Discussions

Safeguard measures in the SADC-EU Economic Partnership Agreement

Safeguard measures in the SADC-EU Economic Partnership Agreement

06 Dec 2017

Willemien Viljoen, tralac Researcher, discusses bilateral safeguard measures under the SADC-EU EPA

Safeguard measures are a temporary restriction, of fairly traded products, to protect a specific domestic industry from a sudden increase in imports which causes serious injury to the domestic industry of the importing country. A safeguard is a ‘safety valve’, giving countries the flexibility to temporarily rescind liberalisation commitments made. Generally, safeguards need to be applied on non-discrimination basis; the measure needs to be applied on the specific import product, irrespective of the source. However, regional trade agreements allow for an exception to this rule in the form of bilateral or regional safeguard measures which are only applicable between the countries party to the agreement. A case in point is the SADC-EU EPA which provides for general bilateral and specific bilateral safeguards. Furthermore, the EPA allows for the exception of goods imported from the SADC member states when the EU applies multilateral safeguard measures in terms of Article XIX of the GATT, the WTO Agreement on Safeguards and Article V of the WTO Agreement on Agriculture (for a transitional period of five years from the date of entry into force of the EPA).

All EPA parties can utilise multilateral safeguards and general bilateral (preferential) safeguards to protect domestic industries against import surges. If the implementation of an EPA obligation (including tariff concessions) leads to such an increase in imports causing serious injury to a like domestic industry, or market disturbances in a like sector leading to a serious economic deterioration, or market disturbances in a like agricultural product. In the case of any of these circumstances, further tariff reductions can be suspended or duties can be increased or tariff quotas can be introduced to remedy the serious injury.

If the removal of trade barriers, required by the EPA, leads to the general or a local shortage of foodstuffs or another product needed for food security in any of the SADC EPA states a safeguard can be applied. These measures can only be applied after all the relevant information has been supplied to the Trade and Development Committee and consultations among the parties have taken place.

The SACU member states can implement specific agricultural safeguards (an import duty), on 23 specified agricultural products imported from the EU. When the designated trigger volume of edible offal, worked cereals, meat preparations, long-life milk, preserved cucumbers and olives and chocolate is exceeded, the import duty can be increased for the remainder of the calendar year, or 5 months (whichever is longer). These agricultural safeguards are only available for the 12-year transition period from the date of entry into force of the EPA. Utilising these safeguards is easier than multilateral or general preferential safeguards as the burden of proof is simpler to obtain; countries do not need to prove a surge in imports, serious injury or causality. At any point in a calendar year imports of the specified agricultural products can exceed the reference volumes which can then trigger an increase in the import duty by the affected SACU country.

Botswana, Lesotho, Namibia, Swaziland (BLNS) and Mozambique have access to an infant industry protection safeguard (temporary suspension of tariff reductions or a tariff increase) if increased EU imports impact the establishment of an infant industry or cause disturbances to the operations of an existing infant industry. If one of the BLNS countries utilises this safeguard measure in the form of an increase in tariffs there is an important clarification to note – the higher tariff is only applicable to imports into the country invoking the provision and does not translate to an increase in the overall SACU Common External tariff applicable to that specific product.

The BLNS countries have access to a transitional safeguard (for 12 years after the date of entry into force of the EPA) if increased EU imports cause injury to any of the domestic industries producing one of 64 ‘sensitive’ products. These products include agricultural products (poultry (HS0207), natural honey (HS0409), vegetables (like legumes, spinach and sweetcorn under HS0710) and olives, cucumbers and mushrooms (HS0711)), fats and oils (HS1517), meat preparations (HS1602), chocolate (HS1806), foodstuffs (pasta, gingerbread and rusks under HS19), fruit juices (HS2009), beer (HS2203), soap and candles, toilet paper, handkerchiefs, tablecloths, umbrellas and two types of slide fasteners (HS 9607). This safeguard does not work via trigger volumes, if a BLNS country want to use this safeguard the standard burden of proof is required by the implementing country (increased imports, serious injury and causality). After the BLNS country has notified the EU of the impending measure (30 days prior to the measure being implemented) an increase in duty or a zero-tariff rate quota can be implemented for a period of four years (which can be extended for a further four years).

There is a very minor difference between the transitional safeguard and the general preferential safeguards in Article 34, something making it ever so slightly easier for BLNS countries to use safeguards on the 64 listed products. If a BLNS country wants to implement a transitional safeguard the burden of proof is that the product is imported from the EU in such increased quantities to cause serious injury in any BLNS state. However, if any EPA party wants to utilise the general preferential safeguards one of the qualifications of the burden of proof is that the surge in imports and subsequent harm must be the result of an obligation incurred under the EPA. The ‘obligation incurred’ requirement is not relevant for transitional safeguards under Article 37; a mere increase in imports from the EU enables the BLNS countries to implement a safeguard measure.

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