The GATT ‘Escape Clause’ : Analyzing Article XIX and the Safeguard Agreement

The General Agreements on Tariffs and Trade facilitated liberal trade of goods globally by opening up domestic markets and reducing interference of states in trade. The proposition of the GATT to some extent meant curtailing sovereign powers of the state. Countries were cognizant of the fact that, theoretically, adopting and implementing a liberal trade theory would bolster economic growth, however, they were also aware that domestic needs could not be seconded in the pursuit of free trade. Therefore, in order to secure global cooperation, the GATT also contains provisions which allow countries to forgo their obligations under certain circumstances. The adoption of a liberal trade policy and the concessions granted as a result of the GATT agreement assured efficient allocation of resources. However, they also posed a threat to domestic industries by increasing competition. As a result, the consequences of increased imports and competition could possibly result in increased unemployment, decreased domestic production and price, increased dependency on foreign nations etc. In addition to anti-dumping and anti-subsidiary measures, the creators of the GATT also provided for certain safeguard measures under Article XIX which permits signatories to temporary suspend adhering to their obligations under the agreement in the interest of domestic industries when increased imports resulting from “unforeseen developments”, “cause or threaten serious injury to domestic producers” of competing products “to the extent and for such time as may be necessary to prevent or remedy such injury.” The said provision is also referred to as the ‘Escape Clause’. This paper aims to analyze the escape clause using cases and decisions of the DSB Panel and the Appellate Body