RESTRICTED
WORLD TRADE S/WPGR/W/26
10February 1998
ORGANIZATION
(98-0482)
Original: English Working Party onGATS Rules
COMMUNICATION FROM HONG KONG, CHINA
Emergency Safeguard Measures:
Awayforward onthePossible Principles
Thefollowing communication iscirculated attherequest ofHong Kong, China toMembers
oftheWorking Party onGATS Rules
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Background
1. Thepurpose ofthispaper istosuggest some broad principles Members might wishtosee
included aspartofanEmergency Safeguard Measures (ESM) agreement ormechanism. Thepaper
does notseektopre-empt anydecision onwhether ornotanESM isnecessary. Nordoesitsuggest
thatwork should notbeundertaken inparallel toexamine theveryrealpractical problems therewould
beinintroducing anESM.
Broad Based Principles
2. Theideabehind thispaper isthatitshould bepossible toconsider, separately from theissue
ofwhether ornotMembers support anESM inGATS, many ofthebasic principles thatwould need
tobeincluded inanyESM. These principles aredrawn from existing WTO Agreements, noticeably
theGATT Safeguard Agreement. Theideasarealsotaken fromaprevious paper fortheWPonGATS
Rules submitted byHong Kong, China (HKC) andcirculated asS/WPGR/W/18 on16May1997.
3. Itissuggested thatthere are,atleast, ninekeyprinciples weshould discuss, assetoutbelow.
Wehavenoted inbrackets thelinkages weseebetween several oftheprinciples andthefourquestions
posed bytheChairman.
General Principles
(i) anESM should beapplied onanMFN basis;
(ii) anESM should represent theminimum measure necessary toadopt inorder totackle
theproblems arising from anemergency situation;
(iii) anESM should betime-bound andshould beremoved assoonascircumstances return
tonormal;S/WPGR/W/26
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(iv) there should besufficient advance notice toinform other Members oftheproposed
ESM action;
(v) AnyESM Agreement would besubject toArticle XXIII (dispute settlement);
Operational Principles
(vi) initiation ofanESM should bebased onobjective andwell-defined criteria. (Q.2-
under whatcircumstances);
(vii) themeasure tobetaken under theESM should beclearly specified (i.e.theremedial
action tobetaken). (Q.4-whatmeasures);
(viii) therelationship oftheproposed ESM tothepublic policy concern which itisseeking
toremedy should bespelt out.(Q.1 andQ.2-onwhose behalf andunder what
circumstances);
(ix) itshould beclearly shown thataproposed ESM willremedy theinjury identified.
(Q.1andQ.3-onwhose behalf andconcept ofinjury);
4. Asregards (i),thisis,itishoped, notamatter thatneeds further elaboration.
5. Asregards (ii),itwillbenecessary toensure thatanyESM isnotopentoabuse andonlydoes
theminimum necessary totackle theproblem. Deciding relevant reference points could however be
problematic, inviewofthefourmodes ofsupply and-arguably -thefaster rateofchange inherent
inmany services industries compared togoods. Thus reference totheaverage levelofemployment
/market penetration /imports etc.overtheprevious threeyears (asintheGATT Safeguard Agreement),
might notbeappropriate.
6. Asregards (iii),asaprinciple itseems clear theESM would needtobetimebound.
7. Asregards (iv),itwillbenecessary toestablish some detailed rules about advance notice of
thevarious keystages ofanESM action, including theneedtoafford adequate opportunity forprior
consultation withaffected parties. Consideration willalsoneedtobegiven totheideaofaprovisional
ESM. Butasaconcept theideaofsufficient advance notice appears sound.
8. Asregards (v),thattheESM besubject totheArticle XXIII should, itishoped, benotamatter
ofcontroversy.
9. Asregards (vi),while itmaybeverydifficult toidentify thecriteria insome oftheservices
areas, itseems onlyreasonable andlogical thatsuchshould beobjective andwelldefined .Itissuggested
thattheyneednotbestandard across theboard criteria (e.g.“a20%dropinprofits/sales/employment ”).
Butwhatever criteria arecited, theyshould beobjective andwelldefined.
10. Asregards (vii), itwillsurely benecessary tosetoutclearly whatmeasures areproposed to
counter theperceived problem. Itisonlythrough suchthat(other) Members oraPanel willbeable
togauge theappropriateness andbalance ofthemeasure.S/WPGR/W/26
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11. Asregards (viii), itissuggested thattheMember initiating theESM should spelloutclearly
whatthepublic policy concern itisseeking toaddress is.Thistypeofprinciple issuggested because
thenature ofanemergency situation inservices could beverydifferent from those encountered on
thegoods side. Emergencies ingoods arelimited toaproduct anddomestic industry producing like
ordirectly competitive products. Inservices theposition maynotbesoclear cut.
12. Asregards(ix),giventhefourmodesofsupplyandthe,possibly,lessdirectrelationshipbetween
thecause andeffect inservices thaningoods, itissuggested thataMember initiating anESM should
berequired toshow thatthemeasure proposed willindeed remedy theproblem.
13. With theabove asthebasic principles, anyemergency safeguard agreement should beona
sound footing. Inaddition todiscussing theabove, wealsoneedtoconduct further discussions onthe
detailed operation oftheprinciples.
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