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 Australian Customs Service.
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 Australian Customs Service.
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. 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.
Productivity Commission Inquiry into Australia's Anti-dumping and Countervailing System
The Department for Foreign Affairs and Trade provided a submission to the Productivity Commission during its 2009 inquiry into Australia's anti-dumping and countervailing system.