Australia-United States Free Trade Agreement - Guide to the Agreement
1. Purpose and Structure
The Chapter provides a mechanism for protecting industries in both Australia and the United States from injury from increased imports during the transition to free trade under the Agreement (the transitional bilateral safeguard). It also commits each Party to consider the exclusion from the application of global WTO safeguards imports from the other Party where those imports are not a substantial cause of the injury to the domestic industry.
The Chapter on trade remedies consists of 6 Articles.
2. Imposition of a Safeguard Measure (Article 9.1)
This Article allows each Party, during the transition period (see Section 3 for the definition of the transition period) to halt further reductions in customs duties (tariffs) for products from the other country and return the tariff rate to either:
- the rate that applies to the same good from all other countries (the 'most-favoured nation' rate) at the time of the decision;
- the rate that applied before the Agreement came into force; or
- in the case of horticultural goods, or any other good which could face a seasonal tariff, the level of duty that applied during the last corresponding season.
Where the products from the other country are being imported:
- in greatly increased quantities;
- as a result of the reduction of the tariff under this Agreement; and
- are causing or threatening serious injury to the domestic industry.
3. Conditions and Limitations (Article 9.2)
Such a safeguard can only be applied:
- once an investigation identical to that required by the World Trade Organisation has been conducted to justify the application of a safeguard. That investigation must be completed within one year;
- for a period of up to two years, with the ability to extend the safeguard for a further two years following a further investigation;
- during the agreed transition period, i.e. within a ten year period after the agreement enters into force, or the phase-in period for a particular product if it is longer than ten years; and
- once on any given product
Where a safeguard measure is expected to last more than one year, the safeguard tariff rate should be progressively lowered, consistent with the liberalisation goals of the Agreement.
4. Provisional Safeguard Measures (Article 9.3)
Where the threat of damage to an industry is particularly urgent, and delay would make the damage difficult to repair, either government may impose a safeguard measure on a provisional basis. The provisional safeguard may only apply for 200 days, during which the government is required to carry out an investigation and, where appropriate, apply a normal transitional bilateral safeguard under Article 9.2.
If the investigation determines that the provisional safeguard measure was not justified, the government must refund any tariff increases it charged during the application of the provisional safeguard measure.
5. Compensation (Article 9.4)
Where a transitional safeguard measure is imposed, the imposing government must provide trade-liberalising compensation elsewhere in the Agreement. This is done by further lowering a tariff that is of interest to businesses from the other country.
If the two governments cannot agree on appropriate compensation arrangements, the government whose goods are being subjected to the safeguard mechanism can halt tariff reductions on goods of importance to the country applying the safeguard.
6. Global Safeguard Measures (Article 9.5)
This Article commits each Party to consider excluding products from the other Party from any global safeguard measure (i.e. a safeguard measure applied to all imported products of a particular type, regardless of their country of origin, under the World Trade Organisation Agreement). Australian products may, for example, be excluded where they are not a substantial cause of the serious injury being suffered by the US industry.
The domestic legislative changes that the United States will put in place to implement this obligation will establish a process for advising the US President whether or not to exclude Australian products.
7. Other Remedies
Elsewhere, the Agreement also provides for:
- Textiles safeguards, which operate on equivalent terms to the transitional safeguard in this Chapter except that compensation should come from within the textiles Chapter (Chapter Four), and
- Agricultural safeguards (Chapter Three)
Australia and the United States will retain their WTO rights to anti-dumping and countervailing action and no changes will be made to relevant legislation as a result of the Agreement.
March 6, 2004