The Safeguards Mess: A Critique of WTO Jurisprudence

Abstract

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.

Keywords: tariffs, steel industry, GATT