Trade remedies are special measures the parties to the agreement can take to mitigate sectoral adjustment problems created as tariffs and barriers drop, or to deal with accusations that foreigners are selling products at prices lower than they charge at home (dumping), and/or subsidizing their exports.
The Koreans had really hoped to negotiate special treatment under U.S. antidumping and anti-subsidy (countervailing) duty procedures. Cooper and Manyin described Korean concerns in a Congressional Research Service Report last July (The Proposed South Korea-U.S. Free Trade Agreement (KORUS FTA):
...For over a decade, South Korea has chafed at the U.S. use of antidumping (AD) and countervailing duty (CVD) laws that raise tariffs on South Korean exports. According to one study, in July 2000 the five CVD and 18 AD orders against South Korean exports covered approximately $2.5 billion, or over 7%, of U.S. imports from South Korea in 1999. Moreover, these tariff hikes have tended to be concentrated in a handful of South Korean industries — semiconductors, steel, televisions, and telecommunications equipment — that have considerable political influence in Seoul. The Ministry of Foreign Affairs and Trade (MOFAT)’s May 2006 draft FTA contains provisions that would constrain U.S. use of AD measures. South Korea is specifically concerned about the U.S. practice of zeroing in determining antidumping margins and cumulation in determining material injury in antidumping and countervailing duty determinations. It is also concerned about U.S. sunset reviews of countervailing duty and antidumping cases, which South Korea alleges results in antidumping and countervailing duty orders being extended unnecessarily. In the multilateral Doha Development Agenda talks, South Korea is one of several countries demanding revisions to global antidumping rules, changes the United States opposes.
Trade remedies are dealt with in the agreement's Chapter 10. It doesn't look like Korea achieved its objectives. Cooper and Manyin describe the result of the negotiations by saying that the U.S. and Korea papered over their differences by setting up a consultative committee.
The Chapter's Section A deals with safeguard measures. These measures are meant to protect domestic industries in each country from serious injury or threat of serious injury from the reductions in tariffs. A serious injury is a significant overall impairment in the position of a domestic industry. A threat must be clearly imminent and based on facts and not on conjecture.
In the event of serious injury, or its threat, the parties can temporarily suspend further reductions in a tariff, or increase it back to its orignal levels.
The agreement conditions and controls these changes. It provides for consultation, requires implementation after investigation by competent authorities, limits them to at most three years, requires phase out of safeguards lasting more than a year, and prevents them from persisting after the agreement's transition period (unless both parties agree), and prevents them from being used twice against the same good.
The agreement provides for emergency "provisional" safeguards, but limits these to 200 days.
If one party imposes a safeguard measure, it must provide compensation to the other. If the two parties can't agree on compensation, the party that doesn't impose the safeguard can suspend concession of equivalent value.
Section B deals with antidumping and countervailing duties. This is where Korea hoped to obtain concessions and where it must have been disappointed. The section starts out by saying that each party retains its antidumping and countervailing duties rights and obligations under the WTO agreement, and that nothing in the trade agreement imposes rights and obligations on either party with respect to antidumping or countervailing duties.
There are some new elements: (a) we've each agreed to notify and provide an opportunity for a meeting when we receive an application for an investigation and (b) we've also agreed to give each other the opportunity to propose price concessions or quantity limits as an alternative to antidumping or countervailing duty penalties. While the agreement creates an obligation to notify and to provide an opportunity to propose alternatives, there is no obligation to accept proposed price concessions or quantity limits. Neither is there recourse to dispute settlement for either of these new elements.
Part C sets up a joint committee on trade remedies. This is also new. The committee provides a forum for an exchange of information and views on all issues related to antidumping, countervailing duties, and other trade issues.
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