Reassessing the safeguards mess

Abstract

The WTO Agreement on Safeguards was hailed as an important achievement of the Uruguay round, rightly so, given that it managed to outlaw the use of voluntary export restraints. Intended to facilitate the use of transparent, temporary, and non-discriminatory instruments to assist domestic industries injured by import competition, World Trade Organization (WTO) jurisprudence undermined the realization of this objective. Worse, erratic case law created negative externalities, ranging from greater recourse to more discriminatory trade practices and use by the United States (US) of the types of managed trade that the Agreement of Safeguards was meant to abolish. As in the classic bootlegger-Baptist metaphor in the literature on regulation, the unintended consequence of WTO jurisprudence on safeguards has been more rather than less selective protection (discriminatory trade policies). As, if not more important, it made it more difficult for WTO members to use an instrument intended to assist governments in sustaining political support for an open trade regime. In this paper, we describe the source of discomfort and suggest ways to address it in a meaningful manner.