RESTRICTED
WORLD TRADE S/WPGR/W/15/Add.2
29April 1997
ORGANIZATION
(97-1891)
Original: English Working Party onGATS Rules
COMMUNICATION FROM INDIA
Response tothequestions relating toanemergency safeguard mechanism inGATS
Thefollowing communication isbeing circulated attherequest ofIndia toMembers ofthe
Working Party onGATS Rules.
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1. What isthejustification andpurpose ofanemergency mechanism under GATS?
Since thenature oftradeinservices isinmany waysdifferent fromthenature oftradeingoods,
itwould appear logical tostatethatthenature ofanEmergency Safeguard Mechanism (ESM)
inGATS would bedifferent from theemergency safeguard provision inGATT. TheESM
inGATS maybeconceived ofasaprovision toaddress anemergency situation, which may
ariseintheeconomy oftheMember, which makes itnecessary forthatMember tohaveto
temporarily modify orwithdraw anycommitment initsSchedule. Themain objective ofthe
ESM would therefore betoprovide remedy incaseofsuchanunforeseen situation.
Theexisting “safeguard ”mechanisms inGATS, suchasthose contained inArticle XIIand
Article XIV, andevenArticle XIVbis,address situations suchasrestrictions tosafeguard
thebalance ofpayments, general exceptions orsecurity exceptions. Availability ofthese
“safeguard ”mechanisms isdulytaken intoaccount bytheMember when scheduling its
commitments initsSchedule. However, theprovisions ofArticle XII,Article XIVandArticle
XIVbisofGATS arenotsufficient todealwithunexpected adverse developments orunforeseen
emergency situations arising fromtheMember ’sobligations under theGATS. Theprovisions
ofArticle XXIappear tobemore applicable tonon-emergency measures, especially sincethese
apply tomodification orwithdrawal ofcommitments threeyears aftersuchcommitments have
entered intoforce. Theavailability oftheESM asaprovision oftheGATS isalsolikely to
givefurther confidence totheMember countries toundertake further liberalisation commitments
under theGATS.
Thefocus oftheESM should bethespecific commitment intheSchedule oftheMember
invoking thesafeguard mechanism, rather thanthenature ofthecommitment related, for
example, totheconcept of“progressive liberalisation ”,itself. Thetemporary nature ofthe
ESM would make itdifferent innature from thelongtermnature ofthecommitment inthe
Schedule.
Theeconomic objective oftheESM inGATS would need tobeassessed inlight ofthe
emergency situation which hasanimpact onthecommitments intheSchedule oftheconcerned
Member.
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TheESM, while being available toallWTO Members, should havespecial provisions for
developing countries, since theareaoftrade inservices havebeenbrought under theambit
ofthemultilateraltradingsystemveryrecentlywiththeformationoftheWTO.Manydeveloping
countries donothaveappropriate infrastructural systems, including theavailability ofnecessary
technology, toaddress unforeseen situations which maycause them toseektomodify or
withdraw temporarily anycommitments intheirSchedules.
Theexperience intheoperation ofthetradeinservices sector under theprovisions oftheGATS
andtheexperience intheoperation ofthetradeingoods sector under GATT provisions would
demonstrate thesignificant differences which areaccorded totherole,transactions andmarkets
inthese twospheres ofthemultilateral trading system.
2. What criteria might bebrought tobear indetermining when anemergency safeguard
measure maybejustified?
TheESM should beofatemporary nature, withaspecified maximum period ofduration, since
itisexpected toaddress anemergency situation, which byitsverydefinition would beofa
temporary nature. Criteria todetermine thejustification oftheESM would needtobeevolved
through analysis. Thisexercise would havetotakeintoaccount thefactthatthemeasure has
tobedirectly linked tothenature oftradeinservices, thespecific commitment being addressed,
andwould havetoalsotakeintoaccount thescope ofthecommitment andthemodes ofsupply
involved. TheESM should beapplied onMFN basis.
3. What form might asafeguard mechanism forservices take?
Theform oftheESM would belinked tothemodification orwithdrawal, onatemporary
basis, oftheconcerned commitment intheMember ’sSchedule. Itwould alsoberelated to
thescope ofthecommitment andthemodes ofsupply involved. There could bedifferent
mechanisms forthedifferent modes ofsupply. Itshould beapplied onanon-discriminatory
basis inallcircumstances. Itshould beavailable forinvocation in“critical circumstances ”.