RESTRICTED
WORLD TRADE S/WPGR/W/15/Add.3
2May1997
ORGANIZATION(97-1944)
Working Party onGATS Rules
COMMUNICATION FROM POLAND
Response totheQuestions Relating toanEmergency Safeguard Mechanism inGATS
Thefollowing communication isbeing circulated attherequest ofPoland toMembers ofthe
Working Party onGATS Rules
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1. What isthejustification andpurpose ofanemergency mechanism under GATS?
a. Would anemergency safeguard forservices beintended todealwiththekindof
situation foreseen inArticle XIXofGATT --thatis,atemporary threat toadomestic
“industry ”arising from increased imports? Would ithaveanyother objective?
Anemergency safeguard forservices should beintended todealwiththekindof
situation foreseen inArticle XIXofGATT -thatis,atemporary threat toadomestic
"industry" arising from increased imports.
b. Areexisting“safeguard”mechanismsinGATS,notablythosecontainedinArticleXII
andArticle XIV, sufficient toaddress anydifficulties governments might encounter
asaconsequence oftheirGATS commitments? Similarly, doesArticle XXIprovide
anadequate vehicle forreversing ormodifying scheduled commitments intheevent
ofunanticipated difficulties?
Theexisting provisions inGATS, notably those contained inArticles XIIandXIV
donotoffer anadequate waytodealwithadverse circumstances thatmight ariseas
aresult ofamember 'sspecific commitments. Inparticular Article XII(3)states that
restrictions tosafeguard thebalance ofpayments shallnotbeadopted ormaintained
forthepurpose ofprotecting aparticular service sector. Article XIVdoesnotcontain
anyprovisions referring tothesituation foreseen inArticle XIXofGATT, thatisa
temporary threat toadomestic industry arising fromincreased imports. Article XXI
does notseem toprovide anadequate mechanism forreversing ormodifying
commitments intheevent ofunanticipated difficulties. Themeasures under thisarticle
mayonlybetaken when some conditions arefulfilled suchaswaiting period, prior
notification, compensatory adjustment.S/WPGR/W/15/Add.3
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c. DoesthenatureofcommitmentsundertakeninGATS--wherebyMembersmaychoose
whether toschedule asector, andmayalsocondition market access andnational
treatment with respect tocommitments thataremade --obviate theneed for
safeguards? Orwould itbemore appropriate tothink interms oftheideathatthe
existenceofasafeguardwouldallowgovernmentstobemoreforthcomingwithrespect
totheirscheduled commitments?
Itisnecessary todevelop anemergency safeguard mechanism inGATS inview to
achieve thehigher levelofspecific commitments andsupport progressive liberalisation
oftrade inservices.
d. What would betheeconomic objective ofasafeguard --toprotect production,
investors, oremployment? Would itprotect alldomestic production, oronlythat
partofproduction attributable tonational suppliers? Would itaimtoprotect
investment bynationals, oralldomestically based investments? What would bethe
objective ofallowing departures from national treatment under modes 3and4?Is
thedistinction between establishment rights perseandpost-establishment operations
relevant inrelation topossible safeguard measures under modes 3and4?
Theeconomic objective ofasafeguard should betoprotect domestic production
consisting ofnational services suppliers. Service providers owned orcontrolled by
foreignpersonsestablishedinaMember'sterritoryareconsideredtobeaforeignservice
suppliers according totheprovision ofArticle XXVIII ofGATS. Thedistinction
between establishment rights perseandpost-establishment operations could berelevant
inrelation topossible safeguard measures under modes 3and4.AMember could
useasafeguard measure solely inrespect tonewentrants i.e.itcould introduce
limitations onmarket access inmode 3and4.
e. Would asafeguard mechanism needtocontemplate special provisions fordeveloping
countries ordoestheconcept ofprogressive liberalization offer adequate leeway in
thisrespect?
Asafeguard mechanism under GATS doesnotneedtocontemplate special provisions
fordeveloping countries.
f. Isthere anything intrinsic toservice transactions, suchasintangibility, simultaneity
ofproduction andconsumption, ortheneed forphysical proximity between the
producer andtheconsumer, which makes (some) services transactions different from
goods transaction inwaysthatmight influence arguments astothenecessity orutility
ofsafeguard measures inservices?
There isnothing intrinsic toservice transactions which makes (some) services
transactions different fromgoods transaction inways thatmight influence arguments
astothenecessity orutility ofsafeguard measures inservices.S/WPGR/W/15/Add.3
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g. Isanything intrinsic toservices markets, suchastheroleandimportance ofregulatory
regimes, standards andcertification requirements, which makes services markets
different from goods markets inways thatmight influence arguments astothe
necessity orutility ofsafeguards measures inservices?
There isnothing intrinsic toservices markets which makes services markets different
fromgoods markets inwaysthatmight influence arguments astothenecessity orutility
ofsafeguards measures inservices.
h. Isanything intrinsic totheroleofservices intheeconomy, suchastheirimportant
support andinfrastructure role,which makes services markets different fromgoods
markets inways thatmight influence arguments astothedesirability ofsafeguards
measures inservices?
Some service sectors, forexample financial services andcommunication services play
averyimportant roleintheeconomy. Furthermore these sectors seem tobevery
sensible toanyinjury. Therefore itisdesirable tobeauthorized toprevent orremedy
injury oranythreat ofinjury veryquickly. Forthispurpose safeguards measures are
verydesirable inthese sectors.
i. DoMembers maintain anyemergency safeguard measures innational legislation?
Ifso,what arethese measures andhowaretheyimplemented?
Poland doesnotmaintain anyemergency safeguard measures innational legislation.
2. What criteria might bebrought tobear indetermining when anemergency safeguard
measure maybejustified?
a. What, interms ofGATS, istheequivalent ofincreased imports under Article XIX
ofGATT? Inmode 1,thecross-border flowofservices maybesimilar totheimport
ofgoods, butthesituation isquite different under other modes. How should the
possibility ofasafeguard betriggered inthese circumstances?
Thetermincreased imports could relate tocross-border service transactions under
mode 1,effects ondomestic industry ofconsumption abroad under mode 2,an
investment flowinrespect tomode 3,themovement ofnatural persons inrespect to
mode 4.
b. How should serious injury bedetermined? Injury towhom orwhat?
Serious injury isdefined inArticle 4(1)oftheSafeguards Agreement. Thecriteria
described inthisArticle could betranslated intoaservices context. Theterm"serious
injury" could mean asignificant overall impairment intheposition ofadomestic
industry consisting ofnational service suppliers.
c. Whatstandardswouldberequiredtodeterminethatincreasedcompetitionfromforeign
sources caused injury tothenational industry?
Thecriteria described inArticle 4oftheSafeguard Agreement could inprinciple be
developed inaservices context withtheappropriate change.S/WPGR/W/15/Add.3
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d. Howwould thenational industry bedefined forthepurpose ofdetermining injury?
Forthepurpose ofdetermining injury thenational industry shallconsist ofnational
service suppliers.
e. Should alinkbeestablished between thenature ofaspecific commitment ina
particular sector, including inrelation tolimitations onmarket access andnational
treatment, andtheavailability ofasafeguard measure? Inother words, should the
availability ornature ofasafeguard berestricted where limitations have been
inscribed?
Theavailability andnature ofasafeguard should depend upon thenature ofspecific
commitments.
f. What measurement andidentification problems ariseinservices thatmight complicate
thedevelopment ofasafeguard instrument, andhowshould theybedealt with?
There arecertain measurement andidentification problems arising inservices that
complicate thedevelopment ofasafeguard instrument, which have already been
discussed inthedocuments circulated among themembers oftheWorking Party on
GATS Rules. Some ofthemare:statistical problems, definitional problems, practical
difficulties. Further work isnecessary tofindhowtodealwiththese problems.
3. What form might asafeguard mechanism forservices take?
a. What typeofmeasure should beapplied? Would taxes, foreign exchange restrictions,
other quantitative limitations, orregulatory restraints besuitable assafeguard
measures?
Measures suchastaxes, foreign exchange restrictions, other quantitative limitations,
orregulatory restraints canbesuitable asasafeguard measures. However, itis
necessary todevelop theprocedure forapplication ofthese measures which canbe
inprinciple based onprovisions oftherelevant articles ofAgreement onSafeguards.
b. What would betheimplications ofdifferent modes ofsupply forthekindofmeasures
employed?
Seeanswer tothequestion c.
c. Would there becircumstances inwhich theapplication ofasafeguard measure in
respect ofonemode ofsupply would provoke ademand forcomparable measures
inrelation toother modes atthesame time?
There could becertain circumstances inwhich theapplication ofasafeguard measure
inrespect ofonemode ofsupply would provoke ademand forcomparable measures
inrelation toother modes. Itwilldepend ontheservice tobesupplied andthetype
ofcommitment made bythemember taking thesafeguard measure. Therefore under
certain circumstances safeguards tobeaffective shallcover allmodes ofsupply.S/WPGR/W/15/Add.3
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d. Should safeguards beapplied onanon-discriminatory basis inallcircumstances?
Safeguards should beapplied inprinciple onanon-discriminatory basisexcept thecase
where safeguards areapplied byamember which isaparty toeconomic integration
recognized byArticle VofGATS.
e. Howquickly would itbepossible foraMember totakeasafeguard measure? Would
thenotion of"critical circumstances," asdeveloped intheAgreement onSafeguards,
apply intheservices area?
Thenotion of"critical circumstances", asdeveloped intheAgreement onSafeguards,
should beapplied intheservices area.
f. What should betheduration ofanysafeguard measures adopted?
Anysafeguard measure shall beapplied onlyforsuch period oftimeasmaybe
necessary toprevent orremedy serious injury. Thecriteria described intheSafeguard
Agreement could inprinciple bedeveloped inaservices context withtheappropriate
changes.
g. Would safeguard measures bemade degressive during theperiod oftheirapplication?
Safeguard measures should bemade degressive during theperiod oftheirapplication.
h. Would aMember taking asafeguard action berequired alsotoadopt adjustment
measures?
Itisnecessary todetermine thecases where amember taking asafeguard action is
required toadopt adjustment measures aswellasthekindoftheseadjustment measures.
i. Would theapplication ofsafeguard measures beaccompanied bycompensatory
adjustments intheschedule oftheMember taking themeasure?
Seetheanswer toquestion h.