A.

Overview

1. What are safeguard measures?

Safeguard measures are trade remedy measures adopted by the government to

provide affected domestic industries relief against imports. The purpose for the application of
safeguard measures 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.

2. What are the two types of safeguard measures?

a. General safeguard measure – imposed against imports if the products at issue

are being imported in such increased 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; and

b. Special safeguard measure – imposed against importations of agricultural

products whose quantitative import restrictions were converted (tariffied) into
ordinary customs duties and agricultural products designated with the symbol
“SSG” in the GATT Schedule of Concessions. It may be invoked 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.

B. The Legislation

3. What is the Safeguard Measures Act?

Republic Act (RA) No. 8800, otherwise known as the “Safeguard Measures Act” was
signed on July 19, 2000 and took effect on August 9, 2000. It provides for:

 General safeguard measures to relieve domestic industries suffering from serious

injury as a result of increased imports; and

 Special safeguard measures on agricultural products marked “SSG’ in Schedule

LXXV-Philippines when the import volume exceeds its trigger level or when the
import price falls below a trigger price level.

The provisions of RA 8800 were adopted in Section 712 of the Customs

Modernization and Tariff Act (CMTA).

4. What other issuances were 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 (TC) Order No. 00-02 - prescribes the internal rules and
regulations governing the conduct of formal investigation by the Tariff
Commission pursuant to RA 8800.

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5. Which government agencies administer the Safeguard Measures Act?

a. General safeguard measure:

 Department of Trade and Industry-Bureau of Import Services (DTI-BIS) or

Department of Agriculture (DA) – receives the application/petition (DTI for
industrial goods and DA for agricultural products) and conducts 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 a Department Order on the results of the
investigation and implementation thereof.

 Tariff Commission - conducts formal investigation and submits

recommendation to DTI or DA Secretary on the form of definitive safeguard
measure to be imposed; monitors the domestic industry’s progress and its
efforts to make a positive adjustment to import competition; conducts
investigation on any legitimate request for the extension and re-application of
safeguard measures; the reduction, modification and/or termination of
safeguard action; and evaluates the effectiveness of the safeguard actions
taken by the domestic industry to facilitate its positive adjustment to import
competition after the termination of safeguard measure

 Bureau 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 finding within 5 working days from receipt of
the petition; and issues a Department Order for the imposition a special
safeguard duty on subject product.

C. Procedures

6. Who may file a petition for safeguard measures?

a. General safeguard measure:

 Domestic producers as a whole, of like or directly competitive products

manufactured or produced in the Philippines, or those whole collective output
of like or directly competitive products constitute 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; or

 The DTI or DA Secretary, motu proprio, provided there is evidence of

increased imports of the product under consideration.

Page 3 / Revised July 2016

 b. Special safeguard measure:

▪ Any person, whether natural or juridical may request a verification if a

particular agricultural product can be imposed a special safeguard duty; or

▪ The DA Secretary may, motu proprio, initiate the imposition of a special

safeguard measure following the satisfaction of the conditions for imposing
the measure.

7. What are the stages of investigation for the imposition of a general safeguard
measure?

a. Prima Facie Determination. The DTI-BIS or DA, upon acceptance of a properly

documented petition from a domestic industry, has five calendar days to decide
whether a prima facie case exists to merit the initiation of a preliminary
investigation. If no prima facie case exists, the application is rejected.

b. Preliminary Determination. Once a prima facie case has been established, DTI
or DA initiates the preliminary investigation to include notification to all known
interested parties and the government of the exporting country, and
distribution of questionnaire to all concerned parties. DTI or DA has 30
calendar days from receipt of the response to questionnaire to make its
preliminary determination whether or not to impose a provisional safeguard
measure. If affirmative finding, the Secretary of either DTI or DA issues a
Department Order (DO) for the imposition of the provisional safeguard
measure. In case of a negative finding, the DTI or DA Secretary terminates the
investigation.

c. Final Determination. The Commission has 120 calendar days (or 60 days if the
Secretary certifies the case as urgent) from receipt of the endorsement from the
Secretary to conclude its formal investigation and submit its report of findings and
recommendations to the Secretary on whether or not to impose a definitive
safeguard measure.

d. Decision. The Secretary has 15 calendar days from receipt of the Commission’s
report 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 a written instruction to the Commissioner of Customs, through the
Secretary of Finance, authorizing BOC the return of the cash bond previously
collected.

D. Elements

8. What are the elements for the imposition of safeguard measures?

▪ General safeguard measure:

a. Like product, as defined, or directly competitive product, i.e., domestically-

produced substitute product;
b. Increased imports – either in absolute terms or relative to domestic
production. Increase should be recent, sharp and significant;
c. Injury or threat thereof – means serious injury which is the overall impairment
in the position of a domestic industry, e.g., loss of profit, reduction in
production, under-utilization of capacity, cut in labor force, etc.; and

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 d. 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.

 Special safeguard measure:

a. Volume of imports exceed a base trigger level; or

b. Price of imports fall below a trigger price level.

Injury to the domestic industry is not element in the imposition of a special

safeguard measure.

9. What are the factors in determining serious injury?

 Rate and amount of the increase in imports of the product under consideration in
absolute or relative terms;

 Share of the domestic market taken by the increased imports;

 Changes in the level 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.

10. What are the 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 substantially increased importation, evidenced inter alia by 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 the 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 underemployment) in the
domestic industry and its inability to generate capital for 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.

Page 5 / Revised July 2016

E. Measures

11. What general safeguard measures can be imposed against injurious import
surges?

a. 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 the tariff increase may not be sufficient to redress or
to prevent serious injury to the domestic producer or producers, a quantitative
restriction may be applied.

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

 Increase in, or imposition of, any duty on the imported product;

 Decrease in or the imposition of a tariff-rate quota (Minimum Access Volume)
on the product;
 Modification or imposition of any quantitative restriction on the importation of
the product into the Philippines;
 One or more appropriate adjustment measures, including the provision of
trade adjustment assistance; or
 Any combination of actions described in subparagraphs (i) to (iv).

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

12. What special safeguard measures are imposed on SSG-denominated

agricultural products?

a. Provisional measure – not applied

b. Definitive safeguard measure:

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

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

i) Zero, if the price difference is, at most, 10% of the trigger price;
ii) Thirty percent (30%) of the amount by which the price difference exceeds
ten percent (10%) of the trigger price, if the said difference exceeds ten
percent (10%) but is at most 40% of the trigger price;
iii) Fifty percent (50%) of the amount by which the price difference exceeds
40% of the trigger price, plus the additional duty imposed under paragraph
ii, if the said difference exceeds 40% but is, at most, 60% of the trigger
price;
iv) Seventy percent (70%) of the amount by which the price difference 60%
of the trigger price, plus the additional duties imposed under paragraphs ii

Page 6 / Revised July 2016

 and iii, if the said difference exceeds 60% and is, at most, 75% of the
trigger price; or
v) Ninety percent (90%) of the amount by which the price difference exceeds
75% of the trigger price; plus the additional duties imposed under
paragraphs ii, iii, and iv, if the said difference exceeds 75% of the trigger
price.

13. What is the duration for the imposition of safeguard measures?

a. General safeguard measure:

 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 four (4) years, including the period in which
provisional measure is impose. The initial period may be extended up to a
maximum of eight (8) years, or ten (10) years for developing countries.

b. Special safeguard measure:

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

14. Are there limitations in the application of general safeguard measures?

Yes. The general safeguard measures should be limited to: i) extent of redressing or
preventing serious injury to the domestic industry; and ii) to facilitate the domestic industry’s
adjustments from the adverse effects directly attributed to the increased imports.

When quantitative import restrictions are used, such measures shall not reduce the
quantity of imports below the average imports for the three (3) preceding representative
years, unless clear justification is given that a different level is necessary to prevent or
remedy a serious injury.

General safeguard measure shall not be applied to a product originating from a

developing country, if that country’s share of total imports of the product is less than 3%,
provided that the developing countries with less than 3% share collectively account for not
more than 9% of the total imports.

15. Are there limitations in the application of special safeguard measures?

To safeguard and enhance the interest of farmers and fisherfolk, the provisions of RA
8435, otherwise known as the Agriculture and Fisheries Modernization Act, will not be
affected by the provisions of the special safeguard measures prescribed under RA 8800.
There shall be no recourse to the use of special safeguards measures concurrently with the
general safeguard measure.

The special safeguard provisions of RA 8800 shall lapse with the duration of the
reform process in agriculture as determined in the World Trade Organization (WTO).
Thereafter, recourse to safeguard measures shall be subject to the provisions on general
safeguard measures as provided in RA 8800.

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16. Can the Commission recommend the application of general safeguards on a
bilateral or selective basis?

No. One of the major guiding principles of the WTO Agreement on Safeguards is that
such measures be applied on a non-selective or Most-Favoured-Nation (MFN) basis.
Safeguard measures shall be applied to a product being imported irrespective of its source.
Thus, a WTO Member may not choose specific countries against whose exports it applies
the measures.

17. Does the Philippines have to pay compensation when it applies a general
safeguard measure?

Yes. The Philippines, when applying safeguard measures, must generally pay for
them through compensation which is substantially the equivalent level of concessions and
other obligations with respect to affected exporting WTO members. Any adequate means of
trade compensation may be agreed upon by the affected Members through consultation. In
the absence of such agreement on compensation within 30 days, the affected exporting
Members may individually suspend substantially equivalent concessions and other
obligations (i.e., retaliate) unless the Council for Trade in Goods disapproves. However, this
right to retaliate may not be exercised for the first three (3) years that a safeguard measure
is in effect, provided that the measure has been taken as a result of an absolute increase in
imports, and conforms to the provisions of the Agreement.

F. Adjustment Plan

18. What is an adjustment plan?

An adjustment plan is the action plan indicating a set of quantified goals, specific
programs, and timetables that a concerned industry commits to undertake in order to
facilitate the industry’s positive adjustment to import competition (e.g., adoption of improve
technology, rationalization of production structures).

19. To whom and when does a domestic industry submit its adjustment plan?

The domestic industry submits its adjustment plan to the Commission within 45
calendar days (or 30 calendar days if the investigation is certified as urgent) upon receipt of
the notice of submission.

20. What is the task of the Tariff Commission with regard to the adjustment plan?

The Commission monitors the developments with respect to the domestic industry,
including its progress and the specific efforts made by workers and firms in the domestic
industry to effect a positive adjustment to import competition. Monitoring includes public
hearing and on-site data verification to determine compliance by the domestic industry with
its adjustment plan.

Page 8 / Revised July 2016

G. Summary of Cases

21. What cases/products have been investigated by the Commission under RA

8800?

Year of Description
TC Final Determination (Original Case)
Investigation
2000 Cement Negative
Ceramic and wall
2000 Positive
tiles
Figured glass, clear Positive; measures on figured glass and
and tinted float glass mirror were suspended and
2004
glass and glass terminated, respectively, due to non-
mirror production of the domestic industry
Sodium
Positive; measure was not imposed for
2007 tripolyphosphates -
reason of public interest
Technical Grade
2009 Steel angle bars Positive
2010 Testliner board Positive
2014 Newsprint Positive

H. Safeguard Measures Vis-À-Vis Anti-Dumping and Countervailing Measures

22. How do safeguard measures compare with anti-dumping and countervailing

measures?

Anti-Dumping / Safeguard Measures

Countervailing Measures (General and Special)
Relevant Agreement:
 WTO Anti-Dumping Agreement (GATT  WTO Agreement on Safeguards
Article VI) (GATT Article XIX)

 WTO Agreement on Subsidies and  WTO Agreement on Agriculture

Countervailing Measures ( GATT Article
XVI)
Nature of Measure:
Address unfairly traded imports: Address fairly traded imports:
 Export price is lower than the normal  Export price at the level of normal
value value

 Subsidized production or exportation of  Increased level of imports absolute

the foreign merchandise or relative to production (general
safeguards)

 Volume of imports exceed a base

trigger level or price falls below a
trigger price level (special
safeguards)

Objective:
 Dumping and countervailing duties seek  General safeguards will remove
to level the playing field by providing injury and facilitate structural

Page 9 / Revised July 2016

 Anti-Dumping / Safeguard Measures
Countervailing Measures (General and Special)
remedies and protecting domestic adjustments that will enable an
industries against the unfair trade industry to gain competitiveness.
practices of dumping and/or
subsidization.  Special safeguards will assist
farmers whose products were
previously protected by quantitative
restrictions that have been tariffied.
Coverage of Measure:
 Limited to like products  All like or directly competitive
products
 Country specific and exporter specific
 All countries exporting of like or
directly competitive product

 General safeguards apply to

industrial and non-tariffied goods

 Special safeguards apply to tariffied

agricultural products denominated
with the acronym “SSG” in the
GATT Schedule of Concessions
Minimum Threshold of Support of Industry for Application:
 A domestic Industry which is supported  Industry filing the case should be a
by domestic producers whose collective producer of the like or directly
output constitutes more than 50% of the competitive product whose collective
total production of the like product output constitutes a major proportion
produced by other domestic producers of the total domestic production –
that are expressing either support for or general safeguards
opposition to the application. However,
no investigation shall be initiated when  DA (motu proprio) for special
domestic producers expressly safeguards
supporting the application account for
less than 25% of the production of the
like product produced by the domestic
industry.
Elements to be Established:
 Product comparability - like” product General Safeguards:
 Product comparability - like or
 Price difference / subsidy directly competitive product)

 Material injury or threat of material injury  Increased imports

 Causal link  Serious injury or threat of serious

injury

 Causal link

Special Safeguards:
 Product comparability - like product

 Volume of imports exceed a base

trigger level, or

Page 10 / Revised July 2016

 Anti-Dumping / Safeguard Measures
Countervailing Measures (General and Special)

 Price falls below a trigger price level

Forms of Measure:
 Provisional measure – anti-dumping General Safeguards:
bond / countervailing bond  Provisional measure – tariff increase

 Definitive anti-dumping duty /  Definitive safeguard measure - tariff

countervailing duty increase; quantitative restrictions
(e.g., import quota; import licensing)

Special Safeguards:
 Additional duty not exceeding one-
third of the level of the ordinary
customs duty in effect during the
year in which the action is taken.
Imposition of Provisional Measure:
 Requires the conduct of a preliminary General Safeguards:
investigation (affirmative preliminary  In critical circumstances where
determination) prior to imposition of a delay may cause damage that is
dumping or countervailing bond for a difficult to repair, safeguard measure
period of 4 months or 120 days. in the form of tariff adjustment may
be imposed for 200 days pursuant to
a preliminary determination.

Special Safeguards:
 Not provisionally applied.
Duration of Definitive Measure:
 Five (5) years, subject to sunset review General Safeguards:
to determine whether or not to extend  Four (4) years, extendable for
the effectivity of the dumping / another 4 years provided the
countervailing duty industry can show that structural
adjustment is being implemented
with an extension for another 2
years for developing countries.

Special Safeguards:
 Shall only be maintained until the
end of the year in which it has been
imposed.

Page 11 / Revised July 2016