Question

Q23. Consider the following statements about Safeguards Duty:

1. Safeguards give domestic producers a period of grace to become more competitive vis-à-vis imports.

2. Safeguards usually take the form of increased duties to higher than bound rate or standard rates or quantitative restrictions on imports.

Which of the above statements are correct?

• A. a) 1 only
• B. b) 2 only
• C. c) Both 1 and 2
• D. d) Neither 1 nor 2

Answer 1

The correct option is A

a) 1 only

• When imports of a particular product, as a result of tariff concessions or other WTO obligations undertaken by the importing country, increase unexpectedly to a point that they cause or threaten to cause serious injury to domestic producers of like or directly competitive products, a safeguard which is a form of temporary relief is used. Safeguards give domestic producers a period of grace to become more competitive vis-à-vis imports.
• If this happens, the government of the importing country may suspend the concession or obligation, but will be expected to provide compensation by offering some other concession.
• Otherwise, the affected WTO member(s) can retaliate by withdrawing equivalent concessions. Industries or companies often request safeguard action by their governments.
• Safeguards usually take the form of increased duties to higher than bound rate or standard rates or quantitative restrictions on imports.