RESTRICTED
WORLD TRADE S/WPGR/W/17
13March 1997
ORGANIZATION
(97-1115)
Original: English Working Party onGATS Rules
COMMUNICATION FROM THE UNITED STATES
Emergency Safeguards
Thefollowing communication iscirculated attherequest oftheUnited States toMembers of
theWorking Party onGATS Rules.
______________
Thepurpose ofsafeguards provisions intrade agreements istofacilitate liberalization. Such
provisions areincluded intrade agreements toacknowledge thatasaresult ofundertaking trade
liberalization, countries mayencounter temporary, unforeseen domestic adjustment difficulties. The
assumption isthatthese difficulties stem from, orareatleast worsened by,theliberalization
commitments.
Oneofthepractical difficulties inassessing theneedforasafeguards provision stems from
theinterpretation Members givetothedegree ofliberalization achieved intheUruguay Round, inwhich
commitments largely bound thestatus quo.Thus, thequestion iswhether asafeguards provision, similar
tothatintheGATT 1994, isneeded forfuture rounds, where theextent ofliberalization presumably
willbegreater. Theargument forasafeguards provision under theseconditions would bethatcountries
seeagreater riskassociated withacommitment thatrepresents theabandonment ofmore restrictive
practices. Asafeguards provision canbejustified largely bytheincentive itprovides tofacilitate a
greater measure oftrade liberalization andactasacounterweight totheuncertainties associated with
suchliberalization.
DiscussionintheWorkingParty,aswellasmostwrittensubmissionstodate,havedemonstrated
thedifficulty inadapting asafeguards provisions forgoods thatwould besuitable forallforms ofGATS
commitments.TheUnitedStatesbelievesthatthereexistimportantobstaclestoconstructingasafeguards
provision applicable toallscheduled commitments. These include conceptual difficulties --forexample,
definition of"like" services --andpractical difficulties --forexample, inadequacy ofstatistics forboth
"imports" anddomestic production. Unless these obstacles canbeovercome, attempting toinclude
such aprovision intheGATS mayundermine thespirit oftheagreement andtheintegrity of
commitments associated withit.
Ontheother hand, participants havenoted thatthenature ofscheduling thecommitments
themselves offers some scope fortailoring commitments totakeaccount ofsafeguards-type concerns.
Thischaracteristic ofGATS scheduling offers theopportunity toinclude asafeguards-type provision
inaMember 'sschedule.
./.S/WPGR/W/17
Page2
Analternative forresponding tothemandate inGATS Article Xtherefore might betodevelop
rules tobefollowed byMembers proposing toinclude safeguards-type provisions intheircountry
schedules. Such provisions would adhere tospecific rules. Forexample, these rules might address
issues suchas:
- inclusion inaschedule ofasafeguards-type provision inagiven sector mustbepaired
withacommitment toliberalization inthatsector
- adequate advance notice must begiven before invoking asafeguards-type provision
- useofsafeguards-type provisions mustbetemporary andwithaspecified maximum
period ofduration
- access toagiven safeguards-type provision mustbelimited --forexample, onceduring
thecourse ofaspecified period oftime--andmaynotbereinvoked during thespecified
period
- application ofasafeguards-type action provision must bedigressive
- application ofactions must beonanMFN basis
- objective, identifiable criteria must beusedastrigger forasafeguards-type action
- clear specification oftheaction tobetaken bymode andbysector orsub-sector
- where thesafeguards-type action involves temporary limits inmode 3,these limits
wouldnotallowfordivestmentorfortheremovalofexistinglicensesenjoyedbyforeign
services providers
- iftheagreed rules arefollowed, nopayment ofcompensation would berequired.