India has recently sought consultations with the United States under the World Trade Organisation’s (WTO’s) safeguard agreement. The trigger for these consultations is the decision by America to increase import duties on derivatives of steel and aluminium products. This action holds significant implications for the global trade landscape and the way India and the US interact with each other economically.
Exploring the WTO’s Safeguard Agreement
The Safeguard Agreement, also known as the “SG Agreement,” provides the guidelines for implementing safeguard measures according to Article XIX of GATT (General Agreement on Tariffs and Trade) 1994. These safeguard measures are essentially “emergency” actions directed towards increased imports of specific products, especially when these imports threaten or have potentially caused serious injury to the domestic industry of the member who is importing.
According to this agreement, a WTO member country that plans to enforce a safeguard measure must offer adequate opportunities for prior consultations to those members having a substantial interest as exporters of the product in question. This provision allows for discussions on the intended measure.
India’s Position
India interprets this action by the US as a safeguard measure under the provision of the GATT 1994 and the Safeguard Agreement. Subsequenly, India has pursued consultations with the United States under the aegis of the WTO’s safeguard agreement.
India seeks to exercise its right to consultation on the specific details of the measures and ascertain suitable trade compensation with the US. As stated by the WTO, India retains the right to bring additional issues to light and present further factual and legal arguments.
It is important to note that this process does not prejudice any other remedies available under the understanding of rules and procedures governing the settlement of disputes and covered agreements during consultations. India is currently waiting for a prompt response from the US regarding a mutually convenient date and venue for these consultations.
Unraveling the General Agreement on Tariffs and Trade
GATT originated from the Bretton Woods Conference in 1944, which laid the groundwork for the financial system post-World War II and established two significant bodies, the International Monetary Fund (IMF) and the World Bank.
The GATT, signed by 23 countries in Geneva in 1947, took effect from January 1, 1948. Its primary objectives were to phase out the use of import quotas and reduce tariffs on merchandise trade. Before the establishment of the WTO in 1995, the GATT was the sole multilateral instrument governing international trade.
Provisions of the GATT 1947 were incorporated into the GATT of 1994, which is part of the WTO formation agreement. The Uruguay Round of GATT, conducted from 1987 to 1994, culminated in the Marrakesh Agreement that gave birth to the WTO.
