07 August 2014

Procedural conundrum of Indian safeguard law

by T.D. Satish

Even though the mechanism set up by India in applying the provisions of Article XIX of GATT and Agreement on Safeguards (AOS) in India through its domestic safeguard provisions [see end note 1] satisfy the basic requirements required for its implementation, however, when compared to other countries, there remain a lot of procedural loop-holes still to be filled in to make the safeguard investigation process more transparent and clear. The present write-up compares and examines four problem areas concerning procedures currently adopted by India in conducting safeguard investigations vis-à-vis other Members of WTO, namely, European Union and United States, which may be suitably adopted by India to cover the existing loopholes.


Initiation of safeguard investigation

Though there is duty casts on Indian Safeguard Authority to prima-facie satisfy itself with contents of application filed by the Applicant/s.[see end note 2], but there is no provision for a time-period within which such an application is to be considered. The issue merits consideration since the Applicant/s may already be severely impacted at the time of making the application and hence anticipates early initiation of proceedings. However, with no time limit to consider the application, Applicant/s have no option but to constantly keep in touch or even lobby with the Authority to get the investigation initiated. Such a practice puts a big question mark on the transparency of the investigation.

Compared to the practice of ‘open-ended’ time frame in India, safeguard provisions in EU and USA provide definite time period to Authorities to consider the request for initiation of safeguard investigation. Article 6.1 of the EU Regulation [see end note 3] requires the Commission to initiate the investigation within one month of receipt of information from a Member state in EU and publish the notice in official journal apart from holding consultations with the concerned Member state making application on behalf of its domestic industry within an Advisory Committee to consider the request [see end note 4].

On the other hand, US Regulations [see end note 5] are quite different from EU regulations for there is no time limit provided, per-se, for initiating the investigation. Having said that, the entire safeguard investigation in US revolves around the date of filing of Application by representative domestic industry as the time line for making determinations hinge on this the date of filing of petition [see end note 6].

India neither has a provision similar to EU to fix a time limit for making a decision to initiate the proceedings or like that of US, where date of filing of petition assumes criticality. To cause undue delay in initiating an investigation, as is more likely in cases, with no set time limits, would be like keeping the patient waiting for treatment, while the epidemic continues to kill it.


Provisional safeguard measure determination

One of the most noticeable part of AoS is the regulation relating to provisional safeguard measures. Article 6 of AoS, inter-alia, allows Member countries to impose provisional safeguard measures in critical circumstances where delay would cause damage, which would be difficult to repair. The terms ‘critical circumstances’ and ‘delay would cause damage which it would be difficult to repair’ indicate urgency in the proceedings. But how early remains early is a difficult question, which need to be decided on facts and circumstances of each case. Further, there is also no time limit prescribed for taking a decision on imposing provisional safeguard measure.

Much like AoS, Indian Safeguard Rules also does not prescribe any minimum time to make a preliminary determination nor a maximum time period to take a decision on provisional safeguard measure. Only deviation in Indian Safeguard Rules from AoS with respect to preliminary determination is that the Safeguard Authority is required to proceed expeditiously.

Result: Uncertainty in the market whether there will be a provisional safeguard measure to restrict fair imports or not, making the position of exporters from exporting nations, importers as well as end-users difficult to take short term as well as long term business decisions. This is apparent from past investigations conducted by India, wherein preliminary determinations have been made as early as fourth day [see end note 7] from the date of initiation of investigation to over 3 months [see end note 8] as well.

EU’s regulations also do not lend much light on this aspect. However, unlike India, EU has used safeguard measure as trade remedy measure very rarely and provisional measures even more sparingly since conducting the first investigation in 1982. From 1982 till 2005, EU has conducted 15 safeguard investigations – general as well as China specific, of which provisional determination was made in only 4 investigations [see end note 9]. Further, since 2005, EU has so far not conducted any safeguard investigation. Thus, provisional safeguard measure is an uncommon affair in EU, unlike India.

On the other hand, US divide application of provisional relief in 2 parts: one for perishable products and citrus fruits and other for other products. Regulations require adherence to following time-line for preliminary determinations, which may be summed up as follows:

Perishable products:

  • Determination whether product is a perishable product and indicates serious injury or threat thereof due to increased imports: Within 21 days from date of request [see end note 10]
    • If affirmative: Trade Representative to request the Commission to make a preliminary determination: Within 21 days from the date of filing of request  [see end note 11].
    • The President to proclaim such provisional relief:  Within 7 days from the date of receiving of report from the Commission [see end note 12]

Other products:

  • Where critical circumstances alleged, determination by Commission of increased imports causing or threatening to cause serious injury and delay in taking action would cause damage that would be difficult to repair: Within 60 days from the date of filing petition [see end note 13].
    • If affirmative: the President, within 30 days from receiving of the report, shall proclaim such a provisional relief [see end note 14].

Thus, there is a clear-cut time limit provided under US law to keep the investigation time-bound and transparent.

Comparison with US and EU provisions indicate the necessity of a set deadline for taking provisional safeguard measures or in its absence, desist from taking any such action unless there are compelling circumstances – a practice adopted by EU. If a detailed time period for making preliminary determination is prescribed in the Indian law, like that made by US, it will increase transparency and bring in to certainty in international trade.


Time limit for taking decision on duty imposition

The task of putting a time limit for completion of safeguard investigation has been left with Member countries to decide for them as AoS does not provide any such time limit. However, being an emergency measure, it is expected that the Member countries would fix a definite time period for completion of investigation, including a buffer time limit to meet any exigencies.

India, in its wisdom, considered 8 months as sufficient time period for completion of investigation from the date of initiation of investigation [see end note 15]. This is irrespective of the fact whether any preliminary determination, examining the existence of critical circumstances, have been made or not. On the other hand, US has kept separate deadlines – (a) case where no allegation of existence of critical circumstances is made and (b) where existence of critical circumstances has been alleged in the petition. The logic behind keeping two separate deadlines is to provide for additional time to Commission to consider the existence of additional facts pertaining to existence of critical circumstances. In addition to keeping a deadline for making a determination, there is a time-limit prescribed for the President to take a decision on imposition of safeguard measures within 60 days (50 days if provisional relief proclaimed) from making of the affirmative report [see end note 16]. EU, on its part, provides for 9 months for conclusion of investigation, which is inclusive of time-period to examine critical circumstances.

However, EU Regulations do provide for an additional period of 2 months, in exceptional circumstances [see end note 17], which is required to be intimated vide publish notice of extension in its Official Journal setting forth the reasons for such extension. India, on its part also, provides for extension of time for completion of investigation. However, the provision is couched in such a manner that the empowered authority has a free hand to extend the investigation for as much time as it desires [see end note 18]. Such an unrestricted power nullifies the real intent behind safeguard investigations, which require speedier and time bound determinations. As a result, there is no ultimate time limit for completion of safeguard investigations in India. This results in uncertainty in proceedings. In Hot Rolled Flat Products of Stainless Steel, the Indian Authority could not finish its investigation within stipulated 8 months ending on 25th February 2013. It was only on subsequent day after expiry of stipulated 8 months that time was again extended back dated by 3 months until 25th May 2013 to complete the investigation. Further, the time limit of 8 months under Safeguards Rules is only for making a determination and does not include time taken for imposition of safeguard measures. Thus, once the Safeguard Authority in India recommends imposition of safeguard measures, there is no prescribed time period within which the Ministry of Finance or Standing Board of Safeguards has to consider the recommendation of Safeguard Authority.

This uncertainty in addition to the fact that there exists no mechanism to find out whether safeguard duty will ultimately be imposed or not, places everyone concerned with the investigation in a vulnerable position as on the one side, domestic industry is deprived of the safeguard duty to protect itself while on the other hand, exporters become wary of exporting their goods into India, which may at any time be subjected to safeguard duties. Thus, both sides remain on an uncertain wicket as they are not able to strategize their future business. Resultantly, there needs to be a certain time limit for interested parties to know, whether safeguard duty will be imposed or not.


Oral Hearings

Unlike EU and US, Indian Safeguard provisions with respect to oral hearings is not explicit and does not clearly spell out the procedure for requesting a hearing or rights of parties during a hearing. Rule 6(6) of the Indian Safeguard Rules requires the Safeguard Authority to provide an opportunity to interested party to present information orally. But the said provision also states that such oral submission will only be considered, when subsequently provided in writing. There is no provision under Indian law as to when oral hearing will be held or at whose behest oral hearing may be held. EU in contrast provides that Commission may hear interested parties where they have made a written application within the period prescribed in the notice of initiation. There is also a requirement to show special reasons, why an interested parties requires an oral hearing [see end note 19]. However, India cannot have such a provision since India follows natural justice principles in quasi-judicial proceedings as well. Thus, Authority has to give a hearing, irrespective of whether it has been requested by interested parties or not.

However, when such hearing will be granted, whether before or after preliminary determination, is not clear. US, in this regard, provides that Commission within a reasonable period after commencement of proceeding, hold public hearings, wherein interested parties and consumers shall be afforded an opportunity to be present, present evidence, comment on adjustment plan, if any, respond to presentation of other parties and otherwise be heard. India on the other hand, provides an opportunity of rejoinder to only domestic industry, while it allows one time opportunity to present their views orally, without giving them an opportunity to comment on submission of domestic industry.



While safeguard mechanism remains an effective mechanism for domestic industry, which is structurally unable to meet import competition, however, in the interest of justice, there is a need to give weight to certainty of proceedings and keep interested parties aware, whether there will be safeguard duty imposition or not. After all it is their legitimate business interest. Indian safeguard law has its own set of problems with many procedures still not codified properly. A look at other jurisdictions can help overcome these problems to a large extent and provide certainty to the proceedings.

[The author is a SeniorAssociate, International Trade Team, Lakshmikumaran & Sridharan, New Delhi]

End Notes:

  1. Section 8B of Customs Tariff Act, 1975 and Indian Safeguard Rules
  2. Rule 5(3) of Safeguard Rules
  3. Council Regulation (EC) No 260/2014 dated 26th February 2009
  4. Article 4.3 of Council Regulation 260/2009
  5. Section 201 to 204 of Trade Act, 1974
  6. Section 202(b)(2A) of the Trade Act
  7. Coated Paper and Paper Board (Initiation: 20th April 2009)
  8. Certain Fatty Alcohols (Initiation 13th February 2014); Carbon Black from China PR (Initiation: 2nd December 2011
  9. Farmed Salmon (2004), Certain prepared or preserved citrus fruits (2003), Certain Steel Products(2002) and Urea (1986)
  10. Section 202(d)(1)(A) of Trade Act 1974
  11. Section 202(d)(1)(C)
  12. Section 202(d)(1)(G)
  13. Section 202(d)(2)(A)
  14. Section 202(d)(2)(D)
  15. Rule 11 of Indian Safeguard Rules
  16. Section 203(a)(4)(A) of Trade Act of 1974
  17. Article 7.3 of Council Regulation
  18. Rule 11(1) of Indian Safeguard Rules
  19. Article 6.5 of Council Regulation No 260/2009


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