All of the Following Statements Concerning the Sunset Review Process Are True Except

Agreement THE WTO: THE AGREEMENTS

Anti-dumping, subsidies, safeguards: contingencies, etc

Binding tariffs, and applying them as to all trading partners (nigh-favoured-nation handling, or MFN) are key to the smooth menstruation of merchandise in appurtenances. The WTO agreements uphold the principles, but they also permit exceptions � in some circumstances. Three of these issues are:

actions taken against dumping (selling at an unfairly low price)
subsidies and special �countervailing� duties to get-go the subsidies
emergency measures to limit imports temporarily, designed to �safeguard� domestic industries.

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Anti-dumping actions

If a company exports a production at a price lower than the price information technology normally charges on its own dwelling marketplace, it is said to be �dumping� the production. Is this unfair contest? Opinions differ, but many governments have action against dumping in order to defend their domestic industries. The WTO agreement does not pass judgement. Its focus is on how governments tin can or cannot react to dumping � it disciplines anti-dumping deportment, and it is often called the �Anti-Dumping Agreement�. (This focus only on the reaction to dumping contrasts with the arroyo of the Subsidies and Countervailing Measures Agreement.)

The legal definitions are more precise, only broadly speaking the WTO agreement allows governments to act against dumping where there is 18-carat (�material�) injury to the competing domestic manufacture. In order to do that the regime has to exist able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter�southward home market cost), and evidence that the dumping is causing injury or threatening to do and then.

GATT (Article 6) allows countries to accept activity against dumping. The Anti-Dumping Agreement clarifies and expands Article half-dozen, and the 2 operate together. They allow countries to act in a way that would ordinarily break the GATT principles of binding a tariff and not discriminating betwixt trading partners � typically anti-dumping action means charging extra import duty on the particular product from the item exporting country in social club to bring its cost closer to the �normal value� or to remove the injury to domestic industry in the importing country.

There are many different ways of computing whether a particular product is existence dumped heavily or only lightly. The understanding narrows down the range of possible options. It provides three methods to calculate a production�s �normal value�. The chief one is based on the price in the exporter�south domestic market. When this cannot be used, two alternatives are bachelor � the price charged by the exporter in another country, or a calculation based on the combination of the exporter�south production costs, other expenses and normal turn a profit margins. And the agreement also specifies how a off-white comparison can exist fabricated between the export price and what would be a normal cost.

Computing the extent of dumping on a product is not enough. Anti-dumping measures can merely be applied if the dumping is hurting the industry in the importing country. Therefore, a detailed investigation has to be conducted co-ordinate to specified rules first. The investigation must evaluate all relevant economical factors that accept a bearing on the country of the manufacture in question. If the investigation shows dumping is taking place and domestic manufacture is being injure, the exporting company can undertake to raise its toll to an agreed level in order to avoid anti-dumping import duty.

Detailed procedures are fix out on how anti-dumping cases are to be initiated, how the investigations are to exist conducted, and the conditions for ensuring that all interested parties are given an opportunity to present evidence. Anti-dumping measures must expire five years after the date of imposition, unless an investigation shows that ending the measure would pb to injury.

Anti-dumping investigations are to stop immediately in cases where the government determine that the margin of dumping is insignificantly pocket-size (defined as less than 2% of the export price of the production). Other conditions are too fix. For example, the investigations also have to stop if the volume of dumped imports is negligible (i.e. if the book from one country is less than 3% of total imports of that production � although investigations tin can keep if several countries, each supplying less than 3% of the imports, together business relationship for 7% or more of total imports).

The agreement says member countries must inform the Committee on Anti-Dumping Practices about all preliminary and final anti-dumping actions, promptly and in detail. They must also written report on all investigations twice a year. When differences arise, members are encouraged to consult each other. They tin also use the WTO�s dispute settlement procedure.

> more on anti-dumping

> See besides Doha Agenda negotiations

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Subsidies and countervailing measures

This agreement does ii things: it disciplines the use of subsidies, and it regulates the deportment countries tin have to counter the furnishings of subsidies. It says a state can use the WTO�southward dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse furnishings. Or the country can launch its own investigation and ultimately charge extra duty (known as �countervailing duty�) on subsidized imports that are found to exist hurting domestic producers.

The agreement contains a definition of subsidy. It also introduces the concept of a �specific� subsidy � i.eastward. a subsidy bachelor only to an enterprise, manufacture, group of enterprises, or group of industries in the country (or land, etc) that gives the subsidy. The disciplines set out in the understanding only apply to specific subsidies. They can be domestic or export subsidies.

The agreement defines 2 categories of subsidies: prohibited and actionable. It originally contained a 3rd category: non-actionable subsidies. This category existed for five years, catastrophe on 31 Dec 1999, and was not extended. The understanding applies to agricultural goods as well every bit industrial products, except when the subsidies are exempt nether the Agriculture Agreement�due south �peace clause�, due to expire at the end of 2003.

Prohibited subsidies: subsidies that require recipients to encounter certain export targets, or to use domestic goods instead of imported goods. They are prohibited considering they are specifically designed to distort international trade, and are therefore likely to hurt other countries� trade. They can be challenged in the WTO dispute settlement process where they are handled under an accelerated timetable. If the dispute settlement process confirms that the subsidy is prohibited, information technology must be withdrawn immediately. Otherwise, the complaining country can take counter measures. If domestic producers are hurt by imports of subsidized products, countervailing duty can exist imposed.

Actionable subsidies: in this category the lament country has to show that the subsidy has an adverse effect on its interests. Otherwise the subsidy is permitted. The understanding defines three types of impairment they can cause. One country�s subsidies can injure a domestic industry in an importing land. They can hurt rival exporters from another country when the two compete in 3rd markets. And domestic subsidies in one country tin can injure exporters trying to compete in the subsidizing country�s domestic marketplace. If the Dispute Settlement Body rules that the subsidy does have an adverse upshot, the subsidy must exist withdrawn or its agin effect must be removed. Again, if domestic producers are injure by imports of subsidized products, countervailing duty can exist imposed.

Some of the disciplines are similar to those of the Anti-Dumping Understanding. Countervailing duty (the parallel of anti-dumping duty) can only be charged after the importing land has conducted a detailed investigation similar to that required for anti-dumping action. There are detailed rules for deciding whether a product is beingness subsidized (not always an easy calculation), criteria for determining whether imports of subsidized products are pain (�causing injury to�) domestic manufacture, procedures for initiating and conducting investigations, and rules on the implementation and duration (normally five years) of countervailing measures. The subsidized exporter tin can besides agree to heighten its export prices as an alternative to its exports being charged countervailing duty.

Subsidies may play an important role in developing countries and in the transformation of centrally-planned economies to market economies. Least-adult countries and developing countries with less than $1,000 per capita GNP are exempted from disciplines on prohibited export subsidies. Other developing countries are given until 2003 to get rid of their export subsidies. Least-developed countries must eliminate import-substitution subsidies (i.e. subsidies designed to help domestic production and avoid importing) past 2003 � for other developing countries the deadline was 2000. Developing countries likewise receive preferential treatment if their exports are field of study to countervailing duty investigations. For transition economies, prohibited subsidies had to be phased out by 2002.

> more on subsidies and countervailing measures

> See besides Doha Agenda negotiations

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Safeguards: emergency protection from imports

A WTO fellow member may restrict imports of a product temporarily (have �safeguard� actions) if its domestic industry is injured or threatened with injury caused by a surge in imports. Here, the injury has to be serious. Safeguard measures were always available under GATT (Commodity 19). Still, they were infrequently used, some governments preferring to protect their domestic industries through �grayness area� measures � using bilateral negotiations outside GATT�due south auspices, they persuaded exporting countries to restrain exports �voluntarily� or to concur to other means of sharing markets. Agreements of this kind were reached for a wide range of products: automobiles, steel, and semiconductors, for instance.

The WTO understanding broke new ground. It prohibits �grey-surface area� measures, and information technology sets time limits (a �sunset clause�) on all safeguard actions. The understanding says members must not seek, take or maintain any voluntary consign restraints, orderly marketing arrangements or whatsoever other similar measures on the export or the import side. The bilateral measures that were non modified to adjust with the agreement were phased out at the cease of 1998. Countries were allowed to go on one of these measures an extra year (until the end of 1999), but merely the European Wedlock � for restrictions on imports of cars from Nihon � fabricated use of this provision.

An import �surge� justifying safeguard activeness can be a existent increment in imports (an absolute increment); or information technology can exist an increase in the imports� share of a shrinking market, even if the import quantity has non increased (relative increment).

Industries or companies may request safeguard activeness past their government. The WTO agreement sets out requirements for safeguard investigations by national regime. The emphasis is on transparency and on following established rules and practices � avoiding arbitrary methods. The authorities conducting investigations have to announce publicly when hearings are to have place and provide other appropriate means for interested parties to present evidence. The prove must include arguments on whether a measure is in the public involvement.

The understanding sets out criteria for assessing whether �serious injury� is being caused or threatened, and the factors which must be considered in determining the affect of imports on the domestic industry. When imposed, 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 unremarkably should not reduce the quantities of imports below the annual boilerplate for the concluding three representative years for which statistics are available, unless clear justification is given that a different level is necessary to forbid or remedy serious injury.

In principle, safeguard measures cannot exist targeted at imports from a particular country. However, the agreement does depict how quotas can be allocated amidst supplying countries, including in the exceptional circumstance where imports from sure countries have increased disproportionately quickly. A safeguard measure should not last more than four years, although this can be extended upwards to eight years, subject area to a determination by competent national authorities that the measure is needed and that there is evidence the industry is adjusting. Measures imposed for more than a year must be progressively liberalized.

When a country restricts imports in club to safeguard its domestic producers, in principle it must requite something in return. The agreement says the exporting country (or exporting countries) can seek bounty through consultations. If no agreement is reached the exporting land tin can retaliate by taking equivalent action � for example, information technology tin can raise tariffs on exports from the country that is enforcing the safeguard measure out. In some circumstances, the exporting country has to wait for three years after the safeguard measure was introduced before it tin retaliate in this way � i.e. if the measure conforms with the provisions of the agreement and if it is taken as a result of an increase in the quantity of imports from the exporting country.

To some extent developing countries� exports are shielded from safeguard actions. An importing country can but apply a safeguard measure to a production from a developing country if the developing land is supplying more than than three% of the imports of that production, or if developing state members with less than iii% import share collectively account for more than 9% of total imports of the production concerned.

The WTO�s Safeguards Committee oversees the performance of the agreement and is responsible for the surveillance of members� commitments. Governments have to written report each stage of a safeguard investigation and related controlling, and the committee reviews these reports.

> more on safeguards

What is this agreement called?
Understanding on Subsidies and Countervailing Measures

�Ad-CVD�?

People sometimes refer to the 2 together � �Advertising-CVD� � merely there are fundamental differences

Dumping and subsidies � together with anti-dumping (Ad) measures and countervailing duties (CVD) � share a number of similarities. Many countries handle the ii under a single law, use a similar process to deal with them and give a single authority responsibleness for investigations. Occasionally, the two WTO committees responsible for these issues run into jointly.

The reaction to dumping and subsidies is oft a special offsetting import tax (countervailing duty in the case of a subsidy). This is charged on products from specific countries and therefore it breaks the GATT principles of binding a tariff and treating trading partners every bit (MFN). The agreements provide an escape clause, but they both also say that before imposing a duty, the importing state must acquit a detailed investigation that shows properly that domestic industry is injure.

But at that place are too fundamental differences, and these are reflected in the agreements.

Dumping is an action by a company. With subsidies, it is the authorities or a government bureau that acts, either by paying out subsidies directly or past requiring companies to subsidize certain customers.

But the WTO is an organisation of countries and their governments. The WTO does not deal with companies and cannot regulate companies� actions such every bit dumping. Therefore the Anti-Dumping Agreement only concerns the deportment governments may take against dumping. With subsidies, governments act on both sides: they subsidize and they act against each others� subsidies. Therefore the subsidies agreement disciplines both the subsidies and the reactions.

What is this understanding called?
Agreement on Safeguards

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Source: https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm

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