Common use of Transitional Safeguard Measures Clause in Contracts

Transitional Safeguard Measures. 1. For the purposes of this Article: 2. If, as a result of the reduction or elimination of a customs duty under this Agreement, an originating product of a Party is being imported into the territory of the other Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to cause serious injury, or threat thereof, to a domestic industry producing a like or directly competitive product, the other Party may, to the extent necessary to prevent or remedy serious injury apply a transitional safeguard measure consisting of: (a) the suspension of the further reduction of any rate of customs duty on the product provided for under this Agreement; (b) an increase of the rate of customs duty on the product to a level not to exceed the lesser of: (i) the most-favored-nation (MFN) applied rate of customs duty on the product in effect at the date on which the transitional safeguard measure is taken; or (ii) the MFN applied rate of customs duty on the product in effect on the day immediately preceding the date this Agreement enters into force. 3. A Party shall notify the other Party in writing: (a) immediately on initiation of an investigation described in Paragraph 5; (b) immediately upon making a finding of serious injury or threat thereof caused by increased imports of an originating product of the other Party as a result of the reduction or elimination of a customs duty on the product pursuant to this Agreement; (c) before applying provisional measures pursuant to Paragraph 12, and (d) no less than 20 days in advance of applying a definitive transitional safeguard measure or extending a transitional safeguard measure. 4. A Party shall consult with the other Party as far in advance of applying a transitional safeguard measure as practicable, with a view to reviewing the non-confidential version of the information arising from the investigation and exchanging views on the measure. 5. A Party shall apply a transitional safeguard measure only following an investigation by the Party’s competent authorities in accordance with Articles 3 and 4.2(c) of the Safeguards Agreement, and to this end, Articles 3 and 4.2(c) of the Safeguards Agreement are incorporated into and made a part of this Agreement, mutatis mutandis. 6. In the investigation described in Paragraph 5, the Party shall comply with the requirements of Article 4.2 (a) and (b) of the Safeguards Agreement, and to this end, Article 4.2 (a) and (b) of the Safeguards Agreement is incorporated into and made a part of this Agreement, mutatis mutandis. 7. Each Party shall ensure that its competent authorities complete any such investigation within one year of its date of initiation. 8. Neither Party may apply a transitional safeguard measure: (a) except to the extent, and for such time, as may be necessary to prevent or remedy serious injury and to facilitate adjustment; (b) for a period exceeding two years, except that the period may be extended by up to one year if the competent authorities of the importing Party determine, in conformity with the procedures specified in this Article, that the measure continues to be necessary to prevent or remedy serious injury and to facilitate adjustment and that there is evidence that the industry is adjusting, provided that the total period of application of a transitional safeguard measure, including the period of initial application and any extension thereof, shall not exceed three years; or (c) beyond the expiration of the transition period, except with the consent of the other Party. 9. No transitional safeguard measure shall be applied again to the import of a product which has been previously subject to such measure for a period of time equal to the period during which the previous measure was applied. 10. Where the expected duration of the transitional safeguard measure is over one year, the importing Party shall progressively liberalize it at regular intervals. 11. When a Party terminates a transitional safeguard measure, the rate of customs duty shall be the rate that, according to the Party’s Schedule to Annex 2-1A and 2-1B (Schedule of Tariff Commitments), would have been in effect but for the measure. 12. In critical circumstances where delay would cause damage that would be difficult to repair, a Party may apply a transitional safeguard measure on a provisional basis pursuant to a preliminary determination by its competent authorities that there is clear evidence that imports of an originating product from the other Party have increased as the result of the reduction or elimination of a customs duty under this Agreement, and such imports have caused serious injury, or threat thereof, to the domestic industry. 13. Before applying a safeguard measure on a provisional basis, the applying Party shall notify the other Party. A Party may not apply a provisional measure until at least 45 days after the date its competent authorities initiate an investigation. 14. The duration of any provisional measure shall not exceed 200 days, during which time the Party shall comply with the requirements of Paragraphs 5 and 6. 15. The Party shall promptly refund any tariff increases if the investigation described in Paragraph 5 does not result in a finding that the requirements of Paragraph 2 are met. The duration of any provisional measure shall be counted as part of the period described in Paragraph 8(b). 16. No later than 30 days after it applies a transitional safeguard measure, a Party shall afford an opportunity for the other Party to consult with it regarding appropriate trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the transitional safeguard measure. The applying Party shall provide such compensation as the Parties mutually agree. 17. If the Parties are unable to agree on compensation within 30 days after consultations begin, the Party against whose originating product the measure is applied may suspend the application of concessions with respect to originating product of the applying Party that have trade effects substantially equivalent to the transitional safeguard measure. The Party exercising the right of suspension may suspend the application of concessions only for the minimum period necessary to achieve the substantially equivalent effects. 18. A Party against whose product the transitional safeguard measure is applied shall notify the Party applying the transitional safeguard measure in writing at least 30 days before it suspends concessions in accordance with Paragraph 17. 19. The right of suspension referred in Paragraph 17 shall not be exercised for the first 24 months during which a transitional safeguard measure is in effect, provided that the transitional safeguard measure has been applied as a result of an absolute increase in imports and conforms to the provisions of this Agreement. 20. The applying Party’s obligation to provide compensation under Paragraph 16 and the other Party’s right to suspend concessions under Paragraph 17 shall terminate on the date the transitional safeguard measure terminates.