Dominican Republic: Safeguard Measures on Imports of Polypropylene Bags and Tubular Fabric

On October 15, 2010, Costa Rica requested consultations (under the WTO) with the Dominican Republic concerning provisional and definitive safeguard mea­sures imposed by the Dominican Republic on imports of polypropylene bags and tubular fabric and the investigation that led to the imposition of those mea­sures. Costa Rica was concerned about certain aspects of the safeguard mea­sures and the underlying investigation. In particular, Costa Rica alleged that these measures appeared to be inconsistent with the Agreement on Safeguards and Article XIX:1(a) of the GATT (1994). The dispute settlement panel concluded its work and submitted its report in January 2012. The panel concluded that the provisional and definitive duties were safeguards, since they suspended the Do­minican Republic’s obligations under GATT Articles I:1 (the most-favored-nation obligation, because certain countries of origin—Colombia, Indonesia, Mexico, and Panama—were excluded from its application) and II:1(b) (since they imposed a tariff surcharge, different from an ordinary customs duty, which was not set forth in the Dominican Republic’s GATT Schedule). After concluding that GATT Article XIX and the Safeguards Agreement were applicable to this dispute, the panel ad­dressed the substantive claims raised by the complainants.

The panel found that the Dominican Republic acted inconsistently with its obli­gations under the GATT 1994 and the Safeguards Agreement because the report published by the competent authorities failed to provide an explanation for the existence of unforeseen developments and for the effect of the obligations of the GATT (1994).

The panel found that the Dominican Republic acted inconsistently with its ob­ligations under the Safeguards Agreement and the GATT by excluding certain products from the definition of the domestic directly competitive product and certain producers of like or directly competitive products for the purpose of de­fining the domestic industry. It also failed (1) to provide reasoned and adequate explanations with respect to the existence of serious injury, and (2) to take all reasonable steps to exclude Thailand, as a developing country, from the applica­tion of the provisional and definitive safeguard measures.

Soon after the issuance of the report, the Dominican Republic lifted the safe­guard measure that was the subject of this dispute and established the MFN tariff at the level that was in place before the application of the safeguard.

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.

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