions of that 
           Article applied in accordance with this Agreement.  

      (b)  Furthermore, a Member shall not seek, take or maintain any 
           voluntary export restraints, orderly marketing arrangements or 
           any other similar measures on the export or the import 
           side.[3],[4]  These include actions taken by a single Member as 
           well as actions under agreements, arrangements and understandings 
           entered into by two or more Members.  Any such measure in effect 
           at the time of entry into force of the Agreement Establishing the 
           MTO shall be brought into conformity with this Agreement or 
           phased out in accordance with paragraph 23 below.

      (c)  This Agreement does not apply to measures sought, taken or 
           maintained by a Member pursuant to provisions of the GATT 1994 
           other than Article XIX, and Multilateral Trade Agreements in 
           Annex 1A other than this Agreement, or pursuant to protocols and 
           agreements or arrangements concluded within the framework of the 
           GATT 1994.

23.   The phasing out of measures referred to in paragraph 22(b) above shall 
be carried out according to timetables to be presented to the Committee on 
Safeguards by the Members concerned not later than 180 days after the date 
of entry into force of the Agreement Establishing the MTO.  These timetables 
shall provide for all measures referred to in paragraph 22 above to be 
phased out or brought into conformity with this Agreement within a period 
not exceeding four years after the date of entry into force of the Agreement 
Establishing the MTO, subject to not more than one specific measure per 
importing Member[5], the duration of which shall not extend beyond December 
31, 1999.  Any such exception must be mutually agreed between the Members 
directly concerned and notified to the Committee on Safeguards for its 
review and acceptance within 90 days of the coming into force of the 
Agreement Establishing the MTO.  The Annex to this Agreement indicates a 
measure which has been agreed as falling under this exception.

24.   Members shall not encourage or support the adoption or maintenance by 
public and private enterprises of non-governmental measures equivalent to 
those referred to in paragraph 22 above.


                               SECTION VII

                      Notification and consultation


25.   A Member shall immediately notify the Committee on Safeguards upon:

      (a)  initiating an investigatory process relating to serious injury or 
           threat thereof and the reasons for it;

      (b)  making a finding of serious injury or threat thereof caused by 
           increased imports;  and

      (c)  taking a decision to apply or extend a safeguard measure.

26.   In making the notifications referred to in sub-paragraphs 25(b) and 
(c) above, the Member proposing to apply or extend a safeguard measure shall 
provide the Committee on Safeguards with all pertinent information, which 
shall include evidence of serious injury or threat thereof caused by 
increased imports, precise description of the product involved and the 
proposed measure, proposed date of introduction, expected duration and 
timetable for progressive liberalization.  In the case of an extension of a 
measure, evidence that the industry concerned is adjusting shall also be 
provided.  The Council for Trade in Goods or the Committee on Safeguards may 
request such additional information as they may consider necessary from the 
Member proposing to apply or extend the measure.

27.   A Member  proposing to apply or extend a safeguard measure shall 
provide adequate opportunity for prior consultations with those Members 
having a substantial interest as exporters of the product concerned, with a 
view to, inter alia, reviewing the information provided under paragraph 26 
above, exchanging views on the measure and reaching an understanding on ways 
to achieve the objective set out in Paragraph 16 above.

28.   A Member shall make a notification before taking a provisional 
safeguard measure referred to in paragraph 4 above.  Consultations shall be 
initiated immediately after the measure is taken.

29.   The results of the consultations referred to in this Section, as well 
as the results of mid-term reviews referred to in paragraph 13, any form of 
compensation referred to in paragraph 16, and proposed suspensions of 
concessions and other obligations referred to in paragraph 17, shall be 
notified immediately to the Council for Trade in Goods by the Members 
concerned.

30.   Members shall notify promptly the Committee on Safeguards of their 
laws, regulations and administrative procedures relating to safeguard 
measures as well as any modifications made to them.

31.   Members maintaining measures described in paragraphs 21 and 22 above 
which exist at the date on which the Agreement Establishing the MTO enters 
into force shall notify such measures to the Committee on Safeguards, not 
later than 60 days after the entry into force of the Agreement Establishing 
the MTO.

32.   Any Member may notify the Committee on Safeguards of all laws, 
regulations, administrative procedures and any measures or actions dealt 
with in this Agreement that have not been notified by other Members that are 
required by this Agreement to make such notifications.

33.   Any Member may notify the Committee on Safeguards of any 
non-governmental measures referred to in paragraph 24 above.

34.   All notifications to the Council for Trade in Goods referred to in 
this Agreement shall normally be made through the Committee on Safeguards.

35.   The provisions on notification in this Agreement shall not require any 
Member to disclose confidential information the disclosure of which would 
impede law enforcement or otherwise be contrary to the public interest or 
would prejudice the legitimate commercial interests of particular 
enterprises, public or private.


                              SECTION VIII

                              Surveillance


36.   There shall be a Committee on Safeguards under the authority of the 
Council for Trade in Goods, which shall be open to the participation of any 
Member indicating its wish to serve on it.  The Committee will have the 
following functions:

      (a)  to monitor, and report annually to the Council for Trade in Goods 
           on, the general implementation of this Agreement and make 
           recommendations towards its improvement;

      (b)  to find, upon request of an affected Member, whether or not the 
           procedural requirements of this Agreement have been complied with 
           in connection with a safeguard measure, and report its findings 
           to the Council for Trade in Goods;

      (c)  to assist Members, if they so request, in their consultations 
           under the provisions of this Agreement;

      (d)  to examine measures covered by paragraphs 21 and 22, monitor the 
           phase-out of such measures and report as appropriate to the 
           Council for Trade in Goods;

      (e)  to review, at the request of the Member taking a safeguard 
           measure, whether proposals to suspend concessions or other 
           obligations are "substantially equivalent", and report as 
           appropriate to the Council for Trade in Goods;

      (f)  to receive and review all notifications provided for in this 
           Agreement and report as appropriate to the Council for Trade in 
           Goods;  and

      (g)  to perform any other function connected with this Agreement that 
           the Council for Trade in Goods may determine.

37.   To assist the Committee in carrying out its surveillance function, the 
MTO Secretariat shall prepare annually a factual report on the operation of 
the Agreement based on notifications and other reliable information 
available to it.


                               SECTION IX

                           Dispute settlement


38.   The provisions of Articles XXII and XXIII of the GATT 1994 as 
elaborated and applied by the Understanding on Rules and Procedures 
Governing the Settlement of Disputes shall apply to consultations and the 
settlement of disputes arising under this Agreement.

                                  ANNEX

                  Exception Referred to in Paragraph 23




Members concerned      Product                Termination

EC/Japan               Passenger cars, off road vehicles, light commercial 
                       vehicles, light trucks (up to 5 tonnes), and the same 
                       vehicles in wholly knocked-down form (CKD sets).31 
                                              December, 1999


1. A customs union may apply a safeguard measure as a single unit or on 
behalf of a member state.  When a customs union applies a safeguard measure 
as a single unit, all the requirements for the determination of serious 
injury or threat thereof under this Agreement shall be based on the 
conditions existing in the customs union as a whole.  When a safeguard 
measure is applied on behalf of a member state,  all the requirements for 
the determination of serious injury or threat thereof shall be based on the 
conditions existing in that member state and the measure shall be limited to 
that member state.  Nothing in this Agreement prejudges the interpretation 
of the relationship between Article XIX and Article XXIV:8 of GATT 1994.

2. A Member shall immediately notify an action taken under paragraph 19 to 
the Committee on Safeguards.

3. An import quota applied as a safeguard measure in conformity with the 
relevant provisions of the GATT 1994 and this Agreement may, by mutual 
agreement, be administered by the exporting Member.

4. Examples of similar measures include export moderation, export-price or 
import-price monitoring systems, export or import surveillance, compulsory 
import cartels and discretionary export or import licensing schemes, any of 
which afford protection.

5. The only such exception to which the European Communities is entitled is 
indicated in the Annex to this Agreement.



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