Trade Remedies

Binding tariffs and applying them equally to all trading partners (Most Favoured Nation treatment or MFN) are key to the smooth flow of trade in goods. The WTO Agreements uphold the principles, but they also allow derogations-in some circumstances.

Three of these issues are called Trade Remedies and cover:


·         Action taken against dumping which essentially means selling a product in an export market below its “normal value”.

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. Is this unfair competition? The applicable WTO Agreement (the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, often called the Anti Dumping Agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping-that is, it disciplines anti-dumping actions-where dumped imports are found, in an investigation conducted by the government of the importing country, to be injuring domestic producers in that country.

·         Subsidies and Countervailing Measures to offset subsidies

The WTO Agreement on Subsidies and Countervailing Measures disciplines the use of subsidies, and regulates the action countries can take to counter the effects of subsidies. Under the Agreement, a country can use the WTO’s dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects. Or the country can launch its own investigations and ultimately apply a countervailing measure (most often an extra duty) on subsidized imports that are found to be injuring domestic producers.

·         Emergency measures to limit imports temporarily, designed to “safeguard “domestic industries.

A WTO member may apply a temporary “safeguard” measure ( extra duty, or a quota, or other measure, on imports of a product) where an increase in imports of the product is causing, or threatening to cause, serious injury to the industry.

Safeguard measures were always available under the GATT (Article XIX).However, they were infrequently used, and some governments preferred to protect their industries through “grey area” measures (voluntary” export restraint arrangements on products such as cars, steel and semi conductors.)

The WTO Safeguards Agreement broke new ground in establishing procedural and substantive rules, including time limits, on the use of safeguards, and in prohibiting “grey area measures”.

Safeguard Duty
Anti Dumping
Countervailing Duty