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Unit 24 : Multilateralism and WTO

Industries or companies may request safeguard action by their governments. The WTO agreement Notes
sets out requirements for safeguard investigations by national authorities. The emphasis is on
transparency and on following established rules and practices, thus avoiding arbitrary methods. A
safeguard measure should be applied only to the extent necessary to prevent or remedy serious
injury and to help the industry concerned to adjust. Where quantitative restrictions (quotas) are
imposed, they normally should not reduce the quantities of imports below the annual average for the
last three representative years for which statistics are available, unless clear justification is given that
a different level is necessary to prevent or remedy serious injury.
In principle, safeguard measures cannot be targeted at imports from a particular country. A safeguard
measure should not last more than four years, although this can be extended up to eight years under
special circumstances. When a country restricts imports in order to safeguard its domestic producers,
in principle it must give something in return. To some extent developing countries’ exports are shielded
from safeguard actions. An importing country can only apply a safeguard measure to a product from
a developing country if the developing country is supplying more than 3 per cent of the imports of
that product, or if developing country members with less than 3 per cent import share collectively
account for more than 9 per cent of total imports of the product concerned.
The WTO’s Safeguards Committee oversees the operations of the agreement and is responsible for
the surveillance of members’ commitment. Member governments have to report each phase of a
safeguard investigation and related decision making, and the committee review these reports.
Attempting to Reduce Non-tariff Barriers

In addition to import tariffs, an international firm faces a number of bureaucratic and legal issues in
the target countries which hinders smooth flow of trade. Such barriers are generally employed to
block market entry and often criticized as arbitrary as they lack transparency. Growing use of
unconventional Non-Tariff Measures (NTMs), such as health and safety measures, technical
regulations, environmental controls, customs valuation procedures, and labour laws by developed
countries has become a major barrier to market access to exports from developing countries. Such
trade barriers are considerably stiffer for products with lower value addition and technological content
(agriculture products, textiles, leather products, etc.) products, which are of major interest to countries
like India.
Import licensing procedures

Import licensing procedures are generally considered as complex and non-transparent with little
predictability and had often been used to block market entry of foreign products. The agreement on
Import Licensing Procedures attempts to simplify and bring transparency to import procedures. The
agreement requires governments to publish sufficient information for international traders to know
how and why licences are granted. It also describes how countries should notify the WTO when they
introduce new import licensing procedures or change existing procedures. The agreement offers
guidance on how governments should assess applications for licences. The agreement sets criteria
for automatic issuance of some licences so that the procedures used do not restrict trade. Here, the
agreement tries to minimize the importers’ burden in applying for licences, so that the administrative
work does not in itself restrict or distort imports. The agreement says agencies handling licensing
should not normally take more than 30 days to deal with an application. However, 60 days are
permitted when all applications are considered at the same time.
Customs valuation

For importers, the process of estimating the value of a product at customs presents problems that can
be just as serious as the actual duty rate charged. The WTO agreement on customs valuation aims for
a fair, uniform, and neutral system for the valuation of goods for customs purposes—a system that
conforms to commercial realities, and which outlaws the use of arbitrary or fictitious customs values.
The agreement provides a set of valuation rules, expanding and giving greater precision to the
provisions on customs valuation in the original GATT.

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