G33 submits proposal on Special Safeguard Mechanism

The Group of 33 developing countries in the WTO agriculture negotiations has submitted to the WTO a proposal on a special safeguard mechanism (SSM) for developing countries.

The proposal provides details on the nature and operation of the SSM, the establishment of which was provided for in the July Framework for use by developing countries facing import surges as well as price depressions relating to their agricultural imports.

The developing countries, led by the G33, have argued that they require an SSM as an instrument to defend the interests of their farmers during periods or situations when there is a surge of agriculture imports into their countries, or when import prices fall significantly and thus could adversely affect the products of local farmers.

Although the concept and establishment of a SSM for developing countries has been accepted in principle, negotiations still need to be undertaken on the details of the workings of the mechanism. The G33 paper is expected to catalyse the negotiations this week itself.

The proposals cover such issues as the remedy to be applied by developing country members, the conditions under which they can resort to these remedies, and the duration and scope of the remedy.

In relation to the remedy, the paper states that "any developing country member may take recourse to the imposition of an additional duty" with respect to "any agricultural product" listed in Annex 1 to the Agreement on Agriculture. Thus the remedy is available to all developing countries and applies to all agricultural products.

The right to apply the remedy is triggered by either the volume of imports, or by the price of the imports, "but not concurrently".

The paper defines the volume trigger as a situation where "the volume of imports of that product entering the customs territory of that developing country Member during any year exceeds a trigger level equal to the average annual volume of imports for the most recent three-year period preceding the year of importation for which data are available."

The price trigger relates to a situation where the import price at which a shipment of imports of a product enters a developing country during any year falls below a trigger price equal to the average monthly price for that product for the most recent three-year period preceding the year of importation for which data are available.

The import price of the product in question is expressed in terms of the domestic currency of the developing country's Member. The proposal therefore provides for an additional means of computing the import price where there is depreciation of the value of the member's domestic currency by a certain amount over a certain period.

Both the amount and the period are not specified. In such a situation, the "import price shall be computed using the average exchange rate of the domestic currency against such international currency or currencies for the three-year period referred to" in setting the price trigger.

The proposal specifies that imports falling under tariff quota shall be included when calculating the volume of imports used in the volume trigger. However, those imports will not be affected by the additional duties that the country may impose to address the situation of import surge or price depression.

Furthermore, shipments of products already contracted and en route before the imposition of additional duty shall be treated differently. In this case, the additional duty will not apply to them. However, the volume of that shipment, or the price, will be included in calculating the volume or price trigger in the following year.

The proposal contains further provisions on the quantum and duration of the additional duties, with different provisions for duties imposed for the volume and price triggers.

In relation to additional duty imposed for the volume trigger, such duty "shall be maintained for no more than 12 months after it has been imposed".

The maximum levels of additional duty that can be imposed will also differ according to the following situations:

• where the level of imports during a year does not exceed [x] per cent of the average import volume, no additional duty may be imposed;
• where the level of imports during a year exceeds [x] per cent but does not exceed [x1] per cent of the average import volume, the maximum additional duty that may be imposed shall not exceed [y] per cent of the bound tariff or [z] percentage points, whichever is higher;
• where the level of imports during a year exceeds [x1] per cent but does not exceed [x2] per cent of the average import volume, the maximum additional duty that may be imposed shall not exceed [y1] per cent of the bound tariffs or [z1] percentage points, whichever is higher;
• where the level of imports during a year exceeds [x2] per cent of the average import volume, the maximum additional duty that may be imposed shall not exceed [y2] per cent of the bound tariff or [z2] percentage points, whichever is higher.

As regards additional duty imposed in relation to the price trigger, it may be "assessed either on a shipment-by-shipment basis or on an ad valorem basis for a duration of no more than 12 months."

Furthermore, where the additional duty is on a shipment-by-shipment basis, "the additional duty shall not exceed the difference between the import price of each shipment and the trigger price".

Where it is assessed on "an ad valorem basis, the additional duty initially shall not exceed the difference between the import price of the shipment and the trigger price expressed as a percentage of the import price." However, if the import prices are lower by a certain percentage than the trigger price for two subsequent meetings, then the developing country member can change from applying the additional duty on an ad valorem basis and use shipment a shipment-by-shipment basis.

The proposals also contain provisions for ensuring operation of the special safeguard in a transparent manner. A developing country taking action in relation to the volume trigger will give "notice in writing, indicating the tariff lines affected by the measure and including relevant data to the extent available, to the Committee on Agriculture as far in advance as may be practicable and in any event within 30 days of the implementation of such action".

It shall also afford any interested Members the opportunity to consult with it in respect of the conditions of application of such action.

In relation to the price trigger, the country "shall give notice in writing, indicating the tariff lines affected by the measure and including relevant data to the extent available, to the Committee on Agriculture within 30 days of the implementation of the first such action or, for perishable and seasonal products, the first action in any period".

Furthermore "developing country Members undertake, as far as practicable, not to take recourse to the provisions" related to price triggers where the volume of imports of the products concerned are declining.

In either case a developing country Member taking such action shall afford any interested Members the opportunity to consult with it in respect of the conditions of application of such action.

Two final elements deal with the scope of members' rights when applying the SSM. First, the paper states that where measures are taken in conformity with the provisions as described above, then WTO "Members undertake not to have recourse, in respect of such measures, to the provisions of paragraphs
1(a) and 3 of Article XIX of GATT 1994 or paragraph 2 of Article 8 of the Agreement on Safeguards".

Secondly, "no developing country Member shall take recourse to measures under Article 5 in respect of any product on which it has imposed additional duties pursuant to the provisions of this Article."