Anti-dumping, countervailing measures and safeguards

Trade remedies are trade policy tools that allow governments to
take remedial action against imports which are causing material
injury to a domestic industry. Such remedies are divided
broadly into:

• anti-dumping action;
• countervailing duty measures; and
• safeguard action.

These remedies are triggered in response to different situations
and circumstances which may be causing material injury to a
domestic industry. Recourse to these tools is initiated by
the domestic industry. The following outlines the relevant
WTO rules and also provides a short summary of the circumstances
which give rise to recourse to such remedies and the procedures for
activating their use.

Further information on WTO
rules relating to trade remedies.

Anti-dumping and the WTO Anti-Dumping Agreement

Article VI of GATT 1994, elaborated by the WTO Anti-Dumping
Agreement, allows countries to take action against imports from
countries allegedly exporting at dumped prices. Anti-dumping
action is undertaken in response to an application from industry
concerning injurious dumped imports.

An exporting company is said to be "dumping" when it
exports its product at a price lower than its normal value (that
is, the price at which that product is sold on the domestic market
in the exporting country). When dumping causes or threatens
to cause material injury to a domestic industry, remedial action
may be taken.

In Australia, anti-dumping investigations are conducted by the Anti-dumping Commission.

Countervailing Measures, Subsidies and the WTO Subsidies
Agreement

The WTO Subsidies and Countervailing Measures Agreement (the
Subsidies Agreement) disciplines the use of subsidies, which are
generally permissible under GATT 1994 and the WTO
Agreements.

The Subsidies Agreement also regulates the actions countries can
take to counter the trade effects of subsidies. A country may
remedy the trade effects of a subsidy multilaterally through
dispute-settlement procedures and thereby seek the withdrawal of
the subsidy or the removal of its adverse effects.
Alternatively, a country may unilaterally launch its own
investigation (known as a countervailing duty investigation)
whereby an extra duty ("countervailing duty") may be
imposed on subsidized imports to offset the injury to domestic
producers. Where industry faces material injury from
subsidised imports, industry may lodge an application for the
initiation of a countervailing investigation.

In Australia, countervailing duty investigations are conducted
by the Anti-dumping Commission.

Safeguards

Safeguard action is "emergency action".
Emergency "safeguard" action may be taken where a surge
of imports causes or threatens to cause, serious material injury to
a domestic industry. It allows a country to respond to
unexpected and unforeseen increased imports which have caused
serious material injury. Imports must be recent enough,
sudden enough, sharp enough and significant enough.

Where the reasons for injury are not limited to increased
imports, these other factors must be distinguished. That is,
the impact of other factors cannot be attributed to the impact of
increased imports.

Safeguard action may involve the restriction of imports of a
product temporarily to help the domestic industry adjust.
Safeguard measures are applied on a global basis and may take the
form of tariffs, tariff rate quotas, or quantitative restrictions
(import quotas). These measures must be temporary,
product-specific and they must be applied to all imports
irrespective of the source.

Safeguard action can only be imposed after a full inquiry by a
competent authority, which is the Productivity Commission in
Australia. Australia's safeguards investigation
procedures are contained in the Commonwealth Gazette No S 297 of 25
June 1998 (as notified to the WTO in document G/SG/N/1/AUS/2 of 2 July 1998) and amended by Commonwealth Gazette No GN39 of 5
October 2005 (as notified to the WTO in document G/SG/N/1/AUS/2/Suppl. 1 [ PDF ] of 16 December 2005).

Australian industry wishing to activate Australia's
safeguard procedures should contact the relevant portfolio Minister
responsible for the product involved or the Minister for Trade, Tourism and Investment. Positive evidence that
unforeseen or unexpected surges in imports are causing serious
injury to the industry needs to be provided for the Australian
Government's consideration. Such evidence may have been
investigated or researched by the affected domestic industry or the
government agency as a result of ongoing concerns expressed by the
affected domestic industry.

If the Australian Government decides to initiate a safeguard
investigation, a reference is sent to the Productivity Commission
by the Treasurer– possibly also asking for an early
report on the issue of provisional safeguards which are allowed
under WTO rules only in special circumstances.

Public notice of the initiation of a safeguard investigation is
given by the Productivity Commission and the investigation would
involve public hearings or other appropriate means to enable
importers, exporters and other interested parties to present
evidence and their views. Under WTO rules, Australia is also
required to notify immediately the WTO and affected countries of
the initiation of a safeguard investigation and its outcome. The
WTO Safeguards Committee has agreed on notification formats and
standards (see WTO document G/SG/1 [pdf]).

Bilateral free trade agreements (such as, for example, the
Thailand-Australia Free Trade Agreement) may also have additional
safeguard processes covering preferential trade where the injury
caused by increased imports is due to the tariff reductions under
the particular FTA. These safeguards are referred to as
"transitional safeguards" or "bilateral
safeguards" and are not global safeguards. The
process for Government consideration of bilateral safeguards is
essentially the same as for WTO safeguards as described above.