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Contingent Protection

GATT founding fathers were quite aware that trade liberalisation could generate economic and political turbulence. They were thus careful to introduce some rules of “contingent protection”, allowing governments to instate transitory protection in well defined circumstances, in order to prevent a return to plain protectionism.

There are three main instruments of contingent protection. The most used (by far) allows an importing country to impose antidumping measures if it demonstrates that these imports are "dumped" (that is, sold at a lower price in the export markets than the price prevailing in the home market of the exporting firms) and cause material injuries to domestic producers. WTO Members can also impose antisubsidy (sometimes called countervailing) measures if the importing country demonstrates that these imports have been subsidized by the exporting country and cause material injuries to domestic producers. An alternative is safeguard measures if the country faces import “surge” and if these imports cause serious injury to domestic producers. All these instruments (antidumping, antisubsidy or safeguard) are subject to WTO procedural rules which have been revised several times since the 1970s.

Contingent protection raises a fundamental question. If there is little doubt that there is a need for a “safety valve” allowing a government to overcome a difficult transitory situation during the liberalisation process, contingent protection instruments have shown their capacity to be captured by powerful vested interests—to the point of becoming an important backdoor for permanent protection (especially in the largest industrial and developing countries) and a way to create international collusion in world markets, an evolution particularly harmful for the smallest and poorest countries.



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