In general, safeguards are temporary import restrictions that provide an opportunity for domestic industries to adjust to increasing imports. Both the WTO Agreement on Safeguards and article XIX of the General Agreement on Tariffs and Trade establish general rules for the application of safeguard measures. Safeguard actions taken under the WTO usually apply to all imports of a product irrespective of source. Other multilateral and bilateral trade agreements also contain safeguard provisions. China’s WTO accession agreement is an example of such an agreement. Its provisions contain a transitional product-specific safeguard that permits WTO members, including the United States, to take measures to address disruptive import surges from China alone. Under the terms of China’s WTO accession agreement, members may use the China safeguard until 2013. In addition to the China safeguard, three other safeguards have been applied to imports from that country in the United States. First, a communist country safeguard applied to China prior to its WTO accession and still applies to import surges from other communist countries that are not WTO members. Second, Chinese imports are subject to a U.S. global safeguard that applies to all WTO members. Third, a textile safeguard provided for in China’s WTO accession agreement covers textile and apparel imports from China. In the United States, the China safeguard is implemented under section 421 of the Trade Act of 1974, as amended, which Congress enacted as part of the legislation authorizing the President to grant China permanent normal trade relations status. Under section 421, U.S. firms may petition the government to apply a China safeguard. The section establishes a three-step process to consider China safeguard petitions. This three-step process involves ITC, USTR, and the President, and it results in determinations about whether import surges from China have caused market disruption and whether a remedy is in the national economic interest or, in extraordinary circumstances, would cause serious harm to national security. The entire process takes approximately 150 days (see fig. 1). The China safeguard was modeled on the communist country safeguard, which applied to China before it became a WTO member. ITC determination: ITC informs both the President and USTR of its determination. If affirmative, USTR requests consultations with the Chinese within 5 days. U.S. producers and certain other entities may file petitions to initiate China safeguard investigations with ITC. These include trade associations, firms, certified or recognized unions, or groups of workers that represent an industry. The President, USTR, the Senate Committee on Finance, and the House of Representatives’ Committee on Ways and Means can also request investigations. The petition must include certain information supporting a claim that imports from China are causing market disruption to an industry. Petitions must include, among other things, the following: product description, import data, domestic production data, and data showing injury. Petitions must also include information on all known producers in China and the type of import relief sought. ITC determines whether imports from China are causing market disruption to U.S. producers and, if so, recommends a remedy to address it. Upon receiving a petition, ITC initiates an investigation by publishing a notice in the Federal Register and holding public hearings to afford interested parties the opportunity to present information. ITC receives information on both market disruption and potential remedies from parties through written submission and oral testimony. ITC has 60 days to determine whether the imports from China are causing–or threatening to cause–market disruption to domestic producers. More specifically, ITC must determine whether imports from China are entering the United States in “such increased quantities or under such conditions as to cause or threaten to cause market disruption” to domestic producers. According to section 421, to determine that market disruption exists ITC must make the following three findings: Imports of the subject product from China are increasing rapidly, either absolutely or relatively. The domestic industry is materially injured or threatened with material injury. Such rapidly increasing imports are a significant cause of the material injury or threat of material injury. If a majority of ITC commissioners determine that market disruption does not exist, the case ends. After an affirmative determination, ITC must propose a remedy. This could include the imposition of a duty, or an additional duty, or another import restriction (such as a quota) necessary to prevent or remedy the market disruption. Within 20 days after making a determination of market disruption, ITC must transmit a report to the President and USTR. The ITC report must include the determination, the reasons for it, recommendations of proposed remedies, and any dissenting or separate views of commissioners. The report must also describe the short- and long-term effects that recommended remedies are likely to have on the petitioning domestic industry, other domestic industries, and consumers. In addition, the report must describe the short- and long-term effects of not taking the recommended action on the petitioning domestic industry, its workers, the communities where production facilities of the industry are located, and on other domestic industries. If ITC renders an affirmative determination, USTR undertakes two parallel efforts. First, USTR consults with China about ITC’s finding and seeks to reach an agreement that would prevent or remedy the market disruption. If the U.S. and Chinese governments do not reach agreement after 60 days (or if the President determines that an agreement reached is not addressing the market disruption), the United States may then apply a safeguard. Concurrently, USTR obtains and evaluates information from interested parties on the appropriateness of ITC’s or any other proposed remedy and makes a recommendation to the President. Within 20 days after receiving the ITC report, USTR issues a Federal Register notice to solicit comments from the public (e.g., importers and consumers). USTR must hold a public hearing if requested to do so. USTR evaluates the information it receives and consults with the other agencies of the Trade Policy Staff Committee (TPSC). Within 55 days after receiving the ITC report, USTR must make a recommendation to the President about what action, if any, to take to prevent or remedy market disruption. Under section 421 the President makes the final decision on the provision of import relief. Within 15 days after receiving a USTR recommendation, the President must decide whether and to what extent to provide relief. Section 421 states: “the President shall provide import relief… unless the President determines that provision of such relief is not in the national economic interest of the United States or, in extraordinary cases, that the taking of action… would cause serious harm to the national security of the United States.” Although the law does not define “national economic interest,” it further states that the President may determine “that providing import relief is not in the national economic interest of the United States only if finds that the taking of such action would have an adverse impact on the United States economy clearly greater than the benefits of such action.” Finally, section 421 requires the President to publish his decision and the reasons for it in the Federal Register. The China safeguard was modeled on the communist country safeguard. In fact, according to its legislative history, it was intended to replace the communist country safeguard for China since it would no longer apply once China became a member of the WTO. As shown in table 1 below, the safeguards share several important characteristics. Both safeguards are limited in scope to imports from particular countries; while the former is limited to imports from China, the latter is limited to imports from one or more communist countries. They also share similar criteria with regard to ITC market disruption determinations and identify the President as final decision maker on whether to provide relief. In addition, both safeguards have a 150-day determination period. In contrast, the China safeguard is significantly different from the global safeguard. The China safeguard is narrower in scope than the global safeguard; it can only be applied to imports from that one country, whereas the global safeguard generally must be applied to all foreign sources of a particular product. Also, the China safeguard’s market disruption standard is regarded to be easier to meet than the criteria for determining injury due to imports under the global safeguard. Furthermore, the standard for presidential action is also different under the global safeguard as it places more emphasis on assisting the domestic industries’ efforts to adjust to international competition (including worker adjustments), and sets forth a broader range of factors for the President to consider in determining whether to provide relief. Finally, the time frame for the China safeguard process is shorter than the global safeguard. Between August 2002 and September 2005, the United States considered five petitions from domestic producers to apply the China safeguard but it has not provided relief. ITC made negative determinations on two petitions and, in three other cases, found market disruption and recommended restricting imports to remedy the situation, ITC is expected to make a determination in a sixth case in early October 2005. In each of the three cases where ITC found market disruption, USTR formulated a presidential recommendation after evaluating various options. The President then decided not to provide any import relief. The success rate for China safeguard petitions is similar to communist country safeguard petitions, but differs from that of global safeguard petitions. U.S. firms have filed six petitions for China safeguard relief since section 421 was enacted (see fig. 2). The petitioners representing the domestic industry ranged from one firm in two cases to seven firms and a union in the most recent petition. The products involved are the following: pedestal actuators (for raising and lowering seats in mobility scooters), certain steel wire garment hangers, brake drums and rotors, ductile iron waterworks fittings (for municipal water systems), uncovered innersprings used in mattresses, and circular welded nonalloy steel pipes. ITC made negative determinations in two of five completed China safeguard cases. In cases brought by manufacturers of brake drums and rotors and mattress innersprings, ITC determined that Chinese imports had not disrupted the domestic market. More specifically, in the brake drums and rotors case, ITC found that although imports from China were increasing rapidly, the domestic industry was neither materially injured nor threatened with material injury.