SAFEGUARD AGREEMENT WITHOUT THE UNFORESEEN DEVELOPMENTS

-ASHISH JAIN AND PRATIK GIRIi

The Safeguard Agreement comes out of Article XIX of the GATT, 1994. The enthusiasts of
the International Trade Law take keen interest in the wording of the agreement as compared
to its source as some of the obligations, namely “unforeseen development” which formed part
of Article XIX are not part of the Safeguard Agreement. In Argentina — Footwear (EC), the
Appellate body interpreted the term ‘unforeseen developments’ to mean “the developments
which led to a product being imported in such increased quantities and under such conditions
as to cause or threaten to cause serious injury to domestic producers must have been
‘unexpected’”.ii One of the first cases which dealt with such conflict was Korea- Dairy
Productiii, in which the Panel hold that the emergency action under the Safeguard Agreement
does not require any explanation of ‘unforeseen development’ as it is explicitly ousted from
the agreementiv.However, the Appellate Body in the same case reversed the decision and held
that the conditions of the Article XIX:1 are still applicable and there is no conflict between
the Agreement and the Article. The purpose of this blog is to endorse the view taken by the
Panel Report which is garnering larger attention of the academicians all over the world.

From the view point of academicians:

Academicians have endorsed the view taken by the panel report in doing away with the
requirement of unforeseen circumstances listed in the Article XIX:1. In the support of the
above contention, the views of several authors providing insight on the relationship of the
Agreement on Safeguards and Article XIX under the new WTO safeguards regime is
pertinent. Professor Thiebaut Flory has opined that, Article XIX “functioned for many years
in a defective manner - moreover the Community has only triggered the safeguard clause
under Article XIX twenty times since the beginning of the 1980's. This very low number of
inquiries displays the defective nature of the functioning of the safeguard clause under
Article XIX of the General Agreement of 1947.”v

Regarding the outcome of the Uruguay Roundvi negotiations, Marco Bronckers notes that
“exporting interests have also lost on a couple of points in the agreement, for example: - the
triggering condition of injury no longer needs to be attributable to ‘unforeseen developments’
or to ‘GATT obligations.” In addition, Janet A. Nuzumvii, has noted the change from
Article XIX’s requirements that the Agreement on Safeguards does not require
“unforeseeable developments and of the effect of obligations incurred by a contracting party
under GATT including tariff concessions”viii

Finally, Edmond McGovern has expressed the view that “the requirements in
Article XIX:1(a) that the injury should occur “as a result of unforeseen developments and of
the effect of obligations incurred under this Agreement” were not repeated in the 1994
Agreementix because they were no longer of practical significance.”x Thus, learned
commentary on the matter in dispute leads to the conclusion that the “unforeseen
developments” condition required under the “defective” Article XIX does not apply under the
Agreement on Safeguards.

Conclusion:

The Panel further in Argentina — Footwear (EC) found that “the express omission of the
criterion of unforeseen developments in the [Agreement on Safeguards], (which otherwise
transposes, reflects and refines in great detail the essential conditions for the imposition of
safeguard measures provided for in Article XIX of GATT), must … have meaning”.xi

After the GATT Contracting Parties in Hatter’s Fur ruled very broadly to embrace virtually
almost every circumstance for the legal requirement of unforeseen development,xii this legal
element was considered to have no practical legal meaning.xiii It was also dropped out of the
textual languages of the WTO Safeguard Agreement during the Uruguay Round negotiation.

The Appellate Body apparently offers a reading that enables the requirement to be trivially
satisfied in every case—a member simply needs to show that it has incurred some obligations
with respect to the product in question. Accordingly it seems that the regulations on
safeguards would be better off in the absence of the requirement of ‘unforeseen
circumstances’ as it is both practically difficult to prove and very subjective. Since it was also
not included in latter texts, therefore it seems the most plausible option to bury the
requirement and refrain from invoking it.

i
3rd Year Students, National Law Institute University, Bhopal.
ii
Appellate Body Report, Argentina — Footwear (EC), para. 91. See also Appellate Body Report, Korea —
Dairy, para. 84.
iii
Panel Report- Definitive Safeguard Measure on Imports of Certain Dairy Products, DT/DS98R.
iv
Agreement on Safeguards.Agreement.
v
THE AGREEMENT ON SAFEGUARDS IN THE URUGUAY ROUND RESULTS, A EUROPEAN LAWYERS’ PERSPECTIVE
(European Interuniversity Press 1996), pp. 265-66. In support of his opinion, PROF. FLORY cites to an extensive
list of GATT/WTO publicists, including: T. FLORY, LE GATT, DRIOT INTERNATIONAL ET COMMERCE MONDIAL
(LGDJ, 1968); J. Jackson, WORLD TRADE AND THE LAW OF GATT (The Bobbs-Merrill Company, 1969); J.
Jackson, THE WORLD TRADING SYSTEM (MIT, 1989); M.C.E.J. Bronckers, SELECTIVE SAFEGUARD MEASURES
IN MULTILATERAL TRADE RELATIONS (Kluwer Law and Taxation, 1985); Edmond McGovern, INTERNATIONAL
TRADE REGULATION (Globefield Press, 1985), pp. 291-310.
vi
Uruguay Round, 8th round of multilateral trade negotiations.
vii
Marco C.E.J. Bronckers, VOLUNTARY EXPORT RESTRAINTS AND THE GATT AGREEMENT ON SAFEGUARDS, in
the Uruguay Round Results.
viii
THE AGREEMENT ON SAFEGUARDS, U.S. LAW LEADS REVITALIZATION OF THE ESCAPE CLAUSE, IN WORLD
TRADE ORGANIZATION, THE MULTILATERAL FRAMEWORK FOR THE 21ST CENTURY AND U.S. IMPLEMENTING
LEGISLATION (American Bar Association, 1996) p. 413.
ix
Appellate Body Report, Argentina — Footwear (EC), para. 91. See also Appellate Body Report, Korea —
Dairy, para. 84.
x
INTERNATIONAL TRADE REGULATION (Globefield Press, 1998 update) p. 10.21-2.
xi
Appellate Body Report, Argentina — Footwear (EC), para. 91. See also Appellate Body Report, Korea —
Dairy, para. 84.
xii
United States – Withdrawal of a tariff concession under Art. XIX (adopted on October 22, 1951; CP/106).
xiii
JOHN H. JACKSON, WORLD TRADE AND THE LAW OF GATT (1969), 553-574.