Safeguard Measures (Airalene)

A. EMERGENCY MEASURES AGAINST INJURIOUS IMPORTS (Airalene)

What are safeguard measures?

The WTO permits Member Countries to provide affected domestic industries relief
against imports under circumstances specified in the General Agreement on Tariffs and
Trade 1994 (GATT 1994).

Under Article XIX (Emergency Action on Imports of Particular Products) of GATT 1994,
as clarified and reinforced by the WTO Agreement on Safeguards, the importing
government may take temporary (general) safeguard measures (higher tariffs, tariff
quotas, or quantitative restrictions) against imports if the products at issue are being
imported in such increased quantities, either absolute or relative to domestic production,
and under such conditions as to cause or threaten to cause serious injury to the
domestic industry.

On the other hand, the WTO Agreement on Agriculture allows for the application of
special transitional safeguards (additional duty not exceeding one-third of the level of
the effective tariff) against importations of agricultural products whose quantitative
import restrictions (QR’s) were converted (“tariffied”) into ordinary customs duties and
agricultural products designated with the symbol “SSG” (Special Safeguard Measures)
in the GATT Schedule of Concessions.

Special safeguard measures may be invoked, if:

 the volume of imports exceeds a trigger level; or (but not concurrently)
 the price of imports falls below a trigger price.
In either case, injury to the domestic industry need not be established.

The purpose for the application of safeguard measures is to give the affected domestic
industry time to prepare itself for and adjust to increased import competition resulting
from the reduction of tariffs or the lifting of quantitative restrictions agreed upon in
multilateral trade negotiations.

B. SAFEGUARD ACTIONS VIS-À-VIS DUMPING/COUNTERVAILING MEASURES

(John Lery)

How do safeguard actions differ from anti-dumping and countervailing

measures?

Comparison of Anti-Dumping, Countervailing, and Safeguard Measures

1. Relevant Agreement
Anti-dumping/Countervailing Measures General/Special Safeguard Measures
WTO Anti-Dumping Agreement (GATT Article VI)
WTO Agreement on Subsidies and Countervailing
Measures ( GATT Article XVI)
2. Nature of Measure
Address unfairly traded imports:
 Export price is lower than the
normal value
 Subsidized production or
exportation of the foreign
merchandise
3. Coverage of Measure
 Limited to “like”
products
 Country specific and
exporter specific
4. Minimum Threshold of Support of Industry for Application
A domestic Industry which is supported
by domestic producers whose collective
output constitutes more than 50% of the
total production of the like product
produced by other domestic producers
that are expressing either support for or
opposition to the application. However,
no investigation shall be initiated when
domestic producers expressly
supporting the application account for
less than 25% of the production of the
like product produced by the domestic
industry.
5. Objective
 Dumping/countervailing duty seeks to provide
a remedy to level the playing field.
 To protect the domestic industries against the
unfair trade practices of dumping and/ or
subsidization.
WTO Agreement on Safeguards (GATT Article
XIX)
WTO Agreement on Agriculture
Address fairly traded imports:
Export price at the level of normal value

Increased level of imports absolute or

relative to production (general
safeguards)
 Volume of imports exceed a base
trigger level or price falls below a
trigger price level
(special safeguards)
 All "like" or "directly competitive" products
 A All countries exporting "like" or directly "competitive
product."
 AGeneral safeguards apply to industrial and non-
tariffied goods
 ASpecial safeguards apply to tariffied agricultural
products denominated with the acronym “SSG” in the
GATT Schedule of Concessions
 Industry filing the case should be
a producer of the like or directly
competitive product whose
collective output constitutes a
major proportion of the total
domestic production – general
safeguards
 Department of Agriculture (motu
proprio) – special safeguards
 General safeguards will remove injury and
facilitate structural adjustments for the
industry to be competitive.
 Special safeguards will assist farmers whose
products were previously protected by
 quantitative restrictions (QR’s) that have
been tariffied.
6. Elements to be Established
General Safeguards:
 Product comparability (‘like” or
“directly competitive” product)
 Increased imports
 Product comparability  Serious injury or threat of serious
("like" product) injury
 Price difference/subsidy  Causal link
 Material injury or threat of Special Safeguards:
material injury  Product comparability ("like
 Causal link product")
 Volume of imports exceed a base
trigger level, or
 Price falls below a trigger price
level
7. Forms of Measure
General Safeguards:
1. Provisional measure – tariff increase
2. Definitive safeguard measure:
 tariff increase
1. Provisional measure – dumping/countervailing bond  quantitative restrictions (e.g., import
2. Definitive anti-dumping/countervailing duty quota; import licensing)
Special Safeguards:
1. Additional duty not exceeding one-third of the level of the
ordinary customs duty in effect during the year in which t
action is taken.
8. Imposition of Provisional Measure
General Safeguards:
 In critical circumstances where delay may
Requires the conduct of a preliminary
cause damage that is difficult to repair,
investigation (affirmative preliminary
safeguard measure in the form of tariff
determination) prior to imposition of a dumping
adjustment may be imposed for 200 days
or countervailing bond for a duration of four (4)
pursuant to a preliminary determination.
months or 120 days.
Special Safeguards:
 Not provisionally applied.
9. Duration of Definitive Measure
General Safeguards:
 Four (4) years, extendable for another 4 years
Five (5) years, subject to sunset review provided the industry can show that structural
to determine whether or not to extend adjustment is being implemented with an extension
the effectivity of the dumping/ for another two (2) years for developing countries.
countervailing duty Special Safeguards:
 Shall only be maintained until the end of the year in
which it has been imposed.
C. THE PHILIPPINE LEGISLATION ON SAFEGUARD MEASURES (Precious)

1. What is the law on the application of safeguard measures?

Republic Act No. 8800, otherwise known as the “Safeguard Measures Act” provides for:
- general safeguard measures to relieve domestic industries suffering from serious
injury as a result of increased imports.

- special safeguard measures (additional duty not exceeding 1/3 of the existing rate of
duty) on agricultural products marked “SSG’ in Schedule LXXV-Philippines, when the
import volume exceeds its trigger level or when the actual c.i.f. import price falls below a
trigger price level

2. When was R.A. No. 8800 signed? effective?

Former President Estrada signed the law on July 19, 2000. R.A. 8800 was published on
July 24, 2000 and took effect on August 9, 2000, i.e., fifteen (15) days following its
complete publication.

3. Have the rules and regulations to implement R.A. 8800 been promulgated?

Yes, the Implementing Rules and Regulations (IRR) was signed by the concerned
Secretaries/Agency Heads and published in Manila Standard on October 4, 2000. The
IRR (Joint Administrative Order No. 03, s. 2000) took effect on October 11, 2000, i.e.,
seven (7) days after publication

4. What government agencies administer the Safeguard Measures Act?

General safeguard measures

Department of Trade and
Industry/ Bureau of Import
Services (DTI/BIS)
Department of Agriculture
(DA)
Conducts preliminary determination to ascertain whether or not provisional
measure may be imposed in the case of industrial goods.
Conducts preliminary determination to ascertain whether or not provisional
measure may be imposed in case of agricultural products.
Conducts formal investigation and submits recommendation to DTI or DA
Secretary on the form of definitive safeguard measure to be imposed.

Monitors the domestic industry’s progress and its efforts to make a positive
adjustment to import competition.
Tariff Commission
Conducts investigation on any legitimate request for the extension and re-
(Commission)
application of safeguard measures; the reduction, modification and/or
termination of safeguard action.

After the termination of safeguard measure, evaluates the effectiveness of the

actions taken by the domestic industry to facilitate its positive adjustment to
import competition.
Decides on the form of definitive safeguard measure to impose and issues a
DTI or DA Secretary
Department Order for implementation by concerned agencies.
Special safeguard measures
Department In the case of sensitive, tariffied agricultural products (marked “SSG” in
of Schedule LXXV-Philippines), conducts verification whether:
Agriculture  volume of imports exceeds a base trigger level, or
  c.i.f. import price falls below a trigger price level.
Issues Department Order requesting the Bureau of Customs, through the
(DA)
Secretary of Finance, to impose an additional special safeguard duty on
subject product equivalent to not more than 1/3 of its existing rate of duty.
D. PROCEDURES (Dexter)

1. Who may file a petition for safeguard measures?

General safeguard measures

i. Domestic producers as a whole, of like or directly competitive products manufactured

or produced in the Philippines, or those whole collective output of like or directly
competitive products constitutes a major proportion of the total domestic production of
those products;

ii. The President, or the House or Senate Committee on Agriculture, or the House or
Senate Committee on Trade and Commerce; and

iii. The DTI or DA Secretary, motu proprio, if there is evidence of increased imports of
the product under consideration.

Special safeguard measures

i. Any person, whether natural or juridical may request a verification if a particular

agricultural product can be imposed a special safeguard duty.

ii. The DA Secretary may, motu proprio, initiate the imposition of a special safeguard
measure following the satisfaction of the conditions for imposing the measure.

2. Where to file?

General safeguard measures

Petitions for safeguard action shall be filed with the DTI Secretary in the case of non-
agricultural products, or with the DA Secretary in the case of agricultural products, who
shall determine whether or not the petition is proper in form and substance and whether
or not the documentary requirements are complied with.

Special safeguard measures

The request shall be filed with the Secretary of the Department of Agriculture.

3. What are the stages in a safeguard investigation?

General safeguard measures

The general safeguard investigation has four (4) distinct stages:

 Prima Facie Determination
The DTI-BIS or DA, upon acceptance of the properly documented petition,
has five (5) calendar days to decide whether a prima facie case exists to
merit the initiation of a preliminary investigation. In its determination, the
BIS or DA undertakes an in-depth evaluation of the data submitted or
provided, together with the information obtained independently.

If no prima facie case exists, the application is denied.

 Preliminary Determination
Once a prima facie case has been established, DTI-BIS initiates the
preliminary determination.

Within two (2) calendar days after the decision to initiate the preliminary
investigation is made, DTI-BIS or DA notifies all known interested parties
and the government of the exporting country about the initiation of the
investigation and sends a proforma respondent’s questionnaire to all the
interested parties (importers, domestic manufacturers, exporters, etc.).

Not later than thirty (30) calendar days from receipt of the properly
documented petition, the Secretary shall, on the basis of the petition, the
answers of the respondents and the supporting documents or information,
make a preliminary determination that increased imports of the product
under consideration are a substantial cause of, or threaten to substantially
cause, serious injury to the domestic industry.

In case of preliminary affirmative findings, the Secretary of either DTI or

DA advises, within three (3) calendar days from making a decision, the
Secretary of Finance to instruct the Bureau of Customs to impose the
provisional safeguard measure. Such measure shall take the form of a
tariff increase either ad valorem or specific, or both, to be paid through a
cash bond. In the case of agricultural products, where the tariff increase
may not be sufficient to redress or to prevent serious injury to the
domestic producers, a quantitative restriction may be applied.

The preliminary affirmative findings by the DTI-BIS or DA, together with

the records of the case, shall be transmitted to the Commission for its
immediate formal investigation of the case within three (3) calendar days
from adopting the decision. However, if the preliminary findings are
negative, the DTI or DA Secretary shall terminate the investigation.
 Formal Investigation
The Commission shall conduct the formal investigation to determine:
1. if the domestic product is a like product or a product
directly competitive to the imported product under
consideration;
 2. if the product is being imported into the Philippines in
increased quantities (absolute or relative to domestic
production);
3. the presence and extent of serious injury or threat
thereof to the domestic industry that produces like or
directly competitive product; and
4. the existence of a causal relationship between the
increased imports of the product under consideration
and the serious injury or threat thereof to the affected
domestic industry.
The Commission shall conclude its formal investigation and
submit a report of its findings and conclusions to the
Secretary within one-hundred-twenty (120) calendar days
from receipt of the request from the Secretary, except when
the Secretary certifies that the same is urgent, in which case
the Commission shall complete the investigation and submit
the report within sixty (60) calendar days.

Upon its positive determination, the Commission shall recommend

to the Secretary an appropriate definitive measure.
 Decision
Within fifteen (15) calendar days from receipt of the Report of the
Commission, the Secretary shall make a decision, taking into
consideration the measures recommended by the Commission.

If the determination is affirmative, the Secretary shall issue, within two (2)
calendar days after making his decision, a written instruction to the heads
of the concerned government agencies to implement the appropriate
general safeguard measure as determined by him.

In case of a negative final determination or if the cash bond is in excess of

the definitive safeguard duty assessed, the Secretary shall immediately
issue, through the Secretary of Finance, a written instruction to the
Commissioner of Customs, authorizing the return of the cash bond or the
remainder thereof, as the case may be, previously collected as provisional
general safeguard measure within ten (10) days from the date the final
decision had been made.
Special safeguard measures
 Verification
The DA Secretary shall verify if the cumulative import volume of an
"SSG"-denominated agricultural product in a given year has exceeded its
trigger volume or, but not concurrently, its actual c.i.f. import price is less
than its trigger price.
 Findings
The Secretary shall come up with a finding within five (5) working days
from the receipt of a request.
 Imposition of special safeguard measure
The Secretary shall issue a Department Order requesting the
Commissioner of Customs through the Secretary of Finance to impose an
additional special safeguard duty.
E. DETERMINATION OF SERIOUS INJURY OR THREAT THEREOF (Miel Nicole)

General safeguard measures

1. What economic factors should the Commission take into account in
determining serious injury?
The Commission shall consider all relevant economic factors, including:
 the rate and amount of the increase in imports of the product
under consideration in absolute or relative terms;
 the share of the domestic market taken by the increased
imports;
 changes in the level of sales, prices, production,
productivity, capacity utilization, inventories, profits and
losses, wages and employment of the domestic industry;
 significant idling of productive facilities in the domestic
industry including the closure of plants or underutilization of
production capacity;
 inability of a significant number of firms to carry out domestic
production at a profit; and
 significant unemployment or underemployment within the
domestic industry.
Special safeguard measures

Injury is not an element in the imposition of special safeguard measure.

1. In making a determination of the existence of a threat of serious injury,

what should be considered?
 Significant rate of increase in imports into the Philippines
indicating the likelihood of substantially increased
importation, evidenced inter alia by the existence of letters
of credit, supply or sales contract, the award of a tender, an
irrevocable offer or other similar contracts;
 Sufficient freely disposable, or an imminent, substantial
increase in, production capacity of the foreign exporters
including access conditions they face in third country
markets, indicating the likelihood of substantially increased
exports to the Philippines;
  Decline in sales or market share, and a downward trend in
production, profits, wages, productivity or employment (or
increasing underemployment) in the domestic industry and
its inability to generate capital for modernization or to
maintain existing levels of expenditures for research and
development; and
 Growing inventories of the product being investigated
whether maintained by Philippine producers, importers,
wholesalers or retailers.
F. MEASURES (Mary Joy)

General safeguard measures

What are the remedies/measures imposed against the injurious import surge?
- Provisional measure (applied only after a preliminary affirmative determination by BIS
or DA)

Such measure shall take the form of a tariff increase either ad valorem or specific, or
both, to be paid through a cash bond set at a level sufficient to redress or prevent
serious injury to the domestic industry.

In the case of non-agricultural products, the Secretary shall first establish that the
imposition of the provisional safeguard measure would be in the public interest.

In the case of agricultural products, where the tariff increase may not be sufficient to
redress or to prevent serious injury to the domestic producer or producers, a
quantitative restriction may be applied.

The duration of the provisional measure shall not exceed two hundred (200) calendar
days from the date of imposition.

- Definitive safeguard measure (following affirmative final determination by the

Commission)
1. An increase in, or imposition of, any duty on the imported product (not
subject or limited to the maximum levels of tariff as set forth in Section
401 (a) of the Tariff and Customs Code of the Philippines, as amended);
2. A decrease in or the imposition of a tariff-rate quota (MAV) on the product;
3. A modification or imposition of any quantitative restriction on the
importation of the product into the Philippines;
4. One or more appropriate adjustment measures, including the provision of
trade adjustment assistance;
5. Any combination of actions described in subparagraphs (a) to (d).
The Commission may also recommend other actions, including the initiation of
international negotiations, to address the underlying cause of the increase in imports of
the product to alleviate the injury or threat thereof to the domestic industry and to
facilitate positive adjustment to import competition.
Special safeguard measures
1. What special safeguard measures are imposed with respect to “SSG”-
denominated agricultural products?
• Under the volume test, the special safeguard duty shall be set to a level not exceeding
one-third (1/3) of the applicable out-quota customs duty on the agricultural product
under consideration.

• On the basis of the price test, the additional duty shall be computed as follows:
i. Zero, if the price difference is, at most, ten percent (10%) of the trigger price; or

ii. Thirty percent (30%) of the amount by which the price difference exceeds ten percent
(10%) of the trigger price, if the said difference exceeds ten percent (10%) but is at most
forty percent (40%) of the trigger price; or

iii. Fifty percent (50%) of the amount by which the price difference exceeds forty percent
(40%) of the trigger price, plus the additional duty imposed under paragraph ii, if the
said difference exceeds forty percent (40%) but is, at most, sixty percent (60%) of the
trigger price; or

iv. Seventy percent (70%) of the amount by which the price difference exceeds sixty
percent (60%) of the trigger price, plus the additional duties imposed under paragraphs
ii and iii, if the said difference exceeds sixty percent (60%) and is, at most, seventy-five
(75%) of the trigger price; or

v. Ninety percent (90%) of the amount by which the price difference exceeds seventy-
five percent (75%) of the trigger price; plus the additional duties imposed under
paragraphs ii, iii, and iv, if the said difference exceeds seventy-five percent (75%) of the
trigger price.

2. What is the duration of the safeguard measures?

Definitive general safeguard measures

General rule:
• The maximum initial period for the application of the safeguard measure is four (4)
years.
Note: Such four (4) year period shall include the period, if any, in which a provisional
relief was in effect

Exception to the general rule

• The initial period may be extended up to a maximum of eight (8) years (10 years for
developing countries).

Special safeguard measures

The additional special safeguard duty shall be maintained only until the end of the year
in which it is imposed.

3. What are the limitations in the application of safeguard measures?

• Extent of redressing or preventing the injury;

• To facilitate the domestic industry’s adjustments from the adverse effects directly
attributed to the increased imports;

When quantitative import restrictions are used, such measures shall not reduce the
quantity of imports below the average imports for the three (3) preceding representative
years, unless clear justification is given that a different level is necessary to prevent or
remedy a serious injury.

General safeguard measure shall not be applied to a product originating from a

developing country, if that country’s share of total imports of the product is less than
three percent (3%), provided that the developing countries with less than three percent
(3%) share collectively account for not more than nine percent (9%) of the total imports.

Special safeguard measures

To safeguard and enhance the interest of farmers and fisherfolk, the provisions of
Republic Act No. 8435, otherwise known as the Agriculture and Fisheries Modernization
Act (AFMA), will not be affected by the provisions of the special safeguard measures
under R.A. 8800.

There shall be no recourse to the use of special safeguards measures concurrently with
the general safeguard measure.

The special safeguard provisions of R.A 8800 shall lapse with the duration of the reform
process in agriculture as determined in the WTO. Thereafter, recourse to safeguard
measures shall be subject to the provisions on general safeguard measures as provided
in R.A. 8800.