The Safeguards Mess: A Critique of WTO Jurisprudence

The creation of the WTO revived the use of "safeguard" measures to protect troubled industries against surges in import competition. Many of these measures have now been challenged in the WTO dispute resolution process, and in each case the process has found the challenged measure to be a violation of WTO law. This paper examines the WTO rules on safeguards from an economic perspective, and offers a critique of the Appellate Body decisions to date. Among other things, it argues that the textual preconditions for the use of safeguards in the treaty text are incoherent, and that the Appellate Body has compounded the problem through a series of unsound rulings. The result is a situation in which nations cannot use safeguards without facing a near certainty that they will be found invalid. Those who believe that safeguard measures are wasteful protectionism may welcome these developments, but it is not obvious that the trading system will benefit in the long run. The tariffs imposed by the United States on steel imports last year, and the pending challenges to them before the World Trade Organization (WTO), have brought a great deal of publicity to a subject that had already been a subject of considerable litigation within the WTO system -"safeguard measures." Such measures are taken pursuant to Article XIX of the General Agreement on Tariffs and Trade (GATT) (the GATT "escape clause"), which permits the imposition of temporary measures to protect industries that exhibit "serious injury" or the threat of such injury due to "increased quantities" of imports. During the Uruguay Round of GATT negotiations which led to the formation of the WTO, the obligations of Article XIX were refined and elaborated in the WTO Agreement on Safeguards. Article XIX and the Agreement on Safeguards raise many conceptual and interpretive issues. Such issues received little attention during the long * Frank & Bernice Greenberg Professor of Law, University of Chicago. This essay was prepared for the Dartmouth/Tuck conference on The WTO-Trade Remedies and Dispute Settlement, May, 2003.