Safeguard:

If  the domestic industry of a country suffers serious injury because of increased imports or  if  there is even a threat of serious injury, the country may put restriction on import, either by raising import duty beyond the bound level or by putting quantitative restrictions on the import.

Detailed rules have been laid down  for taking safeguard measures. (Article XIX  of GATT 1994 and Agreement on Safeguard). A country, before actually imposing import restrictions under  this  provision, has to undertake a transparent, objective and detailed investigation to determine whether there has been a surge in import and whether there  is serious injury (or threat of serious injury)  to the domestic industry because of such surge in import.

A safeguard action has to be taken on the import of the product as a whole and not against the  import fiom a particular  country. Thus if additional tariff  is applied as a safeguard measure, it will  be  applicable to  imports from all countries.  If quantitative restriction is applied, an annual global limit of import will be fixed, based on the past imports; and then this quantity will be allocated to  all  the  countries generally  in proportion to the past imports. There is a provision for deviation from this normal rule of quota division in very specific  circumstances, for example, if there has been very rapid rise in exports from a particular country.

A safeguard measure is a temporary measure. It can continue only so long as the  injury continues. Generally the maximum duration of application of  a safeguard measure is four years. In certain circumstances, it can be extended; but the total maximum period must not exceed eight years. When a country applies a safeguard measure, it has  to give some  compensatory benefit to countries that have substantial interest in the export of that product.

In  absence of compensation, those countries can  take retaliatory measures (generally in the form of raising the tariffs on some products of that country). But no retaliatory measure can generally be taken during  the first  three years of the safeguard measure. The safeguard is an example of burden-sharing in the GATTJWTO system. When a country faces sudden rise in  impohs and  its industry is required to adjust  to  the  emerging situation, the safeguard provision ensures that  the burden  is shared by all the countries, so  that  it  does not  fall totally on the country facing the surge in imports. In some ways, it  is the counterpart of the MFN  provision  which  ensures  the  sharing  of  benefit of lower tariff on a non-discriminatory basis among the countries, as mentioned earlier.