SAFEGUARD MEASURES

1. Definition of terms

Arm’s length transaction- refers to a transaction where the prices is not affected by any
relationship between the buyer and the seller, or if there is no compensation, reimbursement,
benefit, or other consideration given in respect of the price.

Causality- refers to the overall assessment that the serious injury suffered by the domestic
industry is the direct result of increased imports of the product under consideration.

Country of export- is the country where the products was shipped to the Philippines, regardless
of the location of the seller. The country of export and the country of origin may be the same,
but not in all instances.

Country of Origin- is the country where the product either was wholly obtained or where the
last substantial transformation took place. The country of origin and the country of export may
be the same, but not in all instances. In case of a transshipment where a product is shipped from
a third country that is not the country where a product was manufactured or processed, the
country of origin would be different from the country of export.

Increased import- either in absolute terms or relative to domestic production increased should
be recent, sharp and significant

Injury- means material injury to a domestic industry, treat of material injury or material
retardation of the establishment of a domestic industry. Injury test must be based on positive
evidence and shall involve an objective examination of both the volume of the dumped import;
effects of the dumped imports on the prices in the domestic market for like products; and the
consequent impact of these imports on the domestic producers of such product.

Like product- product produced by the domestic industry which is identical or alike in all respect
to the article under consideration, or in the absences of such product, another product which,
although not alike in all respect, has the characteristics closely resembling those of the product
under consideration.

General Safeguard measure- imposed against imports if the products at issue are being
imported in such increase quantities, either absolute or relative to domestic production, and under
such conditions as to cause or threaten to cause serious injury to the domestic industry.

Safeguard measure- trade remedy measures adopted by the government to provide affected
domestic industries relief against imports. The purpose for the application of safeguard measure
is to give the affected domestic industry time to prepare itself for and adjust to increased import
competition resulting from the reduction of tariffs or the lifting of quantitative restrictions agreed
upon in multilateral trade negotiations.
Special Safeguard measure- impost against importations of agricultural products whose
quantitative import restrictions were converted into ordinary customs duties and agricultural
products designated with symbol “GGS” in the GATT Schedule of Concessions. It may be invoke
if (i) the volume of imports exceeds a trigger level; or, but not concurrently, (ii) the price of
imports falls below a trigger price. In either case, injury to the domestic industry need not be
established.

Scope and coverage

General Safeguard- Industrial and non tariffied goods

Special Safeguard- Tariffied agricultural products denominated with acronym “SSG” in the
GATT Schedule of Concession

Emergency Measures against injurious import/ Safeguard actions.

General Safeguard measure- imposed against imports if the products at issue are being
imported in such increase quantities, either absolute or relative to domestic production, and under
such conditions as to cause or threaten to cause serious injury to the domestic industry.

Special Safeguard measure- impost against importations of agricultural products whose

quantitative import restrictions were converted into ordinary customs duties and agricultural
products designated with symbol “GGS” in the GATT Schedule of Concessions. It may be invoke
if (i) the volume of imports exceeds a trigger level; or, but not concurrently, (ii) the price of
imports falls below a trigger price. In either case, injury to the domestic industry need not be
established.

Legislation

Republic Act (R.A.) No. 8800, otherwise known as the “Safeguard Measures Act”

provides for:

a. general safeguard measures to relieve domestic industries suffering from serious injury as a
result of increase in imports; and

b. special safeguard measures (additional duty not exceeding 1/3 of the existing rate of duty) on
agricultural products marked ”SSG’ in Schedule LXXV-Philippines, when the import volume
exceeds its trigger level or when the actual c.i.f. import price falls below a trigger price level.
The reason for the application of safeguard measures is to give the affected domestic

industry time to prepare itself against, and adjust to, increased import competition because of
the reduction of tariffs or the lifting of quantitative restrictions. R.A. 8800 was signed into law on
July 19, 2000, published on July 24, 2000, and took effect on August 9, 2000, i.e., fifteen (15)
days following its complete publication in a newspaper of general circulation. Its provisions were
adopted in Section 712 of the Customs Modernization and Tariff Act (CMTA).

Other issuances promulgated to implement RA 8800

· Joint/Administrative Order No. 03, s.2000- Implementing rules and regulations of RA 8800
which took effect on October 11, 2000.

· Tariff Commission Order No. 00-02- prescribes the internal rules and regulations governing
the conduct of formal investigation by the Tariff commission pursuant to RA 8800

Government agencies administer the safeguard measures act

A. General safeguard measure:

· Department of Trade and Industry- Bureau of Import Service or Department of

Agriculture- receives the application/petition (DTI for industrial goods and DA for agricultural
products) and cons=ducts preliminary investigation to ascertain whether or not to impose
provisional measure.

The secretary of either department decides on the form of safeguard measure to impose and
issues department order on the results of the investigation and implementation thereof.

· Tariff Commission- conducts formal investigation and submits recommendation to DTI/DA

secretary on the form of definitive safeguard measure to be imposed; monitors the
domestic industries and its effort to make a positive adjustment to import competition; conducts
investigation on any legitimate request for the extension and re-application of safeguard measure;
the reduction, modification and/or termination of safeguard actions taken by the domestic
industry to facilitate its positive adjustment to import competition after the termination of
safeguard measure

· Burau of Customs- implements the imposition of the safeguard measures.

B. Special Safeguard measure:

· Department of Agriculture- receives the application/petition for safeguard measure on
sensitive tariffied agricultural products (marked SSG in Schedule LXXV-Philippines); conducts
verification whether (i) volume of imports exceeds a base trigger level, or (ii) c.i.f. import price
falls below a trigger price level and makes its findings within 5 working days from the receipt of
the petition; and issues a department order for the imposition a special safeguard duty on subject
product.

Procedures

For general safeguard measures, the following may file a petition:

· Domestic producers as a whole of like or directly competitive products

manufactured or produced in the Philippines, or those whose collective output of

like or directly competitive products constitutes a major proportion of the total domestic
production of those products;

· The President, or the House or Senate Committee on Agriculture, or the House or Senate
Committee on Trade and Commerce; and

· The Secretary of Trade and Industry or the Secretary of Agriculture, motu proprio, if there
is evidence of increased imports of the product under consideration.

For special safeguard measures, the following may file a petition:

· Any person, whether natural or juridical, may request verification if a particular agricultural
product can be imposed a special safeguard duty.

· b. The Secretary of Agriculture may, motu proprio, initiate the imposition of a special
safeguard measure following the satisfaction of the conditions for imposing the measure.

Determination

Stages of investigation for the imposition of safeguard measure

· Prima facie determination- The DTI-BIS/DA, upon acceptance of the properly

documented petition, has 5 calendar days to decide whether prima facie case exist to merit the
initiation of a preliminary investigation. If no prima facie case exist, the application is rejected.

· Preliminary determination- once a prima facie case has been established, DTI initiates
the preliminary investigation to include notification to all known interested parties and
government of the exporting country, and distribution of questionnaires to make its preliminary
determination whether or not to impose provisional safeguard measure. If affirmative, the
secretary of either DTI/DA issues department order for the imposition of the provisional safeguard
measure. In case of negative finding, the DTI/DA secretary terminates the investigation.

· Final determination- the Commission has 120 calendar days ( or 60 if the secretary
certifies the case urgent) from receipt of the endorsement from the secretary to conclude its
final investigation and submits its report of findings and recommendations to the secretary on
whether or not to impose a definitive safeguard measure

· Decision- the secretary has 15 calendar days from the receipt of the commission’s to
make a decision. If the determination is affirmative, a department order is issued to implement
the imposition of the general safeguard measure. In case of a negative determination, the
secretary issues a DO for the termination of the case as well as written instruction to the
Commissioner of Customs, through the Secretary of Finance, authorizing the BOC to return the
cash bond previously collected.

Elements
A. General Safeguard Measure

· Like product- product produced by the domestic industry which is identical or alike in all
respect to the article under consideration, or in the absences of such product, another product
which, although not alike in all respect, has the characteristics closely resembling those of the
product under consideration.

· Increased import- either in absolute terms or relative to domestic production increased

should be recent, sharp and significant

· Injury- means material injury to a domestic industry, treat of material injury or material
retardation of the establishment of a domestic industry. Injury test must be based on positive
evidence and shall involve an objective examination of both the volume of the dumped import;
effects of the dumped imports on the prices in the domestic market for like products; and the
consequent impact of these imports on the domestic producers of such product.

· Causality- refers to the overall assessment that the serious injury suffered by the
domestic industry is the direct result of increased imports of the product under consideration.

B. Special Safeguard measure:

· Volume of imports exceed a base trigger level; or

· Price of imports fall below a trigger price level

Injury to the domestic industry is not an element in the imposition of a special safeguard measure.

Factors in determining serious injury

· Rate and amount of the increased in import of the product under consideration in absolute
or relative terms;

· Share of the domestic market taken by the increased import;

· Changes in the levels of sales, prices, production, productivity, capacity utilization,

inventories profits and losses, wages and employment of the domestic industry;

· Significant idling of productive facilities in the domestic industry including the closure of
plants or underutilization of production capacity.

· Inability of a significant number of firms to carry out domestic production at a profit; and

· Significant unemployment or underemployment within the domestic industry.

Factors considered in determining the existence of a threat of serious injury.

· Significant rate of increase in imports into the Philippines indicating the likelihood of
substantial increase in importation, evidenced inter alia y the existence of letters of credit, supply
or sales contract, the award of a tender, an irrevocable offer or other similar contracts.

· Sufficient freely disposable, or an imminent, substantial increase in, production capacity

of the foreign exporters including access conditions they face in third country markets, indicating
likelihood of substantially increased exports to the Philippines;

· Decline in sales or market share, and a downward trend in production, profits, wages
productivity or employment ( or increasing under employment) in the domestic industry and its
inability to generate capital for the modernization or to maintain existing levels of expenditures
for research and development; and

· Growing inventories of the product being investigated whether maintained by Philippine

producers, importers, wholesalers or retailers.

Measures

General Safeguard Measure

· Provisional measure- takes the form of a tariff increase either ad valorem or specific, or
both, to be paid through a cash bond set at a level sufficient to redress or prevent serious injury
to the domestic industry. In the case of non agricultural products, the secretary shall first establish
that the imposition of the provisional safeguard measure would be in the public interest. In the
case of agricultural products, where tariff increase may not be sufficient to redress or to prevent
serious injury to the domestic producers, a quantitative restriction may be applied.

· Definitive safeguard measure- may take any of the following forms:

Ø Increase in, or imposition of, any duty on imported product

Ø Decrease or in the imposition of a tariff-rate quota ( Minimum Access Volume) on the product;

Ø Modification or imposition of any quantitative restriction on the importation of the product into
the Philippines;

Ø One or more appropriate adjustment measures, including the provision of trade adjustment or
assistance;

Ø Any combination of actions described in subparagraphs.

The commission may also recommend the actions, including the initiation o international
negotiations, to address the underlying cause of the increase in imports of the products to
alleviate the injury or threat thereof to the domestic industry and to facilitate positive adjustment
to import competition.

Special Safeguard Measure

· Provisional measure- Not applied.

· Definitive Safeguard measure:

Ø Under the volume test, additional duty should not exceed one-third (1/3) of the applicable
quota customs duty on the agricultural product under consideration

Ø Under price test, the additional duty is computed as follows:

ü Zero, if the price difference is, at most, 10% of the trigger price;

ü 30 % of the amount by which the price difference exceeds 10% of the trigger price, if the said
difference exceeds 10% but is at most 40% of the trigger price;

ü 50% of the amount by which the difference exceeds 40% of the trigger price, plus additional
duty imposed under paragraph ii, if the said difference exceed 40% but is most 60% of the trigger
price;

ü 70% of the amount by which the price difference 60% of the trigger price, plus the additional
duties imposed under paragraphs ii and iii, if the said difference exceeds 60% and is, at most,
75% of the trigger price; or

ü 90% of the amount by which the price difference exceeds 75% of the trigger price; plus the
additional duties imposed under paragraphs ii, iii, iv if the said difference exceeds 75% of the
trigger price.

Duration for the imposition of safeguard measures

General Safeguard Measures:

Provisional measure- not exceed 200 calendar days from the date of imposition.

Definitive safeguard measure- The maximum initial period for the application of a safeguard
measure is 4 years, including period in which provisional measure is imposed. The initial period
may be extended up to a maximum of 8 years, or 10 years for developing countries,

Special Safeguard Measure:

Definitive safeguard duty- effective only until the end of the year in which the measure is imposed.